Occupy Taobao – Venders protest over e-commerce woes

Growing pains

The temporary victory of the vendors could be bad for the industry.

Taobao’s decision to raise its fees was completely in line with market logic, said Kang Yan, a senior analyst at Accenture in Beijing.

Raising the access threshold at Taobao Mall would remove a lot of substandard and gray market stores.

“It is not only an effective measure to attract and hold consumers and users, but also provides an edge for future competition,” Kang said.

Business-to-consumer sales in China totaled 54.2 billion yuan during the second quarter of this year, up 170 percent year-on-year, according to statistics from IT consulting firm Analysis International.

Taobao Mall, founded in 2008, accounts for 33 percent of the volume. It is trailed by 360buy.com and Amazon.cn.

But the site has long been known as a paradise for hawkers of counterfeit goods, Kang said. Quality problems and complaints about the service are legion, and media reports of fraud are the norm.

“The fee hikes will force small shops to focus on product quality and the services needed to create a sound commercial environment,” Kang said.

If the move is so right, then why is Taobao being seen as so wrong?

Kang blamed its on the e-commerce industry’s coming of age. The industry has been developing rapidly for 11 years and has an annual turnover of more than 4 trillion yuan.

But Kang said it is largely self-regulated. Relevant laws remain sketchy, and many areas of the industry are entirely ignored by the government.

The Consumer Protection Act, created in 1994, has no clause about Internet transactions. At the time it was written, the Internet as users understand it today hardly existed.

“When a dispute does make it to court, insufficient evidence and holes in the law ensure it will be thrown out,” Kang said.

In Taobao’s early years, Jack Ma acted as a moderator when disputes arose between Taobao’s users and vendors. But as a businessman, Ma said he never found a solution that all the parties could accept.