New Rules On Alibaba’s Tmall Incite Virtual Vandalism by Smaller Sellers [UPDATED]

UPDATE: The article below cites a Chinese media report that turns out to be inaccurate. We have made corrections where necessary to our report, and removed an unreliable local news video.

Zhang Yong, president of Tmall (Photo: news.cfan.com.cn)

On October 10th, Alibaba announced new merchants rules for its B2C e-commerce platform, TMall.com. With these changes, technical support fees and cash security deposits are significantly higher for TMall sellers – and that has especially angered smaller vendors, who say the higher fees are just too much. In response, there have been unprecedented digital protests and some virtual vandalism of larger TMall stores by smaller sellers on the same site.

Technical support charges were raised to 30,000 or 60,000 RMB, depending on the size of the B2C store, from last year’s 6,000 RMB. And sellers have to turn in a deposit ranging from 100,000 to 150,000 RMB compared to the original 10,000 RMB. Both those are refundable, depending on a store’s performance within the rules, meaning they’re more of an outlay than a consumed expense.

The new rules also include a seven-day return period for all purchases, stricter rules on shipping times upon order confirmation, and stricter policies against fake products. The high fees are refundable, however, for merchants who can maintain Alibaba’s service standards, and Alibaba representatives say they are intended purely as an incentive for vendors to provide better service to customers.

The new rules hit TMall like an earthquake, especially small- and medium-sized sellers, and the rules will also impact those who intend to join Tmall in future. In response, on the night of October 11th, a series of attacks were unleashed against major sellers on Tmall.com. It was a well-organized attack by some 4,000 people which later grew to over 40,000. The attack was coordinated through QQ groups and YY IM, a local voice-chat platform. Thousands of malicious purchase orders were placed to large TMall sellers such as the clothing chain UNIQLO, and most orders were cancelled soon after being placed. Also, after the fake orders were made, the vandals placed thousands of negative reviews on the products. And it delivered a clear message from smaller businesses: the new rules suck and we don’t want them.

Bad reviews, usually 0 or 1 out of 5 stars, were given to shipped orders. In only a few hours, major TMall sellers all received over 10,000 cancelled orders. And as such a large amount of orders were pouring in, most sellers would have difficulties dealing with orders and shipping them within the agreed timeline, which then means the buyers can apply for financial compensation. As the attacks unfolded, most attacked TMall sellers chose to put ‘out-of-stock’ notices on their products in hopes of avoiding further attacks.

The attacks brought the platform to a sudden, effective halt. However the attacks did not stop, as protestors went on to upset other sellers by submitting low customer ratings.

On October 12th, Alibaba released its official announcement on the previous night’s incident. The statement called the incident cyber-violence and a riot. It said:

We accept critiques and suggestions on our new rules but we will not tolerate the malicious deeds against innocent merchants on TMall. We have reported this to the police and will take technical measures to protect TMall merchants from further attacks.

Even after the announcement, the rampage showed no signs of stopping. Some TMall merchants physically gathered outside Alibaba’s HQ in Hanzhou, eastern China, holding banners to protest against the new rules.