Service suffers

In recent years, e-commerce has boomed in China, especially online shopping. According to the latest report by China Internet Network Information Center (CNNIC), up to the end of June 2011, the number of online shoppers was 173 million, increasing by 7.6 percent year-on-year. The number of online business-to-consumer, consumer-to-consumer and other similar merchants has reached 15,800, 58.6 percent more than that of last year.

The downside is that these increases mean an equivalent rise in online fraud, fake products and poor customer service. According to CNNIC, one out of every 12 online shoppers reported they were defrauded in the first six months of 2011.

Zhou Fangjie is one of the victims. "I am now extremely cautious when buying goods over the Internet after buying several fake cosmetics from online shops," she told ChinAfrica, adding that she was also troubled by delayed delivery.

"What makes things worse is that consumers are unclear where to complain when they buy fake goods and receive poor service as the online transaction is always transregional," said Mo Daiqing, an analyst from China E-commerce Research Center, in an interview with ChinAfrica. 

Small vendors don't believe the fee hike will solve such problems, but complain the move is destroying their business. "It is clear that Taobao Mall wants to squeeze us out," Li Weibo, a small vendor selling silver accessories, told ChinAfrica.

Zhang Yong said small sellers who are unhappy with the higher costs could switch to Taobao Marketplace, which charges no fee.

But vendor Li disagrees. "I don't think it is a viable option. The website invested more resources into the launch of Taobao Mall, directing most of the online traffic there and in the process threatening the survival of Taobao Marketplace," Li said.

The conflict between the Taobao vendors was eventually resolved by the intervention of the Ministry of Commerce (MOFCOM). Taobao Mall postponed the plan of charging higher fees to October 2012. Its parent company Alibaba planned to set aside 300 million yuan ($46 million) of its budget to marketing and technological service improvement of the website.