"Occupy Taobao" protests force company to postpone fees hike, offer financing

Taobao has relented slightly in the ongoing e-fued between the massive online retailer and its small sellers, by agreeing to postpone their plans to increase their service fees by nine months and by offering financing of up to 180 million RMB to select shops.

The decision is a dramatic reversal of Taobao's earlier assertions that there was no way they were going to back down. Taobao's original plan called for a tenfold increase in annual fees for Tmall store owners from 6,000RMB to up to 60,000RMB and to raise the minimum deposit to 50,000RMB minimum.

While such a fee increase would have a negligible effect on Taobao's largest sellers, the thousands of smaller vendors that fill in the gaps would have struggled to cough up the money.

The dispute, which included small seller hacktivism that targeted large brand names like Uniqlo by buying up thousands of products and then asking for refunds (effectively lowering the confidence rating of the seller and forcing them to delist), got so ugly that even the Ministry of Commerce stepped in to urge Taobao to defuse the situation and open dialogue with the vendors rather than continue their obstinacy.

This fee hike postponement seems to be Taobao's response to the Ministry of Commerce, though vendors may see the concession as a Pyrrhic Victory -- particularly because they have only bought themselves time to submit "official complaints" to the government which will may just fall on deaf ears and into trash cans.

If there is any good news for small sellers it is found in Taobao's promise of 180 million RMB set aside as support for its registered sellers which will include 500 million yuan in loan guarantees for sellers considered too "high risk" for bank loans as well as 300 million yuan to improve Taobao's marketing and tech services.

Taobao is China's equivalent of eBay or Amazon and sells everything from loofahs to Lamborghinis.