An industry source revealed today that several thousand individuals engaged in malicious online attacks on major Taobao Mall merchants on the evening of October 10. Targets included fashion retailers HStyle, 7Gege, and OSA. Spokespeople for HStyle and other vendors said that the attack was intended as retaliation by smaller merchants for Taobao Mall's increased yearly service fees.
The attack began at 9 PM and was coordinated through QQ groups and voice chats over YY Instant Messenger by thousands of participants. Methods of attack included malicious bids, negative feedback, ordering items for COD payment, and applying for refunds.
On OSA, one of the first merchants to be attacked, a number of items were marked as "out of stock" less than half an hour after attacks began owing to massive numbers of orders. The same fate awaited HStyle. When Taobao Mall merchants are unable to ship products, customers have the right to apply for compensation, causing merchant ratings to fall - in some cases, to fall enough that the merchants' accounts are closed. If merchants ship goods within 72 hours and customers confirm delivery, then leave zero-star or one-star seller feedback ratings, the effect on merchant rankings can be catastrophic. Taobao Mall's seven-day return policy also means that if the malicious buyers apply en masse to return their items, they stand nearly a 100% chance of being reimbursed.
An industry insider said that Taobao Mall's changes to its vendor policies, technical support fees, and guarantee fees had been harmful to merchants - particularly to small and mid-sized merchants - creating fuel for the recent attacks.
As of press time, Taobao Mall had not replied to requests for comment.
Editor's Note: For more information on this topic, please see "Taobao Mall Tightens Rules for Merchants," MD 10/10/11 issue.