These cases sometimes end up in the supreme court of Alibaba where the system isn’t perfect. Here are a few of the trials we’ve been put through:

-A customer returned an item that was clearly not what we had sold them. He asked for a refund and we refused. He then escalated the dispute in Taobao. The jury sided with the customer. We lost the money and the original item.

-Another customer reached out to customer service well after the 7-day guarantee period. They complained that there was a problem with the product’s fabric. When we received the returned item, we realized that they had made a cut with a knife so that they can return the item free of shipping (buyer doesn’t have to pay shipping for returning defective items).

It gets better though…

-In one incident, a customer purchased about 3000 RMB worth of goods and then complained to customer service saying that they got charged 9000 instead. He showed a screenshot of the 9000RMB transaction on Alipay and demanded an immediate refund.

As our team responded saying we need time to verify with Alipay, he left us some strong words together with a negative review. A definite blow to the store’s ability to rank. We soon confirmed that there was indeed nothing wrong with the payment. We had our design team investigate the screenshot and confirmed that it had been retouched with Photoshop. Thankfully Tmall sided with us and blocked the invalid negative review.

You need to be able to take multiple hits to survive ecommerce in China. The customer is always right – even the bad ones – and you are always guilty until proven innocent.

There’s a new breed of fraudsters growing on Tmall and its not the sellers.

Taobao’s 7-day guaranteed right of return has given tremendous power to malicious shoppers.

Last summer, a Taobao seller surnamed Li was happy to receive a large order of 18 items worth several thousand RMB. But 10 days later, that customer asked for a full refund saying she didn’t like the clothes she had bought.

Mr. Li refused because it had already been more than 7 days. The customer then escalated the dispute within Taobao and somehow got the platform to side with her.

Mr. Li reluctantly issued the refund. But the situation was too strange so he decided to investigate himself. He went on the customer’s social media and found many pictures of her wearing the clothes from his store in TIBET. This blew his lid off and he went straight to the media with his story.

Usually he would accept late returns even for damaged goods in fear of bad reviews. One bad review can hurt the store’s future earning potential so most Taobao sellers take the occasional hit.

But this one crossed the line for Mr. Li.

And the netizens of China agreed. Soon the customer came out with a public apology begging people to leave her and her family alone.

In a way Mr. Li was vindicated, but Taobao’s less than perfect dispute resolution system leaves many honest sellers out in the cold….

Especially when malicious shoppers band together to form “Mutual Help Groups.”

It starts off with person A buying an item. After using it for 2 months with visible signs of wear, person B helps person A buy the exact same item again. Within 7 days, person B returns the old item person A had already used for 2 months.

These “help groups” enable its members to exchange a product they had already used to a brand new one… or enjoy it for as long as they want until they pass it on to someone else in the group while they get a full refund. The groups enable them to repeat this behavior forever while making it almost impossible for sellers to fight back.

What can or should Alibaba do to combat this?