Juhuasuan.com, the website set up by Alibaba in March 2010, says it has 12 million consumers who use its group purchase services every day. The platform posted a revenue of 10.2 billion yuan (HK$12.5 billion) last year.

The total revenue of the country's group-buying market last year stood at 23.7 billion yuan, according to consultancy EnfoDesk.

The Alibaba Group said on its online retail unit, Taobao.com, that its anti-graft department investigated and punished 28 employees between January and June this year, and handed seven of them over to the police.

The Hangzhou-headquartered company said local police detained Yan for further investigation.

'This announcement speaks for itself,' an Alibaba spokesman said in an e-mail.

'We have no specific additional comments with regard to the individual involved.'

Juhuasuan, which means group bargains, is an open platform that other group-purchase sites can use to open online stores to sell their goods.

Tuan800.com, a leading group-buying deals aggregator on the mainland, said in its May report that by the end of that month, there were 4,500 online group-buying platforms across the country.

However, the top 20 sites occupied more than 90 per cent of the overall market share. The leading players include Meituan.com and Gaopeng.com.

Alibaba has been plagued by complaints about fake products and misconduct of workers.

In May, Taobao said certain vendors on its Taobao Marketplace and Tmall and some of its employees were caught making 'private deals'.

Police detained a former Taobao employee, Zhu Yuehang, in Hangzhou in April last year on suspicion of accepting bribes to delete negative consumer ratings for certain online sellers.

Taobao says it is also beefing up its crackdown on counterfeit goods sold on its trading platforms.

In the past two years, it says, it has removed from its websites 77 million products that violate intellectual property rights.