We asked recently wether Wish can become the next eBay. It is a very open question at this point.
Wish is fascinating on multiple levels. It is a mobile-only e-commerce player (that alone is still rare enough) and the company is positioning itself rather globally, bringing Chinese sellers to different markets worldwide. The latter adds a certain “wild west” feeling to the service; everyone who has browsed Wish knows what I mean. The mobile-only aspect makes Wish a great case study. (Look at how Wish is using push notifications.)
“60% of transactions are coming from customers who had made 5 or more transactions in the past”, Wish-CEO Peter Szulczewski told the audience at Recode’s Code Commerce conference. This is great. But how much is this really worth with most items being priced far below $10?
To be more blunt, how long will Wish get away with (ab)using local customs loopholes?
A lot with Wish remains rather unclear from the outside. There is a debate raging in the industry wether Wish can even be sustainable or not. (Go to any e-commerce meet-up or conference, mention Wish and enjoy.)
Exemplary, here is a discussion, reader Hendrik Laubscher and I had in the comments section of the aforementioned article:
Disclaimer: I am short / bearish on Wish
Having researched Wish and spoken with ecommerce investors in California I have to say I am not sold on the sudden turnaround that is spoken about in the above video.
I can’t see Wish ever being able to sell branded goods as their business has been developed for Chinese manufacturers who are not allowed to sell on any other platform with the exception of Wish. Wish have total control on what customers are charged and what commissions are earned by merchants on their platform.
Why would Wish raise a round for funding but provide new investors with liquidity protection? The CAC & supposed GMV for me raises questions on sustainability. Why? The founding team of Wish have backgrounds in adwords and advertising but not commerce. Also ask yourself one question – why in the last 6 months has Szulczewski done a lot of fireside chats and media work? Counter that to the almost silent approach that Hollar, Zalando, Amazon, JD and Alibaba have?
The Wish model for me is unsustainable as Facebook advertising and paying for downloads are expensive and the apps have thrown the book at UX principles. As a customer it is almost impossible to unsubscribe from push notifications and email notifications from discounts. These together make it almost impossible to create organic valuable LTV based customers.
What is the moat for Wish? Cheap no name brand items that ship 30 days to customers? I don’t see a flywheel that would ensure that Wish has a long term future.
To which I responded:
Yeah, all (or most ;)) valid points. I don’t subscribe to the argument though that Wish can’t turn into a sustainable business model. They were very successful in using Facebook ads to get customers. (Remember people saying, you can’t build a successful mobile app anymore? yeah.) But that is just the early growth phase. That is why I found that data point interesting: “60% of transactions are coming from customers who had made 5 or more transactions in the past”
Yes, 5 transactions on Wish are probably generating as much GMV as one or two transactions on Amazon Marketplace. But the key point is the customer behavior here.
I see many problems coming up or being already there, like fraud. They already started addressing this. (The verified quality program, the name of which eludes me right now.) But this is going to be hard for them.
Wish is very aggressive with push notifications. But I see this more like a big engagement driver for them. (very native for mobile) They will lose some customers (it is certainly too much for me) but they most certainly look closely at the numbers.
“What is the moat for Wish? Cheap no name brand items that ship 30 days to customers? I don’t see a flywheel that would ensure that Wish has a long term future.”
I think that is rather obvious: a logistics operation helping those small merchants on their marketplace. (as the CEO more or less said himself) Can they pull this off? I have no idea. But they have a shot. Also, I think they have shown that with the right model you don’t necessarily need same day shipping or even something close. People don’t buy stuff on Wish they need the next day, for that they have Amazon and its search.
If Wish can keep building out the discovery model within their apps, combined with comparatively low prices, it will be enough for Wish to bring shipping time down to, say, a week. That is very manageable, given they will be able to predict demand precisely enough.
What does anyone else think?