The “latecomer” has overtaken others, can Wish make a comeback?

Wish made its debut in 2010 and became one of the veteran players in cross-border e-commerce. In an era dominated by shelf-based e-commerce and Amazon, Wish took the lead in opening up mobile e-commerce, applying personalized recommendations and waterfall flow display to the e-commerce field, and carving out a path in the sinking markets of Europe and the United States by selling cost-effective products from Chinese merchants.

During the 2018 economic crisis, Wish became the most downloaded shopping app in the United States with its low price advantage. However, in order to attract more merchants and users, Wish relaxed the merchant entry requirements, which led to a decline in the quality of the platform's products and a large number of users leaving. Until now, Wish has not fully recovered and ranks behind 35th on the US shopping app download list.

Today, as the global economy enters a downward cycle again and inflation in the European and American markets continues, Wish, a pioneer in low-price strategy, sees an opportunity to counterattack and begins to implement a series of reform measures in order to regain market share through transformation. However, in the 13 years since Wish started operating, the players in cross-border e-commerce platforms have been reshuffled, and the degree of market competition is no longer what it used to be.

Currently, the two most popular platforms in the European and American lower-tier markets are Temu and Shein. Temu, which was launched in September last year, has now become the number one shopping app in the US, even surpassing Walmart and Amazon. Shein occupies the largest share of fast fashion in the US and is now also expanding its third-party platform business. The growth rate of the two is staggering.

Facing Temu and Shein, Wish has a first-mover advantage, but it has to admit that its competitors are strong and its transformation is facing greater challenges. However, the transformation over the past year has indeed brought results, and at the same time has given Wish confidence and made it more determined to take the next step.

The low-price trend is coming again, and Wish is facing stronger opponents

The business models and development trajectories of Shein and Temu are very similar to those of Wish. All three are doing the same thing, which is to bring high-cost-effective Chinese products to the lower-tier markets in Europe and America. All three have a huge mobile traffic entrance. Whether it is Temu, Shein or Wish, they have invested heavily in mobile terminals, and in the early stages, they all relied on marketing to attract traffic.

The difference is that Wish is a company from the United States, but it is one of the few Silicon Valley companies that is understood as a Chinese company. It has been labeled as "the American version of Pinduoduo" and "the international version of Taobao". In addition, the three companies have slightly different ways of cooperating with sellers and managing them. Temu focuses on full trusteeship and strictly controls goods and prices; Shein has full trusteeship and independent stores for third-party sellers in parallel; and Wish still focuses on independent third-party sellers, but the entry mechanism was later changed to an invitation system.

The rise of Shein and Temu indirectly proves that Wish's previous strategy of focusing on low-priced goods and mobile shopping experience is still effective today. Especially in the new cycle of economic downturn, consumers' desire for high-cost-performance products continues to rise. In the past year of transformation, Wish has also adhered to its main positioning of high cost-performance, but has clearer goals in terms of target customer groups, key categories, and regional markets.

Compared with emerging platforms such as Shein and Temu, Wish has accumulated a high brand awareness and penetration rate in the European and American markets, but it has also left a bad impression on former users due to issues such as product quality. Compared with the former, which built its brand image from scratch, Wish focuses on reversing user reputation, which requires greater effort to solve.

Despite implementing a series of reforms, Wish is still a long way from a successful revolution.

Judging from the second quarter financial report released by Wish recently, its various performance indicators generally declined. Revenue fell more than expected, down 42% year-on-year to US$78 million; adjusted EBITDA was in line with expectations, but still a loss of US$66 million; monthly active users fell 48% to 12 million.

Wish CEO Joe Yan and CFO and COO Vivian Liu both mentioned that competition from rivals such as Shein and Temu has put pressure on Wish's growth. Vivian Liu said that due to increased competition, Wish user acquisition and retention are expected to continue to be under pressure in the short term, and will continue to have a negative impact on monthly active users, the number of active buyers and revenue.

When the results were announced, Wish also announced plans to lay off about 34% of its employees, of which about 160 positions were located in the United States. After more than a year of reform, Wish has a clearer understanding of itself, but as competition becomes increasingly fierce and the industry changes, Wish will continue to work hard.

In response to competition, Wish discloses its next plan

Increasingly fierce competition has indeed brought challenges to the transformation, but it cannot stop Wish from moving forward. Wish CEO Joe Yan, who officially took office in February this year, said at the second quarter earnings conference that although the current market environment has brought greater challenges, the transformation strategy has made progress.

JoeYan also announced some of the measures that have been implemented and Wish's next key plans at the meeting:

1. Increase support for merchants outside of China

Wish continues to focus on Europe and the United States as its main markets, while working hard to attract more merchants to join. Since entering the transformation stage, Wish has implemented a number of measures to address the pain points of merchants in terms of traffic, conversion, profitability, etc., making the cooperation between merchants and the platform smoother.

In March this year, Wish invited 18,000 new European merchants to join its platform and will hold its first merchant summit in Europe in September. JoeYan revealed that in the second quarter, European customers contributed almost half of Wish's revenue in its core market.

Wish has also signed a new partnership with Korean logistics provider Rincos to improve the logistics efficiency of Korean merchants. At the same time, it cooperates with many merchants with local logistics to provide faster shipping speeds for North American customers.

To help merchants increase sales, Wish held its first large-scale promotion event "Wishmas" in March 2023. 6,000 merchants participated in this two-week event, which drove double-digit GMV growth.

2. Improve the shopping experience of platform customers in many aspects

Over the past year, Wish has improved the customer shopping experience in terms of logistics timeliness, product quality, visual browsing and accurate push. In the first half of this year, Wish introduced a fixed shipping fee, which can be enjoyed for orders over a certain amount. Wish also plans to expand the scope of fixed shipping fees in the second half of the year and launch free shipping services for some orders.

Wish also hopes to launch new checkout options in the second quarter to improve the payment experience, and is providing easier login options for existing users. At the same time, the platform's visual, category browsing and navigation experience have been revamped, and personalized recommendations have been strengthened.

With a series of efforts, Wish's customer satisfaction has increased significantly. According to the second quarter data, Wish's on-time delivery rate reached 91%, the order cancellation rate decreased by 47% year-on-year, the refund rate decreased by 30% year-on-year, and the merchant and user recommendation net value (NPS) also increased by 28%. At the same time, the user conversion rate increased by 13% year-on-year, and the customer retention rate increased by 3% year-on-year.

3. Focus on key categories and enhance user awareness

In terms of categories, Wish once again focused on the "home and life" category, including four core categories: fashion, beauty and health, household goods, and electronic products. Although Wish has not yet disclosed the GMV data of each category, it said that these four categories have accounted for more than 50% of the platform's GMV.

Wish plans to build independent landing pages, themed product collections and independent marketing information around these key categories to enhance the user mindset of its home lifestyle online shopping platform. These initiatives are designed to build vertical experiences for users in different categories and will also utilize generative artificial intelligence technology.

4. Focus on improving advertising efficiency rather than blindly attracting new customers

After starting the transformation, Wish focused on serving existing users. As a result, Wish drastically cut advertising spending while setting a higher ROAS target, which was in stark contrast to other competitors who spent a lot of money on marketing.

Vivian Liu believes that the decline in active users in the second quarter is largely attributed to the reduction in advertising spending, but the subsequent marketing strategy will also focus more on sustainable growth, that is, more on user conversion rate and retention rate. During the holiday season, advertising spending may be slightly increased.

5. Reduce costs, increase efficiency and boost profits

JoeYan said that Wish will not pursue aggressive growth targets at present, but will focus more on healthy cash flow and long-term profitability. Cost control and profit improvement will run through the entire transformation process.

Next, Wish will optimize corporate indirect expenses and operating expenses. Recently, Wish announced layoffs, and Joe Yan said that these layoffs are expected to bring the company about $8.7 million in severance pay and other expenses, and will save $43 million to $46 million annually starting in the fourth quarter.

Editor✎ Ashley/

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