Analysis: The weird and wonderful world of Wish.com

Online marketplace Wish.com goes against the grain when it comes to what are typically seen as the hallmarks of great online retail. But that has not stopped the business growing exponentially. This week it completed its latest round of fundraising, led by private equity house General Atlantic, which valued the company at $11.2bn.

Wish was founded in 2010 as a wishlist creation service by chief executive and former Google executive Peter Szulczewski and chief technology officer and ex-Yahoo employee Danny Zhang. It now serves up what almost seems a random selection of product to shoppers, from novelty socks to kitchen gadgets, phone accessories and fashion.

They are typically supplied not by branded goods giants as on other websites, but frequently from Chinese manufacturers. For that reason, delivery times can be highly elastic – it might take weeks for a customer’s orders to arrive.

But the model is proving successful.

Wish was the most downloaded shopping app in the world last year – there were 161 million downloads globally, Sensor Tower, an analytics specialist, found – and sales have risen to almost $2bn annually.

Its appeal is international. Wish operates in 80 countries, and the US accounts for 30% of sales. The EU generates about half of sales and the UK is the retailer’s fifth or sixth biggest market.

Those downloading the app are presented with a plethora of products, starting with a free gift – for which delivery is charged – and based on their initial choices, a constantly replenishing stream of product is then dangled before them in order to stimulate purchases.

A gamification approach includes a ‘Blitz Buy’ wheel of fortune offering once-a-day special offers, and it is visually led, rather than search led, inspired by Chinese websites rather than US or European established practice.

The result, according to Wish directors, is an ecommerce experience that mirrors the surprise and pleasure of browsing in a bricks-and-mortar store.

Making shopping online fun

Wish senior vice-president of engineering Tarek Fahmy, who is in charge of product and, as a mobile commerce specialist, has led its focus almost from launch, tells Retail Week there was an opportunity in replicating those aspects of physical shopping rather than the ‘search bar’ strategy deployed by so many online retailers.

He says: “In the physical world a lot of shopping happens in malls and people are looking to discover things they didn’t know existed. That’s especially true in categories like fashion and accessories.

“We’re very data-focused and we look at what resonates with customers. These ecommerce businesses were not doing for customers what they get in the physical world.

“We saw a really healthy platform evolving because they loved the visual and experiential experience.

“We surface product to people that we think resonates with them. It was a bet that we took.”

To that distinctive proposition, Wish added a “very value-oriented” stance that has wooed cash-conscious and bargain-seeking customers as opposed, for instance, to the wealthier shopper demographics targeted by services such as Amazon’s Prime.

“It was in the fairly early years we noticed that was where the product was resonating and that’s where the user base was,” says Wish chief financial officer Rajat Bahri.

“These people love to have value-add product but at a much lower price [than available elsewhere]. That’s opened up a much bigger market.”

He says the retailer has approximately 80 million monthly active users.

Tying up with independent retailers

While Wish was built around and for mobile phones, it is, like other online retailers, establishing an online-to-offline presence by creating partnerships with bricks-and-mortar stores – typically independents.

The ‘Local initiative’, says Fahmy, caters for “offline merchants looking to tap into our consumer base and data and drive consumers through their doors and inventory into their stores”. He sees it as a big opportunity.

Wish shoppers have the option to select ‘pickup’ on some products and collect them from a store. 

At present 6,000 stores across Wish’s geographical markets are part of the scheme, although only a third of those are classified as “active”. In the UK there are 259 “approved” shops, of which 85 are “active with inventory”.

As well as offering collection, independent stores, which lack the data and sophistication that big retailers and online specialists have access to, can use information gained from Wish to improve their own ranging and draw more trade.

Bahri says: “They struggle to get customers in. The algorithm we have is predictive. It can predict that the consumer in Ealing will want this type of product.

“The shopkeeper seeing it being sold can then choose to stock it, and these are entrepreneurs who live and die by their shops.”

Bringing in big brands

Alongside the Local drive, Wish is building up a branded goods business in addition to the direct-from-manufacturer products that make up the bulk of its inventory. 

It has sold such lines for some time – its “number one merchant” is an electricals and technology reseller, which sells well-known brands.

Such goods tend to be returns or previous seasons’ lines.

There is now a branded tab on the US app, and it will be introduced in Europe this autumn when product from sports fashion giant Under Armour will be made available. More big names are expected to follow. “We’re creating unique experiences on the app where brands can thrive,” says Fahmy.

Beating the critics

While Wish has grown impressively, it has had challenges along the way. Do a search on the retailer and you are pretty certain to quickly come across news stories about comically wrong deliveries or problems with products and claims of knock-off products.

There have also been allegations of fake reviews, prompted by shared characteristics such as similar wording, spurring concerns that in some case the sellers themselves have written them.

However, Bahri is emphatic that any such concerns have been and are taken seriously.

“If you break your aircon and need it immediately, you go to Amazon, but we have things people will like but are prepared to wait for”

Rajat Bahri, Wish.com

He says: “We’ve heard these claims in the past and have taken action to look for reviews that may have been artificially created. We’re very proactive in ensuring the reviews are valid.”

Equally, while there may have been problems with some individuals’ orders, he is confident in the model, with all its idiosyncrasies such as length of delivery time.

“It’s about the kind of product you are buying,” maintains Bahri. “If you break your aircon and need it immediately, you go to Amazon, but we have things people will like but are prepared to wait for.”

One challenge as the retailer has expanded internationally has been preferred forms of payment, from cards in the US to the boleto cash-based system used in Brazil.

“That shapes our checkout experience,” says Fahmy. “We’ve evolved the platform to cater more easily for different payment methods.”

As with payments, an iterative approach is taken across the board and Wish constantly fine-tunes its app based on metrics including how many customers come back each month, time spent scrolling the product feed and items added to wishlists.

The etailer’s success has been noticed by others. Amazon was reportedly interested in buying it for $10bn and there has been speculation that Alibaba has also shown interest.

However, Bahri says it is an IPO rather than a sale that is most likely to be on the cards. He says: “We’re focused on growing the company. We’re looking at an IPO in the next couple of years as initiatives we’re rolling out take root.”

As it launches programmes such as Local and creates alliances with brands, the etailer’s bosses are confident that it can counter the critics with a winning offer that will keep it on shoppers’ wishlists.