Quick: name an eCommerce site. Chances are, if you pose that challenge to random person on the street, more often than not the answer will be, “Amazon.” In the U.S., at least, Amazon has come to define the way we think about online shopping. More than three quarters of American online shoppers did the majority of their holiday shopping on Amazon last year, and the eCommerce giant controls nearly half the total U.S. online shopping spend. And that’s not surprising. From their mind bogglingly huge product selection to their relentless focus on the customer experience—and constant innovation—Amazon has become more than just a dominant force in eCommerce. It’s the standard-bearer.
Wish, on the other hand, which first launched in 2010 as a wish-list creating app, has a completely different approach.
Most of their products are unbranded, sold by various small businesses directly to consumers. The user experience (on web or mobile) is rather pedestrian. The prices, however, are rock-bottom—and it’s that distinction which has made Wish:
- The #1 shopping app in 42 different countries
- The #1 downloaded shopping app in the U.S. in 2017
- Valued at about $8.5 billion with more than $1 billion in revenue in 2017
Wish has focused their business model on one thing and one thing only: price. They’re not looking to expand into the media space, build tech gadgets, or even offer next-day delivery. Wish built their company to provide inexpensive, direct-to-consumer products at the lowest possible price.
By going after a market that Silicon Valley ignored, focusing solely on price and availability, and using technology to learn as much as possible about their customers, Wish built a legitimate global competitor to giants like Amazon and Alibaba.
Founded in 2010 by former Google and Yahoo developers Peter Szulczewski and Danny Zhang, Wish is an eCommerce company with upwards of $1 billion in annual revenue. Wish started as an app where users could create wishlists of their favorite products, and was monetized using a pay-per-click model.
As their business grew, Wish started promoting similar products to their users based on their existing wishlists. This led to partnerships with some merchants, who provided their products directly via the Wish platform. Connecting third-party sellers to buyers through Wish.com turned out to be the business model that would sustain their growth moving forward.
Through seven funding rounds over the next few years, Wish took in $1.3 billion and grew their wishlist app into a full-blown eCommerce provider. During that time they received buyout offers from Amazon, eBay, and Alibaba, but decided instead to expand on their own. Under the umbrella of their parent company, ContextLogic, Wish built up four additional platforms for different types of products. Geek for gadgets and tech, Mama for maternity and childcare, Home for decor, and Cute for beauty and fashion.
The site grew by focusing solely on price. Their early adoption of the direct-to-consumer model gave Wish the ability to offer products at a significantly lower cost than other online retailers like Amazon, who focused on selling products that still had other cost layers built in (like advertising and distribution). And even though it flies in the face of conventional eCommerce wisdom, where the focus has always been the shopping experience first and price second, this pricing strategy helped Wish grow into the global powerhouse it is today.
Going after a forgotten market
Even though Wish received several substantial funding rounds, many in Silicon Valley were skeptical that their business model would pay off. Szulczewski addressed this briefly in a Medium post called The Invisible Half, where he broke down the idea that many startups were ignoring a significant sector of the market.
“We never hypothesized going after value conscious consumers with unbranded goods, but the early data was indisputable. There was a large underserved market of consumers that prioritized price over pretty packaging, fast shipping, and brands. Despite our metrics, we were told repeatedly and at every stage by Menlo Park investors that they didn’t know anyone that would shop on Wish.”Peter Szulczewski, CEO of Wish
As an eCommerce company, Wish was determined to go after a market that had previously been passed over by their main competitors. This led them to relationships with producers who were interested in the direct-to-consumer market, but were not yet featured on Amazon or Alibaba. Wish made the process of setting up shop on their site much easier than their competitors, and that negated the need for producers to create their own eCommerce platform and invest heavily in marketing. Wish made it easy for sellers of unbranded products to access to a huge market of consumers much faster than going it alone.
Though their main driver was always price, what attention Wish did pay to shopping experience was focused on mobile. This strategy was tied directly to their relentless emphasis on low prices and the target customer that attracted. A PEW Research Center survey via Coresight Research showed that 21 percent of lower-income shoppers access the internet solely on their smartphones, which is higher than the 12 percent average. Attention to the mobile shopping experience led to large-scale usage of Wish in the United States and around the world, and their rankings still reflect this fact.
Both Android and iPhone Wish apps regularly stay at #1 for all shopping apps, beating out Amazon, eBay, etc. For overall ranking, Wish is consistently in the top 50 for iPhone and the top 25 for Android. This is due largely to how Wish has positioned their app, concentrating on the browsing experience as opposed to the shopping experience. App users can open the Wish app, spend five minutes browsing for deals that might interest them, and go about their day. It feels more like a habit-building daily deals site, like Groupon or Woot (owned by Amazon) than a traditional eCommerce store. This is quite different from the Amazon app experience, where searching for specific items is emphasized.
Prioritizing price over experience
Most popular eCommerce providers focus on the shopping experience first and product price second. Amazon built their business around making it super easy to discover, learn about, purchase, and quickly receive the products their customers wanted. Wish takes a completely opposite approach, focusing on discounted and unbranded items that are discoverable mainly via browsing instead of search.
The “discounts” are one of the ways that Wish attracts their customers. Items sold on Wish are drastically cheaper than what you can buy on Amazon and others. People searching for deals gravitate towards Wish for that reason, which is why it’s so important for them to go the direct-to-consumer route. The kind of shoppers attracted to Wish may still be shopping on Amazon or eBay, but when browsing Wish, they’re strictly going for the best deal as opposed to the best product. People who purchase via Wish don’t mind that they’re not getting the type of quality control or curation they’d get through a traditional retailer like Target or Best Buy, or that they can’t read a review of the product on The Wirecutter or Consumer Reports before buying. They’re willing to take a chance that the $4 headphones they order may not work as well as the $40 headphones for sale at a traditional electronics store because the discount is big enough to justify the risk.
Many of the products on Wish are sold directly from manufacturers in China. They’re cheap, because Wish cuts out the middleman. Instead of first going to a warehouse in the U.S., and then branded and sold at a markup that includes the cost of marketing and support, Wish sellers ship those products directly to the consumer. This is a model that’s growing in popularity and Wish isn’t the only company that is going after this kind of customer, Chinese sites such as Alibaba and Taobao (owned by Alibaba) are also growing fast.
These sites, which originate in China where much of the cheap goods sold on Wish come from, could negatively impact Wish’s growth if their proximity to the producers allows them to offer even lower prices. Even Amazon is getting in on the act, with as much as one-third of third party marketplace sellers now originating in China.
The browsing aspect of Wish also informs their business model. Wish provides their customers with a streamlined, quick, and easy way to browse through items they might want to buy. Things like packaging, branding, and shipping times are secondary; Wish tailors the experience for snap decisions. Customers buy products via Wish because they’re cheap, not necessarily because they serve an immediate need.
This browsing model is great for a mobile app, but can potentially cause issues when it comes to customer retention. It’s difficult to retain app users over time, so Wish needs to ratchet up the discounting and make better recommendations based on customers’ previous browsing habits. Instead of focusing on items that are typically purchased together, as many online retailers do, Wish uses their data and analytics to serve up items they think the customer would want to buy, sorted by price and current product availability. This differs from the Amazon model, where items that are typically purchased together are recommended to the customer based on the recent purchase history of other Amazon customers.
Customizing the shopping experience with deep learning
Part of the experience with Wish as opposed to Amazon or other eCommerce companies is the browsing and recommendations engine. Wish uses a considerable amount of data, like customer browsing habits as well as social profiles and ad view history to make recommendations.
Customers using Wish are there to browse and potentially find a deal that interests them. Amazon shoppers, on the other hand, know exactly what they’re looking for 63 percent of the time. It’s much more valuable for Wish to recommend a product their customer will buy on impulse as opposed to the precise item a customer is looking for.
Users can sign up to the Wish platform directly through their Google account, email address, or Facebook profile page, all of which gives Wish access to the customer’s ad information. Wish then uses this information to compile a more comprehensive picture of their customers and their product preferences. It’s no wonder that a significant amount of their traffic comes from social media.
This is a holdover from Wish’s days as a modest wishlist app, where the majority of revenue generated came from pay-per-click ads. The more a customer interacts with Wish’s app, website, or any ads they get served, the better the app’s algorithm learns. According to Treasure Data, Wish is processing more than 17 billion different events every day. The continuous scrolling aspects of their app and website also help, as customers will likely spend more time looking for potential impulse buys.
The staggering availability of different types of products is overwhelming. Wish offers up thousands of unbranded, generic products for customers to choose from. This is completely different from Amazon or eBay, where these products might be available, but customers need to spend the time to search them out specifically, and they’re generally deemphasized in favor of higher priced, branded versions. By optimizing the shopping experience towards impulse buys, Wish is learning in a different way than Amazon and other popular eCommerce companies.
By offering their customers a way to browse specific items recommended to them, and focusing more on discounted pricing than anything else, Wish is turning eCommerce conventional wisdom on its head.
► Find the right market
Wish is successful because they went after a market that was traditionally ignored by eCommerce startups. By identifying the need for discount goods online, Wish has been able to corner their own section of a growing market much earlier than their competitors.
► Pricing matters
Wish is free to download and use; they offer low prices because of a direct-to-consumer model that emphasizes cheaply manufactured, unbranded goods, and they make money on volume. If the items sold through their site were priced higher, they wouldn’t have appealed to their target consumer and likely would not have seen the same amount of success.
► Tap into impulse buying
The entire Wish experience is based on impulse and speed. Customers come to their site to browse for deals instead of shopping for specific items. By keeping their prices low and their product offering diverse, Wish has positioned itself online in much the same way that QVC did on television decades earlier.
► Learn, learn, learn
The more you know about your customers, the better. By pulling in data on browsing habits, social media profiles, ad history, etc., Wish is able to recommend products their customers are more likely to buy. This is very important when much of their model is based on purchases made on a whim.
► Walk your own path
Wish entered into a market that was ignored by much of Silicon Valley. By taking the leap and positioning themselves correctly, Wish found success and emerged as a market leader.