To regain growth, Wish tries to optimize logistics, build trust with Chinese sel...

To regain growth, Wish tries to optimize logistics, build trust with Chinese sellers

To regain growth, Wish tries to optimize logistics, build trust with Chinese sellers

Rebbeca Ren

posted on 4 hours ago

A robust and full e-commerce ecosystem that can better serve sellers and shoppers requires long-term investment.

2020 is a tough year for Wish, the Silicon Valley-headquartered e-e-commerce platform, as it has been struggling to rebuild trust with merchants and consumers in the aftermath of the unprecedented pandemic that has dealt a heavy blow to its business.

According to ContextLogic, the parent company of Wish, in the third quarter, it generated only $368 million in sales from all three businesses, core marketplace, ads, and logistics, showing a decline of 39% year over year. And the earnings report added that its revenue in the fourth quarter would decline from that total despite the holidays.

The steep loss in active users also makes the market doubt its prospects, although the company attributed this to the reduction in digital advertising spending. In the earnings call, the company said that its total monthly active users fell 40% year on year to 60 million, while last 12-month active purchasers down 32% year on year to 46 million. 

Instructed by various unpromising metrics, Wish, which was listed at $24 per share at the end of last year, has been trading below the IPO price for nearly a year, and closed at $3.23 last Friday.

Founded in 2010 by former Google and Yahoo developers Peter Szulczewski and Danny Zhang, Wish sells millions of cheap and unbranded products in various categories. The majority of its merchants are based in China, according to the research firm Marketplace Pulse. While selling on Wish, the Chinese companies ship orders directly to customers.

For years, Wish benefited from low shipping rates through the Universal Postal Union Treaty, which subsidizes small packages from China. However, the hike in rates that took effect in July 2020 and the pandemic-causer surge in global logistics prices have raised Wish's shipping costs, making it's difficult to stabilize its logistics services as well as keep offering so many items at such low prices.

In an interview with PingWest, Wish told that this year they are increasing their investment in logistics, especially the warehousing solution Fulfillment By Wish (FBW). The solution allows Wish merchants to ship their inventory to several dedicated FBW warehouses located in the US and Europe, and the FBW warehouses will take care of order fulfillment, including pick, pack, and ship. In order to attract and encourage merchants to adopt this solution, it offered months-long promotion to waive the logistics fees for merchants delivering inventory to selected warehouses. 

Optimizing shipping costs and delivery times through international warehousing is critical for cross-border e-commerce, since it can bring a better experience for buyers thereby boosting sellers' business. Top-notch players like Amazon and AliExpress have realized early on that shipping to the end customer can be a competitive advantage and therefore they invest millions each year in the expansion of their logistics networks, including international warehousing services.

Next, the company said it plans to improve the user experience on the platform by offering more brands and cost-effective products. “Xiaomi, Huawei, and the sports brand peak have been sold on our platform, and the sales are all good. They are brands that provide cost-effective products and fit the needs of our target users," the company said.

Wish told PingWest that it is cooperating with conventional manufacturers to assist them to achieve digital transformation. By providing data and feedback from the consumer end to the manufacturers, it can better guide production and connect sellers and manufacturers.

On the seller's side, a friendly policy has also been introduced. The company launched a merchant reward program called Wish Standards on November 18th, saying that it aims to build the trust of customers and merchants and enhance the Wish shopping experience. 

The program evaluates retailers based on performance metrics such as product quality, shipping and fulfillment, and customer reviews and ratings. The best-performing vendors will get more exposure, commission discounts, etc.

"Wish Standards is a significant initiative representing our long-term commitment to reward exceptional merchant performance and to overall increase the quality and health of the Wish ecosystem for both merchants and customers,” said the company.

Speaking of the "high and unreasonable" fines criticized by Chinese sellers, the company claimed that the once harsh policies have been revised. “Under the premise of protecting the interests of our buyers, we have mitigated the penalty," the company said. "Our platform is positioned to host high-quality vendors that supply cost-effective items," it added.

Although it is making efforts to lure more Chinese sellers to join its platform, a robust and full e-commerce ecosystem that can better serve sellers and shoppers cannot be established quickly and requires long-term investment.

In the third quarter's earnings call, the company claimed that it has made good progress in advancing Wish in a positive direction toward long-term growth and profitability, and plan to improve and maintain trust with buyers, and to provide a differentiated and engaging buying experience. 

"We are confident in our ability to return to growth during the second half of 2022 while creating significant shareholder value over time,” Jacqueline Reses, Executive Chair at Wish, said.