Monthly active users have dropped precipitously. Can Wish retain sellers after reducing commissions?

The cross-border e-commerce industry has been a hot spot in recent years. From its initial rise to its rapid development under the catalysis of the epidemic, many newbies have flocked to the industry to become cross-border practitioners. Many senior practitioners in the industry have made a fortune under the wave of the epidemic and directly bought houses in Shenzhen Bay No. 1 to reach the peak of their lives.

The success of cross-border practitioners has a lot to do with the e-commerce platform they choose. Amazon, eBay, AliExpress, Wish, Shopee and Shopify are all familiar platforms. There is competition among these platforms, but it is also this competition that urges these platforms to develop.

However, this may not be the case for the Wish platform. In recent times, Wish's monthly active users have dropped sharply, and sellers have been choosing to leave the market. In order to alleviate this predicament, Wish has been taking continuous actions, but this does not seem to have much effect.

Wish reduces commissions, sellers: Same old story?

Let’s first review Wish’s recent policy changes:

—Wish Standard was launched to allocate exposure to higher-quality products. Inactive users and low-level merchants who fail to meet the requirements will have their transactions suspended;

- Market focus: exit from 79 non-core markets and focus on the development of 61 core and key emerging markets;

—Cancel most fines for violations, the invitation system, and CEO changes.

Today, Wish's position in the e-commerce industry has changed significantly compared to before. The traffic and orders have declined seriously. Even if the platform is selling well, there are still few orders or even no orders. The sellers on the platform have been complaining about this.

Perhaps in order to alleviate the difficulties, Wish recently released a new policy stating that it will reduce the commission of platform merchants and explained the two commission models.

The first is a tiered commission model , which calculates the commission to be charged to merchants after an order is generated based on multiple factors. It will be first used for all EU-bound orders from 00:00 UTC on June 28, 2022, and will gradually cover other regions in the future.

The second is a pure commission model, which is based on the product value (product price set by the merchant + shipping fee set by the merchant), a specific percentage of commission is charged according to the situation of each order.

The tiered commission model has different commission rates for platinum and gold-level (premium) merchants, silver merchants, and bronze or lower-level merchants on specific product categories such as apparel accessories and electronics.

Many sellers on Wish expressed their opinions on this operation:

—Why are you so obsessed with Wish? Isn’t AliExpress good? Isn’t Amazon good?

—It’s useless. There’s no more traffic, no more customers, and no more sellers. Wish realized it too late.

—Most users are at the bronze level, which is better for central warehouses but not for overseas warehouses.

…

Monthly active users dropped precipitously, what happened to Wish?

Most of the products on the Wish platform come from Chinese sellers. Because of its low prices, Wish is also called the "American version of Pinduoduo." In the beginning, many sellers made a lot of money through this platform, but now, Wish is on a downward slope and there is no turning back.

According to data from Wish's parent company CONTEXTLOGIC, the number of monthly active users (MAU) and active buyers (LTM) on the Wish platform is falling sharply.

In December 2020, when Wish went public, it still served more than 100 million monthly active users, but in just one year, this number has been declining at an alarming rate. As of the first quarter of 2022, Wish platform had only 27 million monthly active users, only 27% of the same period last year.

At the same time, the number of active buyers on the Wish platform is also declining rapidly. In the first quarter of 2021, there were 61 million active buyers. As of the first quarter of 2022, the number of active buyers was 28 million, only 46% of the same period last year.

From its initial glory to its current lack of development, Wish's decline can be traced. The Wish platform initially attracted a large number of consumers with its low product prices, but after all, "you get what you pay for", and the quality problems of these low-priced products in turn became the reason why consumers gave up the Wish platform.

In recent years, Wish has been repeatedly accused of selling dangerous, counterfeit and illegal products, which led to French authorities ordering major search engines and app stores to remove the platform last year. According to data from SimilarWeb, France is Wish's third largest traffic market. Wish's "ban" in France has led to a sharp decline in platform traffic and a plunge in sales of third-party sellers.

In addition to being accused by consumers, sellers on the Wish platform have also complained about the platform. Sellers are miserable due to high fines, frequent account suspensions, frozen funds, and a sharp decline in traffic. Some sellers even joked that the Wish platform makes profits from fines!

As the number of active buyers and third-party sellers decreases, Wish's stock price has fallen again and again. At the beginning, its IPO price was $24, but the opening price was only $22.75. In February last year, the stock rebounded to a record high of $31.19. Today, Wish's stock price has fallen to less than $2 per share.

Under such circumstances, Wish's revenue and net profit are also declining. According to Wish's latest financial report, its revenue in the first quarter was US$189 million, a year-on-year decrease of 76%; its core market revenue was US$90 million, a year-on-year decrease of 81%.

At the same time, the losses of the Wish platform are also increasing. It is reported that its net loss in the first quarter was US$60 million, a year-on-year increase of 53%; the net loss per share was US$0.09, while the loss per share in the first quarter of fiscal year 2021 was US$0.21.

With continued losses, does Wish still have a future?

In the case of continued losses, Wish's future seems precarious, but Yienjun found that Wish's cash flow debt amount seems to be decreasing.

In the first quarter of 2022, Wish's free cash flow was negative $148 million, compared with negative $354 million in the first quarter of fiscal 2021. Currently, Wish still has $1 billion in cash, cash equivalents and marketable securities.

Wish is trying to get out of trouble. As the number of active shoppers shrinks, Wish is reducing marketing expenses to stabilize losses, and its CEO Vijay Talwar is also focusing on narrowing Wish's losses to adjust the scale of its business and improve free cash flow.

At the same time, Wish is also allocating more cash to provide subsidies to premium merchants on the platform and expand its logistics capabilities. Recently, Wish has also integrated more video features (such as Wish Clips) into its marketplace to help platform sellers make sales.

As the capital turnover speeds up, Wish revealed in its financial report that it will increase advertising spending two months earlier than planned to increase the popularity of the Wish platform. Some professionals predict that Wish will not go bankrupt soon, and its low valuation limits its downside potential.

Vijay Talwar is still very optimistic about the future of Wish. He said: "We have seen the progress of our transformation in just a few months, including a doubling of NPS (word of mouth) and a reduction in refunds after delivery. These encouraging signs give us confidence that consumers will return to the Wish market as we begin to increase advertising spending in June."

Vijay Talwar also revealed that they plan to launch exciting new initiatives in the coming months, including the launch of women's fashion categories and the reshaping of the Wish brand. Whether Wish can turn losses into profits and return to its glory days in the future remains to be seen.

Wish

Commission, Policy