Wish is being abandoned by sellers!

Wish is known as the American version of Pinduoduo, but unlike Pinduoduo, which has been rising rapidly, Wish is on the decline. The stock price fell sharply on the first day of listing, the stock price continued to fall, and the active users continued to lose... All of this conveys a message: Wish is no longer as glorious as it once was.

Although Wish is a cross-border e-commerce platform launched by American companies, 90% of its sellers are from China. A large number of Chinese sellers sell goods to overseas consumers through this platform and make a lot of money.

In the past, when Wish was mentioned , sellers always complained about it. Fines, freezes, logistics delays, each of which could become a point of complaint for sellers. However, as one seller said, although there are many complaints, it is undeniable that selling goods on it is still very attractive. However, since the second half of last year, these voices have gradually disappeared, and the feeling in various Wish communication circles is only two words: "silence". Behind the silence, many sellers have abandoned this platform.

Some people even say that if it weren’t for the recent release of its fourth-quarter 2021 financial report, which has led to increased discussion, they would have almost forgotten about the platform.

Why has Wish come to this?

In fact, Wish knows its own problems better than anyone else. Since the end of last year, it has also taken a lot of actions, including launching a rating system, implementing a merchant invitation system, and withdrawing from non-core markets...

With a series of measures, can it return to its former glory? As one of the four major cross-border e-commerce platforms, where will it go in the future?

Sales volume plummeted, and a large number of sellers fled

For Li Yuan (pseudonym ), it is becoming increasingly difficult to do business on Wish, and he has basically given up on this business. For sellers, sales are everything, and a store without sales is meaningless. Therefore, with sales continuing to fall, he has rarely invested in this platform.

Li Yuan, who started to work on Wish in 2014, is a well-deserved veteran seller. He once did very well here, with a considerable number of orders. In the best year (2018), he achieved sales of more than 3 million US dollars, an average of more than 250,000 US dollars per month. However, the peak soon dropped, and after 2019, their sales continued to decline. Until now, the monthly sales are only more than 20,000 US dollars, a 1250% drop compared to 2018. The sales volume can be said to be one world apart.

For sellers, sales volume is paramount, and platforms that can no longer generate orders will have to be abandoned, so now Wish has basically become a discarded child for Li Yuan.

Like Li Yuan, Xiamen seller Zhang Si (pseudonym) feels that Wish has low traffic, inactive buyers, and is as quiet as a pool of stagnant water. This situation is a huge blow to sellers.

Zhang Si said that their order volume has also experienced a big decline. According to him, when things were good before, the annual GMV was still very ideal, and a single link could easily make dozens or even hundreds of orders a day, but now it is considered good to have double-digit GMV.

They are not the only ones who have been hit hard by the decline in order volume:

“——This platform is so inappropriate. Now there are only 6 orders a day at most. Although it looks like there are orders, it may be a loss;

——There was only one order in a month, and they were fined all the time, which was very boring;

——The sales are terrible, it’s too difficult to handle. I started doing this in 2015, but gave up after the Chinese New Year last year. ”

Faced with the increasingly depressed platform, some sellers have become indifferent to orders, just running their stores and sending orders as soon as they are received. Some have begun to reduce their investment, but more have simply abandoned the platform, transferred resources, and invested their energy, manpower, material and financial resources into other platforms.

Wish's penalty system and logistics have always been the most criticized by sellers. But as long as the lifeline (order quantity) is guaranteed, other fines, logistics delays and other issues are not enough for them to escape.

Traffic = order volume. But unfortunately, Wish is losing active users. As of the end of 2020, Wish's monthly active users (MAU) had reached 107 million. But its MAU was lost throughout 2021, with only 60 million at the end of the third quarter and only 44 million in the fourth quarter, a year-on-year decrease of 58%. As of the end of 2020, Wish also served 64 million last-12 month (LTM) active buyers, but by the third quarter of 2021, only 46 million were left, a year-on-year decrease of 32%. In the fourth quarter, this figure dropped to 38 million, a year-on-year decrease of 41%.

In its third-quarter 2021 financial report, Wish attributed its continued loss of active users to reduced spending on digital advertising. Indeed, both feedback from sellers and observations on social media such as Facebook, Twitter, and Instagram indicate that its efforts to attract new users are weakening. "It's rare to see Wish ads on Twitter now," a seller told En.com.

But Wish has been established for more than 10 years. Under normal circumstances, it would have a certain degree of brand awareness and accumulated users. Even without advertising, active users would not be lost so quickly.

In fact, the current situation is caused by its genes.

As we all know, low prices are Wish's weapon. In the early days, Wish relied on this weapon to be invincible among low-income groups and quickly gained a considerable market share. But over the years, it has also been hurt by this weapon.

"Shopping on Wish is risky. The $30 iPhone you see there is almost certainly not made by Apple. You are unlikely to find big companies selling on Wish. Earphones and USB cables bought at a low price may work, but they may not be as sturdy and durable as more expensive products. And you should think twice before buying anything that requires customer support, such as a tablet or smartwatch." It is not difficult to see from what this overseas consumer said that in their eyes, the low price card played by Wish represents poor quality and fakes.

Not only that, Wish's extremely low entry threshold also posed a hidden danger. The large number of sellers gathered on the platform are a mixed bag, and some of them are not really doing business, but are using fraudulent means (such as not shipping, misleading consumption, etc.) to make money quickly.

A questionnaire survey indirectly confirmed this problem. Among the more than 16,000 people who participated in the survey, 23% said that the goods they received were not what they expected.

We often see news like this in foreign media: Is Wish legal? Is Wish a scam? This also proves that overseas consumers do not trust it.

How can a platform that sells inferior and counterfeit products, and may also fall into fraud traps, attract consumers?

Of course, Wish’s problems go far beyond this.

Net profit has been in the red for years, and the stock price has plummeted

In fact, Wish did not reach its current result in one step. Many sellers reported that their order volume has been declining since 2019. Some data also show clues of its decline.

As we all know, the COVID-19 pandemic has taken online shopping to a new level. More and more overseas consumers have shifted from offline stores to online shopping. In this process, many cross-border e-commerce platforms have reaped the benefits and their performance has soared. However, in such a good situation, Wish's performance is not ideal.

For example, the unicorn Amazon saw both revenue and net profit soar in 2020 and 2021 , with full-year revenue of $386.064 billion in 2020, up 37.6% year-on-year, and $469.8 billion in 2021, up 21.7% year-on-year. Net profit growth is even more evident, with full-year net profit of $21.331 billion in 2020, up 84.1% year-on-year, and $33.364 billion in 2021, up 56.41% year-on-year.

eBay, once the king of cross-border e-commerce platforms, has been on a downward trend in recent years, but it has reversed the decline in revenue and net profit growth in the past two years. Its full-year revenue in 2020 was US$8.894 billion, a year-on-year increase of 19.72%, and in 2021 it was US$10.420 billion, a year-on-year increase of 17.16%. The growth in net profit was even more amazing, with its full-year net profit in 2020 being US$5.667 billion, a year-on-year increase of 217.3%, and in 2021 it was US$13.608 billion, a year-on-year increase of 140.13%.

However, Wish, one of the four major cross-border e-commerce platforms, has stalled. Although its full-year revenue in 2020 was US$2.541 billion, an increase of 33.67% over 2019, the situation in 2021 changed suddenly, with full-year revenue of only US$2.085 billion, a year-on-year decrease of 18%. Net profit was even more disappointing. Compared with negative US$129 million in 2019, the full-year net profit in 2020 expanded to negative US$745 million, a year-on-year decrease of 477.52%. Although the loss narrowed in 2021, it was still negative US$361 million.

Net profit is the ultimate result of a business's operations . Judging from Wish's net profit over the past three years, its operating efficiency can only be described as appalling.

Generally speaking, a company that controls operating expenses should have a stable or expanding gross margin, so that its net income will increase as operating expenses no longer erode gross profit. But Wish does not have that . Data shows that its gross margin fell from 76.7% in 2019 to 62.7% in 2020, and then fell again to 53.1% in 2021. Wish attributes this continued decline mainly to rising logistics costs , which continue to exceed its revenue despite the company's reduction in sales and marketing expenses.

At the same time, Wish is consuming cash at an increasing rate. In 2020, its free cash flow was negative $2 million, which quickly expanded to negative $953 million by the end of 2021. As more consumers leave, this rate may accelerate.

This series of difficulties is also directly reflected in its stock price. At the end of 2020, Wish's parent company ContextLogic successfully listed on the Nasdaq and set the IPO price at US$24 per share. However, its stock price fell below the issue price on the first day of listing, a sharp drop of 16.4%. At that time, it was stated that it was normal for the market to fluctuate accordingly in the first few days and weeks of trading.

But more than a year later, the fact we see today is that its stock price has been falling since the date of issuance. As of March 16, it closed at only $1.99 per share. During this process, only the monthly K-lines in January and June 2021 closed in the red.

Whether it is the stock price, net profit or monthly active users, it is not difficult to see that Wish has fallen into deep danger and is struggling. Fortunately, it did not give up, but took a series of measures.

A heroic act of self-sacrifice

Since the end of last year , Wish has been trying to save itself. So far, it has adopted three main measures:

1. Improve the quality of sellers and strive to change the "cheap" impression

Since its birth, the label of "cheap" has been with Wish for more than ten years. It is said that there is a chain of contempt in the cross-border e-commerce seller circle. Those who do Amazon look down on those who do eBay, and those who do eBay look down on those who do Wish. Wish ranks last, which is also related to this label.

It is undeniable that the word "cheap" has attracted a large number of consumers to Wish, but it has seriously hindered the development of the platform. Last November, Wish was removed from the French market due to "non-compliant and illegal products", which further confirmed this point. Nearly half of Wish's core market revenue comes from Europe. If other countries follow France's example, it will be a disaster for Wish.

Therefore, the first task for Wish to save itself is to break through this "cheap" constraint. To this end, it launched two measures:

First, in November last year , Wish launched the "Wish Standards" program to encourage high-quality merchants who provide high-quality products and user experience. The program will evaluate merchants from multiple dimensions such as product quality, shipping experience, customer reviews, refund rate, and compliance with Wish policies, and give more exposure to merchants that meet the standards.

Secondly, Wish suspended self-registration in February this year and implemented an invitation-only system. Starting from February 2, new sellers who want to sell on Wish will need to participate in a "multi-step qualification certification process" (invite-only).

The two actions clearly show that the "invite-only" system blocks the influx of low-quality sellers from the source, and the "Wish Standards" plan clears out low-quality sellers. Because in this plan, the Wish Standards levels of all sellers are divided into platinum, gold, silver, and bronze. The lowest-ranked "bronze" sellers have very limited traffic. If they do not place orders for a long time or the number of orders is very small, these sellers will withdraw. For example, those sellers who spread goods and commit fraud are one of them.

According to feedback from sellers, a group of bronze sellers have already left the market, and the large number of sellers who left the market mentioned above include some bronze sellers.

2. Reduce the size of the business and focus on key markets

Platforms including Amazon are actively exploring new markets, especially in the context of the gradual saturation of the European and American markets. Wish is no exception, having already completed the layout of more than 100 markets. However, if there is not enough operational strength to support it, the platform will be over-expanded and will backfire.

Therefore, in January this year , Wish made a decisive statement that from March 1, it will withdraw from 79 countries (or regions) where value development for the platform and merchants still requires time , and focus on the development of 61 core and key emerging markets such as the United States, Germany, the United Kingdom, France, Italy, Brazil, Japan, and South Korea .

3. Terminate the lease, reduce staff, and reduce costs

Layoffs are often the first choice for companies to reduce costs. Although the method is simple and crude, it is undeniably effective. When Wish was in trouble, it also chose this method.

On February 24 of this year , Wish launched a restructuring plan, which included reducing the company's headcount by approximately 15% (approximately 190 positions), exiting various facility leases, and reducing and adjusting supplier spending.

Although Wish will spend a maximum of approximately $21 million on employee severance and other staff reduction costs, it will reduce annual costs by $32 million to $37 million.

Surrounded by wolves and under external pressure

Catalysed by the epidemic, the global e-commerce market has developed rapidly. Changes in consumer lifestyles will have a direct impact on the growth of cross-border e-commerce retail. The " 2021 China Cross-border E-commerce Development Report" shows that between 2019 and 2020, the overall e-commerce retail sales in major countries in Europe, America and the Asia-Pacific region experienced a rapid growth of more than 15%.

As the center of the global supply chain, China's cross-border export e-commerce is also rapidly catching up. According to iiMedia Research data, China's cross-border export e-commerce is expected to reach 1.97 trillion yuan in 2022 and 2.45 trillion yuan in 2023.

Under the general trend, some new platforms have made their debut with the help of capital. For example, Voghion, a cross-border e-commerce platform headquartered in Singapore , was launched in 2021. In China, last year, companies including giants such as Alibaba and ByteDance also launched cross-border e-commerce independent station projects such as AllyLikes and Fanno. Like Wish, their main markets are aimed at Europe and the United States.

Although the competition among platforms is not a fight to the death or an either-or situation, as fans of a certain independent website, it does not prevent them from going to other platforms to have a look. However, there are definitely differences in the size of the market share, and the demand is limited. If there are too many people, the share they get will naturally be less.

Moreover, as of now, the development momentum of these new platforms is not weak. Take Voghion for example, it ranked among the top 10 in terms of downloads in the European market only one month after its launch.

It seems that Wish is facing a lot of external pressure. Under normal circumstances, it would be difficult for Wish to cope with it, not to mention that it is now in a difficult stage of losing users.

What's more, in addition to these emerging platforms, there are also two big mountains, eBay and Amazon, pressing ahead. The market environment is changing rapidly, and it is difficult to guarantee that Wish's market share will not be eroded in the process of self-rescue. After all, in the capital market, examples of "taking advantage of your illness to kill you" are not uncommon.

In addition, after last year's Amazon account suspension incident, cross-border e-commerce sellers have accelerated their pace in finding new markets and new platforms, which is likely to increase the loss of Wish sellers. Sellers, platforms, and consumers are a closed loop. If there are problems in the seller link and product supply is reduced, it will not be long before consumers are lost, especially the loss of high-quality sellers, which will have a greater impact.

The current cross-border e-commerce industry is sending a signal: the market environment is becoming more and more mature. Statistics show that in 2019, the global cross-border online shopping penetration rate has reached 51.2%. Not only that, the attitudes of countries around the world towards cross-border e-commerce are showing a trend of standardization. For example, last year, the United States and the European Union respectively released the "Counterfeit and Piracy Market Review Report" and the Tax Reform Report, which further proposed compliance requirements for cross-border e-commerce products in terms of copyright, authenticity and taxation.

In this case, it is particularly important for the platform to find a sustainable development model. At this time, Wish was determined to change its previous rough development model and vigorously improve the quality of sellers. It can be said that it was due to pressure, but it was also in line with the trend.

On February 1 this year , Wish's new CEO and board member Vijay Talwar took office. "Major changes" in the way of operation are also being implemented one by one. I hope that after these drastic actions, Wish can usher in a new life. After all, for Chinese sellers, one more high-quality platform means one more good way to make money overseas, so why not?

Wish

Cross-border e-commerce platform