The pain period was too long, and the former "king" suffered another huge loss of 575 million

Last week, Amazon, Wish , Wayfair, Etsy and other North American e-commerce giants released their second quarter financial reports. Amazon is still the undisputed leader, with Q2 net sales of $134.4 billion and net profit of $6.7 billion, turning losses into profits compared with the same period last year, and net sales also increased.

But compared to Amazon, Wish, once one of the "Four Heavenly Kings" in the cross-border circle, and other American e-commerce giants are not having such a good time.

Wish continues to lose $80 million in Q2, and is going to lay off 34% of its employees

This year marks the 14th year of Wish. As a veteran player in the cross-border e-commerce market and the "pioneer" of the US sinking market, it seems as "down and out" as it once was.

In the second quarter performance data ending June 30, 2023 , Wish 's revenue still showed a significant decline.

According to the financial report, Wish 's total revenue in the second quarter was US$78 million, a year-on-year decrease of 42% . Among them, the core market revenue was US$24 million, a year-on-year decrease of 56%; Product Boost revenue was US$6 million, a year-on-year decrease of 45%; logistics revenue was US$48 million, a year-on-year decrease of 30%.

With the revenue decline rate remaining high, you can imagine the profit impact.

According to the Q2 financial report, Wish's net loss for this quarter is still high, reaching $80 million, which is equivalent to about 575 million RMB at today's RMB exchange rate . Although compared with the net loss of $90 million in the same period last year , the loss has decreased by $10 million, but the situation is still not optimistic .

Under normal circumstances, starting from the second quarter, the number of cross-border e-commerce orders will increase compared to the first quarter. However, compared with the total revenue of US$96 million in the first quarter, Wish continued its downward trend in the second quarter, and its net loss only decreased by US$9 million (net loss of US$89 million in the first quarter).

As far as the first half of this year is concerned, Wish 's revenue is still unsatisfactory . In the first half of 2022, Wish's revenue reached US$323 million, while in the same period this year it was only US$174 million, a year-on-year decrease of 46%; its net loss also increased from US$150 million to US$169 million.

The downward trend is difficult to reverse, but Wish is still actively trying to save itself.

Wish CEO Joe Yan said that in order to cope with the challenges of the macro environment and achieve long-term development, the company is significantly reducing its cost structure and improving operational efficiency.

Therefore, Wish announced a restructuring plan in the third quarter when it released its financial report , and 34% of the company 's employees will be laid off in terms of team structure . It is expected that starting from the fourth quarter of 2023, layoffs will save Wish $ 43 million to $46 million in operating costs each year.

At the same time, Wish is now in urgent need of transformation due to the losses caused by its early crazy pursuit of sinking markets, lack of branding, uneven product quality, and delivery time .

In terms of business, Wish has repositioned itself precisely, focusing on target customer groups, regional markets , key categories , shopping experience , etc. For example, in terms of customer groups, compared to the surging "Z generation", Wish focuses more on the "millennials" and "X generation" accumulated by the platform .

In terms of logistics, the delivery time of goods in Wish’s core markets is currently stable at around 15 days. Not long ago, Wish also reached a cooperation with Singapore Post in Australia. Couriers, an Australian subsidiary of Singapore Post ,   Please will be responsible for the import customs clearance of goods on Wish and provide terminal delivery services.

Joe Yan pointed out that the average home delivery time in Wish's six major markets has been shortened by six days compared with last year . The on-time delivery rate this quarter reached 91%, the customer order cancellation rate decreased by 47% year-on-year, and the customer refund rate decreased by 30% year-on-year .

In terms of market layout, Wish will also focus more on other markets. In March this year, French regulators cancelled the delisting measures against Wish , allowing Wish to return to the French market .

Can Wish successfully survive this long "painful period"? How long will it take to get out of the haze? The answers are unknown. But the current market difficulties and increasingly fierce competition are obvious to all. Not only Wish, but many American e-commerce giants besides Amazon are going through a "disaster".

Active buyers have lost nearly 2 million, and Wayfair is still in deep debt crisis

Before Wish, American home furnishing e-commerce giant Wayfair released its second quarter financial report this year .

Wayfair's revenue is also declining. The financial report shows that Wayfair's net income in the second quarter was 3.2 billion US dollars , which was 14.3% higher than the first quarter , but 3.4% lower than last year . Fortunately , its revenue in the main US market did not fluctuate much, with net income of 2.8 billion US dollars, down only 0.4 % year-on-year. However, the international market is not optimistic, with net income of 386 million US dollars, down 20.9% year-on-year.

Not only is revenue declining, but Wayfair 's active buyers are also losing at an accelerated rate. It is reported that Wayfair had 21.8 million active customers in the second quarter, a year-on-year decrease of 7.6% , and the loss trend over the past few quarters has not eased .

Fortunately, Wayfair 's loss situation has improved significantly.

The financial report shows that Wayfair's net loss in the second quarter was $46 million, compared with $378 million in the same period last year , a significant reduction in losses. For the first half of the year, Wayfair's loss this year was $401 million, but it was as high as $697 million in the same period last year.

The reduction in losses is closely related to the increase in order volume and the reduction in costs .

Wayfair delivered more than 10 million orders in the second quarter , up 3% year-over-year . Although the number of orders per customer decreased slightly (this year: 1.82, last year : 1.85 ), the proportion of repeat orders increased, accounting for 80.1% of all orders ( last year : 78.6% ) , reaching 8.3 million.

Cost of goods sold fell 8.4% to $2.2 billion.

As a result, Wayfair 's gross profit reached $985 million in the second quarter , an increase of nearly 10%, with a gross profit margin of 31.1% . This gross profit margin level was only achieved by Wayfair during the peak of the epidemic in 2020.

So, will Wayfair continue its upward trend in the second quarter in the coming period?

At a time when demand for home furnishings in the United States is slowing down and market competition is becoming increasingly fierce, IKEA announced earlier this year that it would invest $2.2 billion to open new stores and strengthen its distribution network in order to boost omnichannel growth in the United States .

In addition, after Overstock acquired the veteran home furnishing giant BedBath&Beyond , it renamed its e-commerce website to BedBath&Beyond and plans to expand its product categories to provide furniture and other home product categories such as carpets, lighting and decorations .

Wayfair 's competitors are not letting up for a moment .

Although Wayfair's losses have improved, its debt situation is still very serious. Excluding the profit from the $1 billion debt amortization, Wayfair's net loss is still as high as $146 million, and its operating loss is $142 million . If Wayfair wants to get out of its financial predicament , it still has a long way to go .

In conclusion:

Consumption is lower than in previous years, and consumers prefer low prices. In the cross-border e-commerce market where internal competition is intensifying, the giants are fighting more fiercely.

Previously, a report from FTI Consulting stated that by 2023, Amazon alone is expected to account for 50% of the entire US e-commerce market share , while the remaining 50% will be divided up by eBay , Walmart, Etsy, etc. In this food grabbing competition, how much can the former king Wish, home furnishing giant Wayfair, and newcomer Temu grab?

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