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Revolutionizing Mobile-First E-commerce: Wish’s Algorithmic Feed

Wish: Revolutionizing Mobile-First E-commerce through an Algorithmic Feed

In today’s digital age, mobile-first e-commerce has been made possible through the innovation of Wish, a San Francisco-based online shopping platform with over 100 million active users. With its extensive selection of products at low prices, Wish has become an attractive option for bargain seekers worldwide.

However, many have questioned the quality of its products and the long delivery times. In this article, we will take an in-depth look at the workings of Wish, its history, and its revenue model while highlighting some of the problems associated with the platform.

How Wish Works

Wish is a two-sided marketplace where merchants from around the world can sell their products to buyers on the platform. The site has an algorithmic approach to sales where users are presented with products based on their browsing history.

This real-time data is collected and analyzed to predict user interests, which helps the platform to suggest and push relevant products. The Wish app has an intuitive interface with filters that allow users to search for products based on category, color, size, and price.

Once a user selects an item, they are redirected to a merchant page where they can view product details, including ratings and reviews. Wish offers low prices by working with international sellers, who can sell their goods at a discount due to lower production costs.

Additionally, Wish charges a sales fee of 15% to merchants for products sold on its platform.

History of Wish

Wish was founded in 2010 by Peter Szulczewski, a former Google engineer, and Danny Zhang, a former programmer for Yahoo! The initial idea for the platform was to create a social media application that allowed users to create wish lists, where friends and family could purchase desired items. However, after initial testing, the founders decided to pivot the concept towards an e-commerce platform that provided an alternative to high-priced retail shopping.

Wish’s innovative approach to advertising, using Facebook to target its users, allowed the company to grow rapidly. In 2012, the platform reached a user base of 100,000, and just four years later, it had over 500 million transactions on the platform.

As of 2021, Wish had surpassed 100 million monthly active users worldwide.

Problems with Wish

Wish has faced significant criticism from users and merchants alike due to the quality of its products and long delivery times. One of the primary concerns is the prevalence of counterfeits and knockoff products on the platform.

As international merchants can sell on Wish, the lack of oversight in product quality has been a significant issue. Furthermore, Wish uses a review system that is open to abuse from fake reviews, which can affect buyer trust.

Additionally, due to the merchant’s fulfillment process, delivery times are often lengthy and unpredictable. Low-priced items from international sellers can take up to several weeks or even months to arrive.

This prolonged delivery time has led to frustration and negative reviews, damaging the brand’s reputation.

Revenue Model of Wish

Wish operates as a two-sided marketplace revenue model, where the platform takes a percentage of each transaction. The company generates revenue through sales fees, commission on merchant services, and additional merchant services.

Wish charges a sales fee of 15% to merchants for each product sold on the platform. The commission on merchant services includes fees for account management, payment processing, and advertising.

Wish offers additional merchant services, such as Fulfillment by Wish, Wish Express, and ProductBoost, to improve the seller’s experience. Fulfillment by Wish provides warehousing services for merchants and ensures quick and reliable delivery times.

Wish Express is a shipping program that provides faster delivery times. ProductBoost is a paid advertising tool that allows merchants to increase their product visibility on the platform.

Conclusion

Wish has revolutionized mobile-first e-commerce through its algorithmic approach to sales and extensive selection of low-priced products. However, the platform still faces several challenges, such as product quality issues and long delivery times.

Wish’s revenue model is based on a two-sided marketplace, generating revenue through sales fees, commission on merchant services, and additional merchant services. Wish aims to improve the seller’s experience by offering merchant services such as Fulfillment by Wish, Wish Express, and ProductBoost.

Wish continues to innovate and improve its platform, making it a primary contender in the world of mobile-first e-commerce. With its ongoing effort to address its shortcomings, Wish is paving the way for a new era of affordable shopping accessible to millions worldwide.

Funding, Valuation, and Revenue of Wish

Venture Capital Raised by Wish

Wish has raised multiple rounds of investment, with the majority of funding coming from venture capitalists. The first investment round occurred in 2011, where the company raised $1 million from Start Fund and SV Angel.

Other notable investors include Founders Fund, GGV Capital, and DST Global.

In 2015, the company raised $500 million in a funding round led by e-commerce giant Alibaba, valuing the company at $3.5 billion.

As of 2021, Wish has raised a total of $2.3 billion in funding and is now valued at over $8 billion. Wish’s IPO

The year 2020 saw the initial public offering (IPO) of Wish, which was one of the most highly anticipated floatations.

The company went public on December 16, 2020, under the ticker “WISH,” offering 46 million shares at $24 per share. Wish’s IPO had a market valuation of $17.1 billion, which was below its private market valuation of $19 billion.

The lower valuation was due to concerns over the company’s financial performance and its heavy reliance on low-priced goods from international sellers.

Wish’s Revenue and Net Loss

Wish’s financials for fiscal year 2019, released in the company’s IPO prospectus, showed revenue of $1.9 billion, representing a YoY increase of 10%.

Wish operates as a two-sided marketplace, generating revenue through sales fees on products sold on the platform. The company reported a commission revenue of $402 million, representing a YoY increase of 24%.

Despite this growth, Wish also reported a net loss of $129 million, which was a decrease of 34% from the previous year. One of the primary drivers of this loss was the company’s heavy investment in marketing and advertising to expand its user base.

The company’s financials also showed high operating expenses, including fulfillment expenses and general administrative expenses, which totaled $1.45 billion, representing a YoY increase of 14%. However, Wish’s prospectus reported that the company had reduced its fulfillment expenses to 70% of its revenue in fiscal year 2019, down from 92% in the previous year.

While Wish’s financials have shown signs of growth, the company’s revenue streams and high operating expenses put it under pressure to improve profitability.

Conclusion

Wish has raised multiple rounds of investment from venture capitalists, valuing the company at over $8 billion. The platform went public in 2020 with a market valuation of $17.1 billion.

While the company has shown revenue growth, it has struggled with profitability due to high operating expenses, including marketing and advertising costs.

Wish continues to innovate and expand its platform, offering additional merchant services to improve the seller’s experience.

As the platform strives to address concerns such as product quality and delivery times, it is positioned to become one of the leading players in the mobile-first e-commerce market. In summary, Wish is a mobile-first e-commerce platform that operates as a two-sided marketplace, generating revenue through sales fees, commission revenue, and additional merchant services.

The company has faced criticism over long delivery times and concerns regarding the quality of its products. Despite this, Wish has raised over $2.3 billion from venture capitalists and went public in 2020 with a market valuation of $17.1 billion.

While the company has shown revenue growth, profitability remains a challenge due to high operating expenses. Wish continues to innovate and expand its platform, paving the way for a new era of affordable shopping accessible to millions worldwide.

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