By Greg Bensinger
On the smartphone shopping app Wish, everything is a bargain: A
$2,470 man's watch for $69! A $399 waterproof Wi-Fi camera, just
$89! $229 stilettos for the low, low price of just $32!
Prices like those are attracting users to San Francisco's Wish,
an online bazaar for cheap, unbranded clothes, jewelry, smartphone
cases, shower heads and other products, most of them sent directly
from China.
Call it the anti-Amazon. While the Seattle-based e-commerce
giant is spending heavily to speed delivery to as fast as one hour,
Wish's vendors pledge to get their goods to customers in weeks, and
sometimes overshoot that deadline.
Nearly 100 million free accounts have been registered, triple
last June's total. Today, the app offers roughly 40 million items
from about 100,000 merchants.
Investors are buying in, too. Parent ContextLogic Inc. recently
closed a roughly $500 million funding round from Russia's DST
Global, and previous investors including GGV Capital and Founders
Fund, said people familiar with the matter. The funding valued the
company at over $3 billion, they said, up from about $400 million
in June.
By comparison, flash-sale online retailer Zulily Inc. sports a
market capitalization of $1.7 billion,and shopping-mall fixture
American Eagle Outfitters Inc. is valued at $3.1 billion.
"It's clear there's a market for buying goods directly from
China," said Richard Last, senior director of the University of
North Texas Global Digital Retailing Research Center. Wish has
succeeded so far, he said. "The question will be whether they can
maintain the products' quality and reliability of the customer
service as they continue to get bigger--something eBay had to work
through as it got bigger."
Much like eBay Inc., Wish is a pure marketplace where sellers
handle shipping, meaning Wish has no inventory and less overhead.
It takes a 15% cut of each sale.
The company, which has about 400 employees, declined to disclose
financial data, but executives say it plans to pursue an initial
public offering, though the timing isn't clear.
"Where else can I find a new shirt for $4?" said 31-year-old
Wish user Kristina Lampasi, of Gibsonia, Pa., who downloaded the
app after seeing ads for it on Facebook, one of Wish's primary
marketing vehicles. "It's not great quality, but for the money it's
pretty amazing."
She said she had spent about $100 in the past couple of months
buying blouses, T-shirts and hoodies on the mobile app, all of
which took a few weeks to arrive. That isn't unusual. The app's
merchants say it will take 33 days to deliver a $3 stainless-steel
quartz watch or 22 days for $10 aviator-style sunglasses. The
maker's identity is often unknown.
Wish executives say their marketplace has an advantage over some
competing platforms in that it isn't an attractive place for
would-be hawkers of counterfeit goods. That is partly because Wish
sells mostly no-name products and has only a limited inventory of
authentic brands that can serve as a price comparison, its
executives say.
But Mr. Last said that as Wish becomes larger, with more
inventory, it may prove more difficult to ensure knockoffs don't
get listed.
Indeed, a pair of apparent Nike Air Max knockoffs--minus the
familiar swoosh--were listed for $80 on Wish, compared with over
$100 for the real thing on other sites.
Former Google Inc. engineers Peter Szulczewski and Danny Zhang
co-founded Wish in 2011 after their advertising-technology startup
failed. The app grew out of a concurrent project aimed at improving
recommendations for shopping on mobile devices.
Mr. Szulczewski, 33, said he hoped to help shoppers find goods
they didn't know they wanted, akin to browsing in a shopping mall.
Wish relies on an algorithm that recommends goods based not only on
what consumers buy, but also on what they view and ultimately
reject.
Hans Tung, managing partner of GGV Capital, said the
recommendation software was a primary reason his venture-capital
firm invested in the company.
"If you're shopping on your phone, you want to be able to make
quick decisions, without a lot of hunting around," he said. Mr.
Tung said Wish this year released two new shopping apps, Geek and
Mama, targeting gadget buyers and new mothers.
Wish isn't the only retailer taking on Amazon.com Inc.'s
reputation for low prices. Startup Jet.com Inc. is promising prices
10% to 15% below competitors for name-brand items when it launches
later this year. Web retailer LightInTheBox Holding Co. reported
$382 million in sales of direct-from-China merchandise last year,
up 31% from a year earlier, though its loss widened to $30
million.
Mr. Szulczewski said Wish vendors are free to price goods and
make claims about discounts as they see fit. "The majority of our
merchants are honest about their pricing," he said. "But it's up to
the consumer to decide if the price seems too good to be true."
Merchants say the app gives them instant access to customers
world-wide. James Wang said he sells $200,000 of goods a month
through Wish, since opening a store in the app in November. "Wish
has found a way to recommend the right items to users when they
open the app," he said from his office in Yiwu, China, near
Hangzhou. "Buyers on eBay and Amazon always choose the lowest
price; maybe that's not what they really want."
Junny Yu, chief executive of Yiwu Yan Kun Electronic Commerce
Ltd., said she sells $1 million a month of jewelry, clothes and pet
supplies via Wish. About 65% of the company's sales are to the
U.S., 15% to the U.K. and 10% to Australia.
Both vendors said they use the U.S. Postal Service's ePacket
program, which cuts shipping costs by processing goods overseas
before they are sent to the U.S. In many cases, it can cost no more
to ship a package to the U.S. from China than from elsewhere in the
U.S.
"Frankly, I like the idea that I can buy a shoe that kind of
looks like a Nike, but isn't priced like one," said Rob Chandra,
the 49-year-old CEO of investment firm Avid Park Capital, Palo
Alto, Calif. "I don't really need a brand on my socks, so why pay
for that and why pay that?"
Like many users, he said the low prices help justify having to
wait nearly a month for delivery. Over time, however, that might
prove to be a liability for Wish, as Amazon and others shrink
delivery times.
Some customers, such as Nina Heaney of Hillsville, Pa., complain
that Wish vendors fail to meet even their unambitious shipping
promises. She said she got only half the items she ordered in
February and had to wait nearly six weeks for them to arrive.
A leather journal was "pretty nice, but I probably won't buy
from them again, because it is just not worth waiting a month and a
half," she said.
Mr. Szulczewski said Wish is experimenting with warehouse space
in the U.S., Europe and China with limited inventory to cut
shipping times.
Competing with far-off vendors has been good for iMerchandise
LLC of, Centerbrook, Conn., which sells licensed T-shirts under the
Old Glory brand on Wish. Old Glory gets about $30,000 a month, or
about 20% of its sales, through the app. About 40% of its sales on
Wish now go to international buyers, said Nick Mari, who helps
oversee the company's e-commerce strategy.
"None of this would have been possible if we weren't on Wish,"
he said.
Write to Greg Bensinger at greg.bensinger@wsj.com
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