wish-business-model

Wish Mobile E-commerce Platform Business model

Wish is a mobile-first e-commerce platform in which users‘ experience is based on discovery and customized product feed. Wish makes money from merchants’ fees and merchants’ advertising on the platform and logistic services. The mobile platform also leverages an asset-light business model based on a positive cash conversion cycle where users pay in advance as they order goods, and merchants are paid in weeks.

The framework used for the analysis

The VTDF framework is the basis of the analysis.

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Origin Story

Former Google engineer Peter Szulczewski joined the company back in 2004 as an intern, and there he stayed, in the California office until 2007. In 2007, he moved to South Korea, whereas Forbes explains he learned a lesson in how mobile e-commerce looked like. Rather than the clean, minimalist style so much loved in the Valley. Koreans preferred portals crowded with information, which looked more like a bazaar than a temple.

This lesson would prove extremely valuable, as we’ll see to shape Wish’s experience, a mobile e-commerce platform that is all except clean or minimalist, with elements of gamification and personalization all across the platform.

By 2009, Szulczewski, with enough money to live off for a couple of years, coded an application that would match a user with potential product advertising based on the same browser history. He would call “ContextLogic” (which name would stick, as ContextLogic Inc. is the corporation behind Wish).

By 2010, Szulczewski would get the first round of investment from Yelp CEO Jeremy Stoppelman. Yet, the idea at the beginning was all about advertising and how to track users at the point of offering a customized advertising experience and potentially compete with Google.

Only afterward, by 2011 Szulczewski, had his friend Zhang join as co-founder, he would shift focus toward mobile e-commerce. And the idea didn’t seem that great, given that would mean competing with giants like Amazon.

By 2011, as Szulczewski got an offer from Facebook‘s Zuckerberg to buy its technology, ContextLogic, for $20 million, as reported by Forbes, Szulczewski refused the offer, which upset investors and risked putting an early end to his venture.

Then by 2011, the embryonic version of Wish, which at the time was called Wishwall.me, was born. Indeed, this worked as a wish list where users could flag the products they wanted (which Wishwall.me didn’t have yet but only showed) and build up a sort of list where they would earn rewards. To gain traction quickly, the platform didn’t ask for commissions to merchants, but only to reduce their price for them so that users could get rewarded with discounted products.

The idea seemed to be taking traction. Over the years Wishwall.me which transitioned to become Wish, got over $2 billion in funding and evolved to become a mobile e-commerce platform with elements of gamification, Where e-commerce platforms, like Amazon had been built with the promise of fast delivery and a balance between cost and convenience, Wish had built a name (sometimes even a bad name) for cheap stuff, mostly from Chinese merchants, often delivered within weeks.

And yet it turned into a multi-billion dollar platform, and now to scale further, of course, it’s tackling the problem of preventing bad merchants on the platform as it scales further.

LOGO
How the Wish platform scaled over the years by also adding Merchant Services, from the Wish Merchant Dashboard, the Wish Express, the ProductBoost (to advertise merchant’s products on the platform), and all the other programs to attract more merchants (Image Source Wish Prospectus).

Value model

Started in 2010 with the vision to bring an affordable and entertaining mobile shopping experience. The whole value model moves around offering a variety of products, with a gamified mobile experience and low prices. As we’ll see, the value model is enhanced by a platform with a discovery-based mobile experience.

Mission and vision

Wish has a simple mission—to bring an affordable and entertaining mobile shopping experience to billions of consumers around the world.

Since its founding in 2010, Wish vision has been to unlock e-commerce for consumers and merchants, by providing consumers access to a vast selection of affordable products and by providing merchants access to hundreds of millions of consumers globally.

The whole point of Wish then is about democratizing mobile commerce by making it affordable and accessible to anyone.

Value propositions

The two key stakeholders for the platform are consumers and merchants.

Value propositions for consumers

  • Affordable, as merchants on the platform offer primarily unbranded products that can be discounted as much as 85%.
  • Accessible, Wish was born as a mobile platform, as such it’s all about a great mobile experience for consumers.
  • Global, the platform is available worldwide.

Value propositions for merchants

As of 2020, Wish counted over 100 million monthly active users, which worked as an attractive option for merchants to sell their products. In addition, Wish also offers a set of tools to those merchants to grow their business through Wish.

Business Model Highlights

  • Started as software to match users’ intent with product advertisement, Wish (at the time called ContextLogic) pivoted into a mobile e-commerce platform throughout the 2010s. While traditional e-commerce platforms, like Amazon, would prioritize a cleaner experience, Wish offered a “rich experience” with gamification elements, which looked more like an online bazaar.
  • Wish runs an asset-light business model, where contrary to business models like Amazon, it does not carry inventory either deliver goods. Instead, Wish leverages local partners to deliver stuff in remote locations worldwide, cross-border partners to deliver goods worldwide. This enables it to work with the digital platform’s logic by collecting fees from merchants’ services and advertising on the merchants’ platform.
  • The company’s revenues are skewed toward the marketplace (with merchants’ fees and advertising revenues) and logistic services.
  • Wish’s logic is all about the product feed, a personalized experience for shoppers, which is more similar to social media, than a search engine. Indeed Wish tries to minimize the number of searches users make, and in fact, most of the purchases on the platform happen from users’ product feeds.
  • As a mobile-first e-commerce platform, the experience is skewed toward discovery, gamification, and conversion, less toward search and intent discovery.
  • As an e-commerce platform, Wish still leverages primarily on third-party merchants’ sales; however, it has also been selling its own labeled selected brands.
  • While the company loses money, it still has positive cash flows, as it is asset-light. It runs on a positive cash conversion cycle by collecting money from users in advance and paying merchants after weeks from the collection, unlocking short-term liquidity for the business operations.

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Read Next: E-commerce Business Models, Amazon Business Model, Cash Conversion Cycle, Gamification.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"