In a surprising turn of events, Wish, the once-valued $14 billion e-commerce platform, has recently announced its acquisition by Singapore’s Qoo10 for a mere $173 million in cash. This staggering decrease in value highlights the challenges faced by e-commerce companies in maintaining sustainable growth. Founded in 2010 and based in San Francisco, Wish gained popularity through its offering of ultra-cheap products primarily sourced from Chinese manufacturers. Co-founder Peter Szulczewski believed that consumers would tolerate long delivery times in exchange for rock-bottom prices. However, this business model ultimately proved to be unsustainable, resulting in the need for strategic alternatives.
One cannot help but draw parallels between Wish’s marketing strategy and the recent advertising campaign by discount retailer Temu during the Super Bowl. Temu, known as an online dollar store, heavily invested in advertisements on Facebook and Instagram, similar to Wish. Additionally, Temu secured a deal to have its logo printed on Los Angeles Lakers jerseys, aiming to enhance visibility and brand recognition. However, despite these extensive marketing efforts, Wish continued to experience financial losses. In November of the previous year, Szulczewski stepped down as CEO, and the company expressed its intent to explore strategic alternatives. Consequently, Wish’s acquisition by Qoo10 comes as no surprise, given the challenges faced by the company.
With this acquisition, Qoo10 now finds itself in direct competition with both Temu and Shein, two e-commerce giants that originated in China and maintain strong ties to the world’s second-largest economy. Notably, TikTok, owned by Chinese company ByteDance, also introduced an online marketplace in the United States last year. These companies have demonstrated their willingness to invest heavily in advertising, offering lucrative discounts and free shipping to attract customers. While their advertising contributions have positively impacted Meta’s revenue, they have proven detrimental to retailers like Etsy, who acknowledged that Temu and Shein have acquired market share from traditional retailers.
During and immediately after the Super Bowl, Temu launched several “shop-like-a-billionaire” advertisements and proudly boasted $15 million in giveaways. Given that brands spent approximately $7 million for a 30-second ad slot during the game, Temu’s advertising expenditure is estimated to be between $600 million and $1.4 billion in the first nine months of 2023. Stifel analysts noted that Temu had around 70 million monthly active users during the same period last year, showcasing the platform’s extensive reach. Temu, which debuted in late 2022, benefits from strong financial backing from its parent company, PDD Holdings. On the other hand, Shein, established in 2012, has aggressively utilized social media advertising over the past few years.
As Wish enters a new chapter in its history, its future remains uncertain. Industry analysts, such as those at Morgan Stanley, suggest that the e-commerce market in the United States is becoming saturated and that companies like Wish are entering the market at a time when the hype is dwindling. This skepticism is reflected in the significant decrease in Wish’s value from $14 billion to $173 million. However, Qoo10’s acquisition may present an opportunity for the company to redefine its image and strategy, leveraging its new ownership to drive growth and overcome the challenges faced by its predecessors.
Wish’s acquisition by Qoo10 sheds light on the difficulties of sustaining growth in the e-commerce industry. The parallel between Wish and Temu’s marketing strategies emphasizes the competitive nature of the market, as companies vie for the attention of consumers. Moving forward, Qoo10’s task will be to navigate this fiercely contested landscape and establish itself as a significant player alongside Temu and Shein while embracing the lessons learned from Wish’s journey.
Leave a Reply