Wish, an e-commerce app that once aspired to become the next Walmart, has suffered major setbacks in the past two years.
Despite a 31.5% increase in revenue in 2020, the app’s financial performance took a nosedive in 2021 and continued to plummet in 2022, according to a recent report by Business of Apps.
For perspective, Wish reported $1.9 billion in revenue for the full year 2019 but ended 2022 reporting $571 million in full year revenue, lower than its revenue in 2016.
This was reflected in the number of monthly active buyers on Wish’s platform last year, which dropped by a staggering 74% compared to 2020.
Wish’s Q1 2023 financial report claimed that the app was making progress, but the figures presented do not support the assertion.
The report showed that Wish recorded revenue of $98 million, which marks a 49% drop from the previous year and an 87% decrease compared to two years ago. Monthly active buyers have also suffered a severe decline, plummeting from 101 million to just 14 million.
Wish Struggles From Reputational Damage
While Wish tried to differentiate itself from competitors such as Amazon and eBay by offering absurdly low prices, it now seems to have backed down from that position.
Wish’s shift away from such deals may be an attempt to rebuild the trust of consumers who have grown weary of the app’s offers.
According to a report by The New York Times, Wish has been plagued by complaints of fake stores, unreliable shipping, and poor customer service.
The company has responded by implementing stricter guidelines for the merchants on its platform and removing those who regularly fail to deliver items.
Furthermore, Wish has cut back heavily on ad spending, which was the main way it brought in customers.
In fact, Wish was the top advertiser on Facebook and Instagram in 2021, where the e-commerce retailer spent $1 billion on sales and marketing in that year.
Chinese Cheap Goods Apps Dominate US Retail Market
Meanwhile, Chinese cheap goods have taken the online retail market by storm, dominating app download charts in the first quarter of the year.
Specifically, Temu, which runs a marketplace for virtually everything from home goods to apparel to electronics, continues to gain popularity among shoppers looking for deals.
The app’s approach is not dissimilar to that of Wish’s early days, offering products at incredibly discounted prices to entice customers to make purchases.
Likewise, Shein, a fast-fashion retailer that has been expanding its inventory and is increasingly competing with Amazon, has captured consumer attention in the fast fashion and cheap goods space.
The surge in popularity of Temu and Shein comes as consumers are increasingly turning to apps that offer deals and savings in the wake of an uncertain economic landscape marked by high-interest rates, macroeconomic headwinds, and rising inflation.
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