M-Commerce – Creating new opportunities?


Introduction

Mobile commerce is growing rapidly and at a faster pace than e-commerce (Brohan, 2016). Currently, mobile commerce accounts for one third of total e-commerce sales. This percentage is expected to exceed the 50% mark soon. In other words, mobile commerce optimization is not a competitive advantage anymore, but a competitive imperative for companies (Roggio, 2016). Due to mobile commerce, you can buy everything you want, whenever you want. What would you buy via your mobile device? Do you have any wishes on your shopping list?

Peter Szulczewski and Danny Zhang founded a company called ‘Wish’ in 2010. Wish initially  was an advertisements company that focussed on recommendation technology by asking customers for a wish-list (Rey, 2015). Its personalization algorithm, matching product images from shopping sites to the buyers connected to Wish, was better than most retailers. However, this business model had difficulties achieving revenue as mobile commerce makes it difficult to collect a commission for sale via links or ads (Rey, 2015). Therefore, Wish approached Chinese merchants providing them an opportunity to sell their products to buyers that saved their wishes within Wish’s platform (Rey, 2015).

From this moment on, Wish started to be a platform connecting buyers to Chinese merchants and their low priced products (Rey, 2015). Wish adds value to both sides within the platform. First of all, it connects buyers to merchants that can fulfil their wishes (Rey, 2015). Second of all, Chinese merchants are connected to a large crowd and have the opportunity to sell goods within a market they were not able to operate in before (Loizos, 2016). Wish matches merchants’ products with possible buyers by recommendations. In addition, Wish makes buyers add extra value to the platform by personal information so that Wish can provide personalized offerings to the buyer (Cova et al., 2009).

How does it work?

As a merchant, you would need to contact Wish in order to be able to operate within the platform. As a buyer however, you only need to download the mobile application as Wish focusses mostly on mobile commerce. Wish asks you to create an account; either integrate Facebook or create a separate account. After creating an account, Wish is able to optimize recommendations by asking for product preferences. Next, you are ready to operate within Wish’s platform. Based on your preferences and browsing behaviour, Wish is able to provide you with the best recommendations (see figure 1) and offers personalized prices via push notifications (Rey, 2015).

Figure 1 “Product preferences lead to recommendations” (Wish Mobile Application)

Figure 1

Business model

As indicated earlier, the company changed from asking customers for their wishes to a platform connecting buyers to Chinese merchants. Szulczewski stated that shopping via smartphones is a relatively new experience (Lozios, 2016). As Wish focusses mostly on mobile commerce, this results in smaller price purchases being made. By asking buyers for their preferences and by analysing their browsing behaviour, Wish is able to provide buyers with an algorithm of efficient recommendations (Rey, 2015). Wish takes an aggressive approach in recommendation making as it is said to be the number one app advertiser reaching $100 million a year on Facebook and Instagram (Rey, 2015).

The profit model is based on an innovative pricing method: individualized pricing (Hinterhuber et al., 2014). Wish subsidizes individualized offers by decreasing their service fee from 15% to 12% per order (Rey, 2015). Individualized pricing is only offered the day after a buyer placed a certain product within his/her shopping cart. However, the current business model is also challenged. First of all the platform is challenged by low quality products. Due to this, Wish and its 900 employees are educating the Chinese merchants to the western standards in the hope that product quality increases (Lozios, 2016). Second of all, the long delivery times. A large part of this is already being dealt with due to partnerships with logistics providers. This results in an average shipping time to the U.S. of thirteen days (Lozios, 2016).

Conclusion

To conclude, Wish provides a (mobile) platform for buyers to connect directly with Chinese merchants (Rey, 2015). The business model is based on providing recommendations to buyers based on their product preferences and past behaviour. For this, Wish asks a service fee of 15% to 12% per order. Latter one is to provide individualized prices through push notifications. Due to this, Wish has already surpassed one billion dollars in revenue (Lozios, 2016). Szulczewski believes that Wish could eventually become one of the major players within global e-commerce. The most important challenge for Wish would be the sustainability of the business model. With an average of five yearly purchases per customer, Wish could be on its way to sustainability (Lozios, 2016). My question for you is: Do you think Wish will succeed in becoming one of the major players within global e-commerce?

References

Brohan, M. (2016). Mobile commerce. internetretailer. Retrieved 7 March 2016, from https://www.internetretailer.com/2015/08/18/mobile-commerce-now-30-all-us-e-commerce

Cova, B., & Dalli, D. (2009). Working consumers: the next step in marketing theory?. Marketing theory, 9(3), 315-339.

Hinterhuber, A., & Liozu, S. M. (2014). Is innovation in pricing your next source of competitive advantage? Business Horizons, 57(3), 413-423.

Loizos, C. (2016). The hot e-commerce app Wish has “hundreds of millions of users” (plus other fascinating stats). TechCrunch. Retrieved 7 March 2016, from http://techcrunch.com/2016/03/01/the-hot-e-commerce-app-wish-has-hundreds-of-millions-of-users-plus-other-fascinating-stats/

Rey, J. (2015). Meet Wish, the $3 Billion App That Could Be the Next Walmart. Re/code. Retrieved 7 March 2016, from http://recode.net/2015/12/28/meet-wish-the-3-billion-app-that-could-be-the-next-walmart/

Roggio, A. (2016). Ecommerce Lessons from the Wish Shopping App. Retrieved 7 March 2016, from http://www.practicalecommerce.com/articles/78359-Ecommerce-Lessons-from-the-Wish-Shopping-App

Wish Mobile Application

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