At a time when consumers are tightening their belts, trading down and shifting their spending habits toward essential items, Wish.com’s new CEO Vijay Talwar says the macroeconomic environment will be a tailwind for the 12-year-old eCommerce marketplace for low-priced goods.
In fact, at a time when the challenge and cost of meeting the same-day and next-day free delivery expectations of retail customers are getting increasingly difficult, he said Wish’s online dollar store business model is a completely different value proposition.
“We have to focus on what makes us unique,” Talwar said in a recent conversation with PYMNTS Editor-in-Chief Matt Nesto, in which he said boosting customer retention was his top priority. “There’s a lot of things that are similar [to Wish.com] but nothing that’s exactly the same.”
A Mini Christmas Whenever
While there are an estimated 50,000 dollar stores across the country that continue to be the fastest growing segment of retail in terms of adding new physical locations, there’s clearly demand for this “thrill of the hunt” or bargain hunting type of shopping.
Where dollar stores aim to deliver instant gratification to their customers, Wish.com’s challenge is to meet the same need, only with a two-to-three-week shipping delay, a differentiation Talwar said many people view as a big disadvantage.
“I get it. I mean all of us want that instant gratification but when I talk to our consumers, I found a really interesting insight as well,” he said of the time gap between order and delivery. “They’re actually pleasantly surprised. They’ve actually forgotten what they bought and then they’re very excited to open up that box and see what three, four or five items they’ve purchased, and it’s almost like a Christmas gift to yourself type of thing.”
Again, like the dollar stores, Talwar said customers don’t typically come to Wish.com looking for a particular item. They’re browsing, exploring and looking to discover something “really cool” that they didn’t know they needed, and then be able to act on it, with price points that are often $3 to $7.
The Struggle Is Real
To be sure, Talwar’s first five months on the job, as well as the past 18 months since the initial public offering (IPO) of Wish.com’s parent company Context Logic, have been challenging and pushed its stock below $2 per share and left its market value at just $1.2 billion.
In its first quarter earnings report in May, Wish posted a $60 million loss and saw its revenue drop 75%, underscoring the need and urgency of the turnaround task the new CEO was brought in earlier this year to rectify.
“The first and the most important pillar of our strategy is focusing on the consumer,” a task he likens to “basic blocking and tackling” where the ultimate goal is to increase customer service retention, and one he said has already doubled the company’s Net Promoter Score in the past three months.
“Ultimately, that’s tied to things like on-time delivery, making sure the product is close to what we describe it to be, making sure that customers have a way to connect with us if they have questions or concerns or returns,” he added, saying the results in improved return customer rates will be tracked for improvement of the next three, six and 12 months.
“That’s the stuff that we’re working on behind the scenes,” Talwar said, pointing to 170,000 product video demos that have been uploaded as part of the retailer’s “Wish Clips” campaign.
No Free Shipping
As part of its deep value proposition, Wish.com has never offered free shipping or returns, and has no intention of changing that model. In fact, Talwar said, the company was actually better positioned to capture market share as inflation drives both prices and shipping costs higher.
That’s not to say Wish ignores shipping times, and is actively working to streamline its business, by reducing delivery times from 21 days to perhaps 15 or 18 days, and also recently reducing the number of countries where it sells, from over 100 to 69 currently.
While mega-cap rivals, such as Target, Walmart and others, accelerate their promotional activity to clean out and pare down their swollen inventory of unsold goods, Talwar said Wish’s merchandise and “entrepreneurial customers” that often buy for a small business, are in a different silo.
“So, yes, it creates some potential competition but again, keep in mind that the products that Target is carrying are fundamentally different than the products Wish is carrying,” he said, reverting to the “discovery based” customer versus a “need based” shopper that wants an item in a day or two.
“People are trading down from a price point perspective, so that helps us, that becomes a win for us,” he said. “I think everybody would agree that given our [low] average selling price and average order value and things like that in general, [inflation] is a tailwind.”
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