Wish Is The Alibaba For Middle America and Why It Might Be Worth $10 Billion
Wish has done something fascinating by becoming the Alibaba for middle america consumers. It’s a secret that’s hiding in plain sight. I’ve spent a good amount of time on Alibaba out of curiosity and also as a customer. My company Morsel, is having custom branded packaging made overseas and used Alibaba to source the supplier. Here are a few things you need to know about Alibaba and sourcing product from China:
It’s not made for consumers — Alibaba is made for businesses ordering a bulk amount of product. Think custom packaging or a department store that wants to sell Android tablets. You have to buy in bulk. Everyone thinks Alibaba.com is the chinese amazon, IT IS NOT.
It’s a fucking mess — Try dealing with Alibaba to get something done and you’ll enter the 7th ring of hell. Communication is tough, suppliers often re-neg on deals, and much more.
You can get just about anything — EVERYTHING you could ever imagine is available from a gadget or clothing standpoint. If it’s popular it exists there and it’s a lot cheaper. If for some reason it doesn’t exist, it CAN be made.
Shipping is a pain in the ass — There are many different ways to get your product shipped. By air, by sea. Does the price include getting it to the port or not? It’s not like UPS where it just shows up on your door step.
So that’s a primer on Alibaba and more than anything the friction that exists. Let’s now take a look at what the average American consumer wants, not the folks in NYC shopping at Apple and Prada. We’re talking the same group of folks that make Walmart a nearly 200 billion dollar company. The average american consumers wants value and they want it accessible.
China and Alibaba make the items they want at an even cheaper price than you would get at Walmart once you cut out the middleman, BUT it’s not accessible. Remember above? You can’t buy goods as a consumer and there’s a ton of friction. Wish is the person bringing the value goods in an accessible way. Wish has made it possible for an average everyday person like me to buy cheap goods directly from China. Don’t believe me? Go browse Wish and go browse Alibaba.
- Wish clothing items are mostly in Chinese sizes. This is a common recurring theme.
- Shipping times are so long due to shipping from China
- Look at Alibaba, the image style is very similar to what you see on Wish.
So how did Wish do this? They setup a self serve platform a few years back to bring merchants aka chinese suppliers on board.
It’s added over 100k merchants from China. This is not an easy task and Alibaba’s suppliers are a big reason for its success. It’s also able to bring them new business they didn’t have before — consumers in the United States. It’s also done in a hassle free way. On Alibaba, chinese suppliers have to haggle. With consumers, they just ship the product.
Below is why Wish is worth $10 billion to Amazon or Alibaba —
- It has built a strong connection with a large number of chinese suppliers, provide them real revenue.
- Wish is providing chinese suppliers with a constituent they’ve never been able to attack before — the middle america consumer. If you were Amazon, you could use these suppliers to attack Alibaba, or Alibaba itself could easily have a new line of business.
- Wish is building valuable data through social and mobile connections to be paired with these items. It’s across tens of millions of consumers. That’s real demand to be matched with the supply.
The current business at a 2 Billion GMV, is not worth 10 Billion today… it’s worth that in the future and this is the price to buy the future.
The biggest risk for Wish seems to be the quality of product when sourced from China. I’ve spent a good amount of time reading reviews on Wish and elsewhere about their products.
It’s a real problem, but at $20 for something that should be marked up 10x, consumers are less likely to be upset. If Wish can overcome this, it’s not crazy to think that they could become one of the largest retailers in America — most people want the style of the $200 leather jacket without the price.
