Qoo10's Acquisition of Wish: Why Sellers Welcome It Over the Anticipated 11street Acquisition
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- This year might witness the hottest issue in the commerce industry as Qoo10 announces its acquisition of the global e-commerce platform 'Wish'. While Wish might be unfamiliar to Korean consumers, many are likely aware of AliExpress or Temu. Wish's business model is similar to these platforms. This article explores what Qoo10's acquisition of Wish signifies, including insights from the acquiring company Qoo10 and stories from Korean global sellers. Interestingly, sellers seem to welcome the acquisition of Wish more than the long-rumored acquisition of 11street.
- First, let's delve into the details of Wish's business and its performance metrics. Wish has distinct advantages over other cross-border marketplaces, which clarifies why Qoo10 decided to acquire it. Although Wish serves over 60 countries globally, including Korea, it has specialized service areas and product characteristics. We analyze the reasons behind the acquisition with official statements from Qoo10's president, Gu Young-bae.
- In recent years, Wish's situation has not been favorable, with significant performance metrics declining sharply since its peak in 2020. This article will examine Wish's condition up to its decision to sell, providing concrete figures. This seemingly adverse situation turned into an opportunity for Qoo10, and we explore why.
- Global sellers have clear reasons to favor Qoo10's acquisition of Wish over the anticipated 11street acquisition. They see the acquisition as an opportunity for Qoo10 to create a service that can rival Amazon, Temu, and TikTok Shop. We will uncover these specific reasons as explained by the sellers. Additionally, we looked into the future of Wish's 'logistics' through internal sources at Qoo10, referencing the company's previous acquisition of India's third-largest open market, 'Shopclues'.
CHAPTER 1
Qoo10 Acquires Wish: What Kind of Company Is It?
Qoo10 announced its acquisition of the e-commerce platform service 'Wish (operated by ContextLogic)' on the 13th, with the comprehensive business transfer contract signed on the 10th. Qoo10 has expressed its ambition to accelerate the establishment of a global e-commerce ecosystem through the acquisition of Wish.
Wish, though perhaps unfamiliar to Korean people, operates a cross-border marketplace similar to AliExpress and Temu. Founded in San Francisco in 2010, Wish can be considered a pioneer in the cross-border e-commerce platform market.
Wish's unique selling proposition was its 'discovery-based mobile shopping platform', emphasizing technology that offers personalized product recommendations to consumers. According to Wish, as of December 2020, over 90% of user activity and purchases occurred on mobile, and more than 70% of transactions happened without entering search terms.
Wish has also built an integrated marketplace connecting global consumers, supporting local currency conversion, payment, product sales and purchases, cross-border logistics, and last-mile delivery. Business of Apps, citing various data, reported that Wish's Monthly Active Users (MAU) reached 107 million in 2020, with over 500,000 global sellers active on the platform in the same period. This performance base allowed Wish to successfully go public on NASDAQ in 2020.
CHAPTER 2
The Reason Behind Qoo10's Acquisition of Wish
The acquisition's rationale can be found in Wish's extensive global user and seller network. According to Wish Seller Center, Wish supports 33 languages and offers shipping services to over 60 countries. In 2020, Europe accounted for 47% of Wish's sales, with North America making up 39%. This indicates that Wish possesses the North American and European user network that Qoo10's coalition found lacking.
Moreover, Wish has a large network of global sellers outside Korea, selling products to global users. Business of Apps analysis shows that over 300 million product items were listed on Wish's store, most of which were from China. This signifies that Qoo10 can substantially expand its seller network distributing low-cost Chinese products.
In summary, Qoo10's acquisition of Wish opens up two strategic business directions: First, leveraging Wish's seller network for Qoo10's expansion into the European and North American markets. Second, distributing the global seller network in regions where Qoo10 has significant user presence, such as Southeast Asia and Korea, with Qoo10's logistics subsidiary, Qxpress, leading the charge. This acquisition lays the foundation for Qoo10 to cover major global e-commerce markets.
CHAPTER 3
Wish's Decline: An Opportunity for Qoo10
Wish's user numbers have sharply declined from a peak of 107 million MAUs in 2020 to 27 million in 2022, with revenue and profitability worsening each year. Investing.com data shows that Wish's annual revenue in 2022 was $571 million,
a 73% decrease from the previous year, with losses increasing by 45% compared to the previous year. The New York Times reports attributed this decline to repeated instances of false advertising, unreliable delivery quality, and a significant reduction in marketing efforts, which made it difficult to attract new customers.
Qoo10 saw an opportunity in Wish's challenges, acquiring it at a fraction of its peak valuation. According to CNBC and Bloomberg, Qoo10 acquired Wish for approximately $173 million, a stark contrast to its $14 billion valuation at its NASDAQ debut.
CHAPTER 4
Replacing 'Amazon, Temu, TikTok Shop'
The acquisition of Wish by Qoo10 was surprising to many in the commerce industry, especially considering Qoo10's recent acquisitions within Korea. The decision to acquire Wish was seen as a welcome alternative to the rumored acquisition of 11street. Sellers believe that Qoo10, through Wish, can create a viable alternative to Amazon, Temu, and TikTok Shop, providing a new channel for Korean sellers to enter global markets.
CHAPTER 5
The Future of Wish's Logistics
Wish operates 'WishPost', a logistics organization tracking product shipping and providing related data to customers. Although its fulfillment service FBW has been discontinued, Wish's logistics capabilities are expected to be absorbed by Qxpress, similar to Qoo10's acquisition strategy with Shopclues in India. This integration is anticipated to significantly enhance the global logistics solutions available to Korean sellers, further facilitating their expansion into overseas markets.
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