New • IPO Report

Analyzing Wish’s US Business As It IPOs

Wednesday, December 16, 2020 • 8:00 AM EST

Ecommerce’s latest darling - Wish - is launching an IPO on the public markets. According to its S-1 filing, approximately a third (roughly 35%) of Wish’s revenue comes from the United States, making their US business a critical market for the San Francisco-based startup. Cardify spending data shows a decrease in US volume, transactions, and customers year over year. However, it’s not all bad for the virtual dollar store: increased basket sizes suggests that people who use Wish are now spending more.

While Wish saw a surge in the early days of the pandemic, that surge fell to below 2019 levels by summer, staying there ever since. There was a bump in November 2020, but a similar bump in November 2019 suggests it’s likely more to do with the holidays than anything else.

Looking at gross volume, transactions, and customers, a similar pattern emerges.

While 2019 was largely consistent, 2020 has been volatile and dropped below 2019 numbers. Now, around the holiday season, another bump is on the way. But data shows that no metric - volume, number of transactions, or number of customers - has reached its 2019 numbers yet. 

One area where Wish appears to be gaining strength, though, is average basket size.

Basket sizes were fairly consistent throughout 2019, hovering between $15 and $20 in most cases. Contrast that to 2020, where average basket size has been steadily climbing. In the early days of the pandemic, average basket size increased into the $20 to $25 range, where it stayed all year. As holiday spending begins, basket size has held fairly consistent near the top of this new range.

In Wish’s S-1 filing with the SEC, it cites COVID-19 as a key reason behind limited sales. Specifically, shipping challenges, saying “during the initial outbreak of COVID-19, our cross-border logistics function was severely impacted in terms of both disrupted processing capabilities and increased costs, which resulted in a decrease in sales due to higher logistics costs and higher refund rates due to poor performance.” Further, the company says “due to COVID-19, global logistics has experienced longer delivery times.”

As Wish continued to figure out its logistics, Amazon continued to increase its footprint. Not only did Amazon move Prime Day in response to the pandemic, but it also regularly delivers things within a couple days - hitting a key weak point named in Wish’s S-1 filing. Further, Amazon is a known aggressive competitor and has already shown its willingness to do almost anything to keep cash flowing into its coffers.