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Will “Low price” Make Wish a Future of the E-commerce Market?

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Low price” Make Wish a Future of the E-commerce Market?

Forbes data shows that Wish is worth $8.5 billion, worth more than Macy's and JC Penney Combined. Wish seems to have a good prospect, and even analysts say that Wish's "low price" model has a future e-commerce market, but is this really the case?

Chinese products have become the star of e-commerce platforms

With the development of the Internet and logistics technology, as well as the platforms, such as AliExpress, Wish, LightInTheBox, Amazon, etc., more and more Chinese goods have entered the US market. Chinese goods also have a certain audience in the US market. Also, Wish allowing consumers to buy cheaper products directly from Chinese manufacturers or sellers, helping consumers to skip retailers, middlemen (the site itself acts as a retail broker), has indeed made it popular with some consumers.

In addition, under the general trend, manufacturers are also willing to play the role of retailers. Juozas Kaziukėnas, an e-commerce research site, also pointed out that Chinese manufacturers were not used to selling goods directly to consumers in the past, but with the development of information technology, Chinese manufacturers can more easily sell goods to consumers.

Juozas Kaziukėnas estimates that more than one-third of Amazon's sellers are from China (data shows that there are currently more than half of Chinese sellers), who ship their products in bulk to the US and then accept orders from Amazon customers, Wish customers or other US companies.

Although it is currently difficult to track the growth of US customers' purchase orders directly from China, the number of packages received by the United States has surged in recent years. In the first quarter of 2018, the United States Postal Service (USPS) received a total of 175 million overseas letters and parcels, a significant increase from the 97 million in the same period in 2013.

ePacket

China Post has launched a fast and affordable new logistics method for Chinese sellers - ePacket. Chinese sellers can send light and small packages (less than 4.4 pounds) to the United States to enjoy more favorable prices, and transport faster, and each message has a clear tracking number. The cost of sending small parcels to the US by Chinese sellers is lower than the cost of shipping in the United States.

Challenge for US importers and manufacturers

It is worth noting that since many of the products on Wish are issued directly by the manufacturer, the product packaging is not beautiful or even simple. But for this problem, many American consumers who buy products at Wish said that since they want to buy cheap products, they must learn to lower their expectations, and there is no excess demand for packaging.

Kaziukėnas pointed out: "For American manufacturers, the cost of manufacturing Chinese products is much lower than the cost of manufacturing US products due to labor costs and so on. Also, the prices of US-made products cannot compete with Chinese products." This is why American shoppers will flock to stores such as Target or Wal-Mart to buy low-priced goods imported from China. Wish poses a huge challenge for US importers and manufacturers.

Although Wish does not have quality control processes like Target and Wal-Mart's, American consumers are willing to buy on their websites at the price of the product. In addition, because most Chinese sellers on the Wish website do not exist in the United States, they do not need to levy a sales tax on products sold in various states in the U.S (many states currently oppose this practice in court), which also makes the price of the product unfair competitive advantage.

Product quality and shopping experience are big problems

However, some American consumers say they are not willing to buy poor quality products at low prices. There are many fake and shoddy products on Amazon which are from China, facing litigation from consumers and brands. And people's shopping experience on Wish is not very good. Wish has received 512 customer reviews on Hiya.com, most of which are bad reviews, only 1 star. Indeed, many consumers are really dissatisfied with shopping experience on the wish and even have a buyer said that after the order was placed, no product was received at all.

Forrester's retail analysts suggest customers who are thinking to purchase on Wish, should read more real wish reviews from other experienced buyers on the internet. Also, they believe that people may be willing to try to buy a cheaper product at Wish, but if the product is too bad, people will not make a second purchase. It makes sense.

 

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