With a solid user base, Wish makes changes to increase its sales

By Cale Guthrie Weissman , written on October 9, 2013

From The News Desk

The tension between being a popular app with a solid user-base and an actual cash driver is always tough. While impressive user numbers can be, well, impressive, sometimes that isn't enough. What matters to apps -- especially to e-commerce platforms -- is how it's bringing home revenue, and not simply the amount of eyes the startup attracts.

Wish is an app dealing with this problem, in that it has a bunch of users and is trying to figure out how convert this captured audience into real dollar signs. To do this, it's now trying some new recruiting tactics, as well announcing an Asian expansion, hoping this will drive up its transactions metrics.

Wish is a shopping app for those who want to window shop on their mobile phone. Users sign in with either Facebook or their email, and in a Pinterest-esque way Wish lets users browse items and then add them to their wish list. Users, of course, can buy these items (and Wish sure hopes you do), but the real fun is just in the browsing. Using the data from these lists, the app is then able to recommend products users may like.

The two founders, Peter Szulczewski and Danny Zhang, got the idea when they realized that few shopping apps focused primarily on curation and recommendation. Szulczewski explained to me that the two created an app that harnessed users' data more to make an ever-improving recommendation engine. "The premise has been on relevance," he said, and "you can't make it relevant without the data."

Since its launch in 2010, Wish has gained a much wider audience base. It now touts 15 million overall users, with between 200,000 and 500,000 active per day. In addition, Szulczewski told me that users recommend an average of 200,000 items a day.

As impressive as those statistics are, they are just people using the app. While Szulczewski and Zhang wouldn't give me the exact numbers, they said the site has facilitated well over 100,000 transactions. Even if "well over," means double that, however, the number of transactions still doesn't correlate very well with its substantial user base. While the company has raised both a seed round and a Series A over the last few years, transactions are what would make Wish into a profitable company.

To improve this, Wish has been working on a few new tactics. One of its latest features was email sign-in. When the app first launched, it was only connected through users' Facebook accounts. About four weeks ago, the startup included email sign-ups, and that supposedly increased engagements.

In those four weeks, the app received 171,000 new signup and the average engagement from email users (that is, recommending and sharing items, etc.) was 60 percent higher than Facebook users. In addition, the company says that email accounts generation 150 percent more in sales as compared those who login using Facebook.

But Wish isn't stopping there. The app has announced it is launching in Asia this Q4, Japan, Korea, Singapore, and Malaysia to be more specific. Szulczewski explained that this wasn't merely expansion for expansion's sake, but was a very calculated decision.

One of the biggest problems Wish faces, along with any shopping site or app, is something called "shopping cart drop-off" -- that is, people who choose items to buy and then abandon them right before checkout. Many Asian counties, such as Japan, do mobile payments slightly different, allowing customers to purchase items almost instantaneously that are then billed to their monthly telecom bills. This means that the customers don't have to enter their credit card number, and can much more smoothly (read: mindlessly) finalize a transaction. Because of that, Szulczewski explained to me, transaction numbers in those countries are much higher.

This makes sense, because while mobile payments are rising (some forecasts have mobile payments hitting $1 trillion in 2015), shopping cart drop-off rate is still an issue. One statistic says that over 61 percent of online shopping carts are abandoned before checkout. At the same time, e-commerce in Asia is booming, with the Chinese market alone hitting $71 billion in sales.

So Wish is hoping these moves will increase user engagement. At the same time, it's of course not the only shopping app. There are heavyweights like Amazon (who already have options for one-click payments), and smaller ones like TheFind and Snoox. Where TheFind gives users a vast search engine experience for almost any product online, Snoox tries to capitalize on social recommendations from friends (in addition, Snoox recommends places in addition to products).

Szulczewski and Zhang think Wish is different because of its automatic recommendation engine, which is fun for shoppers to just browse. "The value we provide is if the users doesn't know what they want," Scuzczewski said. So Wish is walking a fine line between e-commerce platform and window shopping entertainment app. He then explained that users spend an average of 30 minutes a day using the app, most probably for the "entertainment" factor.

Entertainment aside, the only way for Wish to survive is to increase its overall transactions. This will be a hurdle, as it is for any e-commerce platform. But the co-founders are pitting their hopes on the new sign-up model and expansion.

Hopefully Wish's recommendations will be relevant to its Asian users. If not, it may have to start promoting items like this.