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Wish is preparing for a major turnaround: the online marketplace that mainly sells cheap, Chinese products is laying off 15 % of its workforce and is moving out of 79 countries. Contrary to expectations, the platform will remain active in Europe.
Drastic restructuring
Things are not going well for e-commerce platform Wish: sales plummeted 64 % to 289 million euros (260 million euros) in the fourth quarter of 2021, mainly because advertisers spent less on the platform. The cash flow also shrank. Although gross profit improved, the marketplace ended the year with a loss of 23 million dollars (20 million euros). A year earlier, losses had even risen to 95 million dollars.
“These figures tell me that we need a new way of thinking to lead us back to the growth we know is possible,” says new CEO Vijay Talwar. The American platform with mainly Chinese offerings is therefore going to undergo a major reorganisation. The company is leaving 79 different markets that make a nominal contribution to the turnover, but significantly slow down the margins. “We will focus on the 61 markets where we have promising financial results and benefit from economies of scale,” the company says.
A consequence of the restructuring is also the dismissal of about 190 employees, representing 15 % of all employees. Wish is becoming much leaner and more efficient, in order to be more profitable in the long run. A renewed management team continues to work on video shopping – Wish Clips – and other benefits for successful merchants on the platform.
Not moving out of Europe
(update 7 March) Last weekend, the platform announced from which countries it will withdraw and where it will stay. It seemed likely in advance that Wish would cease operations in European countries, as since last year, consumers have to pay VAT on packages from outside Europe that cost less than 22 euros. Since Wish specialises in very cheap goods from China, that is a setback. In France, the platform was recently banned from search engines and app stores, because the company would sell unsafe products.
Yet, the online retailer is holding on to Europe. The platform even strongly advises its sellers to keep selling in countries such as Belgium, the Netherlands and France. The 79 countries from which it is leaving are mainly located in Africa and Latin America.
