Deal focus: Wish scales up cross-border e-commerce

Alibaba Group’s success is based on its ability to connect Chinese and foreign suppliers with Chinese consumers through the Taobao and Tmall platforms. Wish, a San Francisco-based mobile shopping app, connects sellers on Taobao and Tmall with consumers in the US and Europe. Its China-made products - ranging from jackets to jewelry to make-up brushes – cost less than similar items from US-based peers Amazon and Walmart.

“US players don’t play that game,” says Hans Tung, a managing partner at GGV Capital. “Amazon positions itself as a high-end platform by selling branding products, and wants to charge high branding fees from merchants. Companies like that don’t scale well. For Wish, it is all about the mass market. It doesn’t mind selling products from China at cheaper prices.”

Now five years old, Wish has raised several rounds from the US and Asia-focused investors. GGV was one of the earliest backers, co-leading a $19 million Series B round in 2014 alongside Formation 8, and re-upped in every round since then. Most recently, Everbright-IDG Industrial Fund was joined in an extended Series F round by GGV and other existing investors including legend Capital and online retailer JD.com. The initial Series F, led by Temasek Holdings, closed late last year at about $500 million.

Wish manages Chinese merchants and outbound logistics out of its Shanghai office, while its engineering team is based in the US. The company relies on UPS and post offices to deliver goods worldwide. It intends to build its own logistics capabilities in the near future, including warehousing facilities in different countries. Wish has also developed a mobile platform with matching technology that provides a personalized shopping experience by recommending products based on users’ spending habits.

“Based on what a consumer clicks on, Wish can quickly generate a shopping list for that particular consumer. The app will then display images of products that the consumer might like,” explains Tung. “In addition, Wish is creating online social content, allowing users to post video clips and images of products they like. This cross-sharing between users is impossible to do offline.”

Global cross-border B2C e-commerce reached $230 billion in 2014 and is estimated to hit $1 trillion by 2020, according to an Accenture report. Wish generates billions of dollars in gross merchandise value (GMV) each year, although the profit generated from each transaction is still slim. The company will use the new capital to continue scaling up its business – in part driven by the fact that mobile retail penetration in the US and Europe is less than 2%, compared to 19% in China.

“Europe is the largest market for Wish but it can get deeper penetration and also expand into Latin America and Southeast Asia,” Tung says. “There is plenty of room for growth. Taobao and Tmall are still growing in China even though Alibaba is already the dominant player.” 

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• Topics
• Greater China
• North America
• Expansion
• Consumer
• Cleantech
• China
• USA
• TMT
• Venture
• Growth capital
• China Everbright
• GGV Capital