Fast-fashion eCommerce marketplaces including Wish, Shein and relative newcomer Temu are reeling as inflation presses down and consumer buying behavior shifts, creating a drag on the sector and leading to revisions in critical operational elements to reignite momentum.
This was clear on the Wish fourth-quarter 2022 earnings call Thurs. (Feb. 23) as Wish.com CEO Joe Yan noted, “Our value-oriented consumers were impacted by the steep increase in energy and food prices, which translated to a slowing of discretionary spending across the regions,” adding that “we are not immune to the changes in consumer spending habits, particularly among the lower income households that shop on our marketplace.”
With Q4 2022 revenues down 57% compared to Q4 2021, Wish responded by launching a new Deals Hub platform enabling merchants to showcase discounts and drive product exposure across the Wish platform, and a ‘Bargains Made Fun, Discovery Made Easy” rebrand to “more accurately reflects our renewed focus on helping value-oriented consumers discover listings for new products while having fun in a frictionless and convenient way,” he said.
Yan said Wish also collaborated with affiliate partners including Affinity, Honey, Klarna, Rakuten and RetailMeNot to drive incremental traffic. It introduced flat rate shipping in the U.S., a “revamped fashion experience, Wish Fashion; the shoppable videos feature, Wish Clips; the merchant scoring system, Wish Standards; improved Deals Hub” new logged-out experience; an increased focus on merchandising and collections, and the redesigned homepage on the Wish app which features collection modules, category tabs, and wishlists.
CFO and COO Vivian Liu said the Q4 and full-year 2022 slowdowns were caused in part by new pricing transparency and lower digital ad spend at a time of soaring customer acquisition costs.
Responding to an analyst’s question on fast-fashion developments at Wish, Liu said “We saw customer satisfaction and average order GMV per buyer improve materially through the fashion relaunch. But more importantly, we learned a lot through that relaunch [about] how we [can] improve listing quality, delivery time, how we engage with our buyers more effectively and our merchants, and we have a lot of merchants now participating in the fashion relaunch.”
Fast-Fashion eCommerce Reinventing Itself
The reinvention of digital features will be crucial to eCommerce marketplaces.
According to the 2023 Global Digital Shopping Index, a PYMNTS and Cybersource collaboration, “Satisfaction drops when merchants remove or change features consumers find valuable,” adding that “The removal of these features took a toll on U.S. shoppers’ satisfaction. As a result, U.S. merchants’ GDSI score decreased from 99 to 95, indicating that local shoppers were 4.3% less pleased with their shopping journeys than they were just one year ago.”
Meanwhile, Wish competitor Shein recently said it plans to double revenues by 2025 and expects its gross merchandise value (GMV) to rise 174% in that timeframe as well.
As PYMNTS reported, Shein said it will focus on encouraging repeat purchases, increasing its apparel collections, and adding premium lines, as Gen Z shoppers who are its primary customer base tend to not be brand loyal to any individual marketplace, hunting for deals and specials.
As for Temu, whose Super Bowl 2023 ads helped push the app to the most downloaded retail app in January, as was widely reported, the Boston-based U.S. subsidiary of China’s PDD Holdings (formerly Pinduoduo), is leaning into channels that favor younger demographics, particularly video selling and influencer marketing programs.
In a statement to PYMNTS, a Temu spokesperson said, “Temu deeply values the relationships it has with all its brand partners and customers. Helping influencers pursue their dreams promoting products that they love is also part of Temu’s mission. There are a few different ways that influencers can participate, including a campus ambassador program, affiliate program, and seeding program. Temu influencers are most active on Instagram, TikTok, and YouTube.”