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The $.99 store of Apps

Why does it work?

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I had a conversation not long ago like this:

Source: Have you heard about ContextLogic? They’re killing it. Changing the game.
Me: No. I don’t know what you’re talking about. It sounds like some sort of Big Data thing…
Source: They buy a lot of Facebook ads.
Me: What do they sell?
Source: I’m not going to tell you what they sell. You need to go look. Wish.com.

So I did:

For a really, really long time:

It’s an online store. It also seems to have no rhyme or reason — unless you start buying stuff. Then it starts recommending things. Oh, and everything is cheap. Really really cheap. Here’s a smartwatch for $10:

Or this futuristic looking hoodie for $11:

You’d think this sort of goofy, low-quality stuff wouldn’t translate into much of a business. You’d be wrong. Very wrong. Wish.com’s annual revenue is in the billions of dollars. Their user base is in the hundreds of millions.

So what’s their secret to success? There are a few ingredients:

1. Nothing is very expensive…at all.

It turns out when stuff is really cheap, we don’t really think much about buying it. From Peter Szulczewski, Wish.com’s CEO:

I don’t think people are comfortable with buying a $5,000 TV on their phone. I think even $300 is high, as most people want to compare prices, read through reviews, etcetera. People were willing to spend $20, $30, $50, but not much more than that [which we learned].

In other words, they aspire to sell mainly stuff we don’t really need. I mean, who really needs this?

Nobody of course. Except for $5 it’s funny and why the hell not.

And that’s part of Wish’s formula. Eliminate (or nearly eliminate) any deliberation behind the purchase. It’s the commerce equivalent of Twitter or Instagram. Small bite-sized bits of content ready for consumption. The great majority of purchases happen on the the Wish mobile app.

In stock? Nothing is in stock.

The other part of Wish’s business is to have zero inventory. They effectively order stuff from Chinese manufacturers and suppliers directly. No big warehouses and massive logistics to maintain. It takes a few weeks to receive anything, which is ok because you don’t need any of the stuff you buy.

Do we have another Groupon on our hands?

When you pause and look at the sort of stuff for sale on Wish, you can’t help but wonder if they’re actually interested in building a long-term relationship with the customer. Similar to Groupon, it’s 95% stuff we don’t need but feel compelled to try out because we’re convinced it’s an awesome deal.

In a recent article on Re/Code, a consumer psychologist described Wish as the “boyfriend of the week,” predicting that the novelty wears off and we eventually move on.

Then again at least half the time on my iPhone is committed to novelty and killing time. If I were serious about a purchase, I’d dig in more. I’d hit sites like Wirecutter and dig into Amazon reviews. Wish isn’t about that. Sometimes you need a good reliable pair of winter boots and sometimes you just want to have a good time.

For sale on the Wish app. Batteries possibly included.

Rich Ziade is a co-founder of Postlight.