Maybe you haven’t heard of the five-year-old e-commerce startup, Wish.
But all the major e-commerce players have. Sources close to the company say both Amazon and Alibaba have talked about buying the company in the past year. And the price they’re talking about is jaw dropping.
The most interesting rumour is that Amazon recently offered $US10 billion in cash for Wish — and Wish walked.
So, is the $US10 billion rumour true?
Here’s what we’ve pieced together.
The magic number
Wish has been described as the e-commerce company Fab was supposed to be. It sells dirt cheap yet stylish products by optimising social channels such as Facebook. Its layout resembles Pinterest, but on Wish, everything is for sale, and you’ll be hard pressed to find an item that costs more than $US25.
The company has reportedly raised close to $US600 million and been valued at $US3 billion or more by investors, but it hasn’t gotten much press because CEO Peter Szulczewski doesn’t want or need any. When we first reached out to Szulczewski in December 2014, Szulczewski wrote that he was “both humbled and a bit surprised” to find himself on Business Insider’s radar since both he and the company “try to keep a very low profile.”
Everyone we’ve spoken with agrees: Alibaba and Amazon have both had acquisition talks with Wish in the past year.
One person close to top players at Wish says Amazon recently offered $US10 billion in cash to buy the company, and Wish’s CEO walked away. Another person who’s friendly with top Wish people said they’d heard the $US10 billion rumour as well, but that number may actually reflect a new valuation Wish is raising at, not an acquisition offer.
We circled back to the first person who said the $US10 billion rumour was “clearly conveyed” as an all-cash Amazon offer, not a fundraise.
The most likely case is that Wish has had “soft” talks with both Alibaba and Amazon. But the discussions never resulted in a serious written bid for the startup for two reasons:
- Wish’s CEO Peter Szulczewski doesn’t want to sell
- If he were to sell, he wouldn’t budge unless the offer was more than $US10 billion.
Amazon and Alibaba aren’t willing to pay more than $US10 billion for Wish, a person with knowledge of the situation says. But Szulczewski thinks he can grow his five year old startup to at least $US100 billion in gross revenue — or one-quarter the revenue of Walmart — in which case Wish would be worth much more than $US10 billion.
Wish already is already on track for annual gross revenues of single-digit billions, people familiar with the company say. And the margins are really good. One person estimated that Wish takes home roughly 11% of gross revenue, so it’s possible the company is profitable on net revenue of around $US1 billion. Wish is a lean operation — we’re talking less than a few hundred employees (LinkedIn says its headcount is between just 11-50 people).
The business, like Walmart, appears to be recession-proof. The company gets merchants in China to compete on price so it can offer customers unbelievably cheap items.
One person familiar with the business says Wish has about 100 million users across its platform and works with over 100,000 merchants; it’s popular in the U.S. and Europe and it’s become masterful at converting customers through social channels like Facebook. The key to Wish’s success seems to be its customer acquisition strategy and its data-driven approach. Most of Wish’s sales are on mobile, not desktop.
When reached for comment, Amazon said it doesn’t comment on rumours or speculation.
Wish and Alibaba did not immediately respond to requests for comment.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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