Our thoughts on Qoo10’s acquisition of Wish

As Temu appeared on the SuperBowl for the 2nd year, Wish is being sold to Singapore-based ecommerce platform Qoo10. 

The price, according to the press release, is US$173 million, a 44% premium over last Friday’s closing price, or more than 99% below the IPO price in Dec 2019. 

ContextLogic, Wish’s parent, will carry on as a listed entity to ‘monetise’ its US$2.7 billion net operating losses. 

Some thoughts: 

1. It is not the first time that a Singapore-based ecommerce platform takes over a major listed cross border ecommerce operator focused on the US market. In 2018, NYSE-listed Light in the Box (LITB) acquired Singapore-based cross border platform Ezbuy, with the management of the latter taking over the combined company. LITB just managed to break even in Q3 2023, while having lost 91% value since IPO in 2013; 
2. Since Temu’s launch in Sept 2022, many compared it to Wish and questioned its ability to survive with a low cost strategy. Just like when Shopee was first launched in 2015, so many compared it to Carousell (not exactly wrong then);
3. Wish’s problems are well known and we covered them extensively in our “Who is Temu” report. Behind all these quality and experience issues are root causes in leadership, people and organisation. Since founder Peter Szulczewski was ousted in 2021, the board has been looking for “strategic alternatives”; 
4. History is littered with visionaries who saw an opportunity but did not seize it properly – it is quite normal. Remember that “Dare to be latecomer” quote commonly attributed to Duan Yongping, mentor of Pinduoduo founder Colin Huang? “Let you start first, and I will go for the kill with the model you have explored, in a market you have educated. In your eyes, I am your competitor; In my eyes, you are my tool”;
5. Temu has thusfar proven to be very different from Wish, from organisation, culture and leadership points of view. We have discussed these extensively through TheLowDown blog and the Impulso Podcast – a refresher would be “Inside Temu: the fiery culture and a perpetual efficiency machine” (Podcast link here) 
6. Another case in point of Temu’s efficiency was how they pulled the first Super Bowl ad together (blog and podcast links). Before this year’s Super Bowl, there were reports that lobby groups were trying to persuade the organiser of Super Bowl to drop the ad – it still aired; 
7. However, looking at the comments that the ad has been receiving on YouTube and X, Temu might be facing more political pressure as US elections draw near. Will its ability to bring cheap goods to millions of Americans alleviate some of the political pressure? How about allowing US based sellers from March onwards? 
8. Back to the deal. Qoo10 has raised significant amount of money but has been bleeding cash. Its accumulated losses by end of 2021 (the latest filing) was US$309 million. Southeast Asia will be too small a market for it to turn around, not to mention the fierce competition here; 
9. While it is almost impossible to fight a price war against Temu, US is too big a market that a differentiated, niche offering can still make a large, profitable ecommerce platform. Look at eBay and Etsy. It it is serious for a breakthrough, Qoo10 would need to find that niche.