A public Wish
Wish, the online marketplace plagued with counterfeits went public. Publicly traded companies have a lot of legal responsibilities, including warning their shareholders against potential risks they’re facing. Counterfeiting is a definite risk. Will this make Wish step up its game against counterfeits and grey markets on the platform?
The ambitious online marketplace, Wish went public in December 2020. The marketplace’s San Francisco-based parent company, ContextLogic priced its initial public offering (IPO) at $24USD per share, raising $1.1 billion on its debut day. During its first few weeks of public trading, the value of Wish shares has mostly hovered around its IPO price, between $22-$28.
Founded in 2010, Wish is known as a “trashy marketplace” that offers cheap goods to customers who very often don’t exactly receive what they have ordered. In fact, many customers end up disappointed because the products that arrive don’t seem to have much in common with the goods pictured on the Wish app.
But besides causing hilarious online-shopping fails for its customers, Wish poses a very real threat for brands. The marketplace is often associated with selling counterfeit or grey market products, causing both brands and consumers a lot of harm.
The French government, for example, is suing Wish for selling counterfeit products.
Still the marketplace’s annual revenue in 2019 (2020 data is not yet public) was $2.3 billion, with over 500 million users and 1.3 million merchants active on the app.
While Wish tried to introduce anti-counterfeit measures like educating its sellers on why counterfeiting is wrong, the issue is still present on the marketplace. Would this change for the better now that Wish became a public company?
Public companies have to obey a set of rigorous legal obligations. According to the transparency directive of the European Union, listed companies whose securities are traded on EU markets have to disclose various information to shed light on their activities.
For example, financial reports every six months, significant changes in voting rights, and other inside information that could affect the price of their shares must be published. As ContextLogic shares are currently traded in the EU, Wish will have to comply with these regulations.
In the US, ContextLogic’s native market, public companies’ responsibilities are outlined by the Securities and Exchange Commission (SEC). Like in the EU, public companies in the US have to disclose their relevant financial data in the form of quarterly and annual reports, any substantial changes to their financial and organizational stability, as well as an analysis of their strengths, weaknesses, opportunities, and risks.
As we can see, the majority of obligations affecting a publicly listed company concerns financial issues. However, there’s a significant obligation that can’t be overlooked: the report on strengths and weaknesses. And this is where counterfeiting comes in.
Because counterfeiting (and grey markets) constitutes a major risk for an online marketplace.
Don’t take our word for it: look at Amazon’s own analysis of strengths and weaknesses.
In its 2019 report, the ecommerce giant itself acknowledged the risks that the trading of counterfeit products poses to shareholders (not to mention brands and consumers).
This is a big step towards fighting counterfeits. Because if Amazon acknowledges the risk, it would seem strange if Wish, a platform even more affected by counterfeiting and grey markets wouldn’t do the same. And acknowledging a problem is the first step towards eventually solving it.
The annual reports of public companies are not the only platform where the issues of counterfeits and grey markets appear. In fact, governments have taken several steps to warn brands and consumers of the dangers various online marketplaces pose.
The United States Trade Representative (USTR) issues an annual review of notorious markets for counterfeiting and piracy. In its most recent report, the USTR flagged several online marketplaces as problematic, including various Amazon domains like amazon.co.uk, amazon.fr, amazon.de, and amazon.it.
Due to several circumstances (not in the least the coronavirus and the resulting boom in ecommerce), it would be hard to detect the impact of the “notorious market” label on the performance of Amazon’s stock. However, with a less ubiquitous marketplace that’s even more plagued by counterfeits and grey markets, Wish won’t be able to ignore the issue for long if it wants its stock to perform well on the markets.
Although Wish is not featured in the USTR’s most recent report, there are signs that it may make it into one in the next few years.
The American Chamber of Commerce to the European Union (AmCham EU) issued a paper with comments and suggestions for the USTR.
The AmCham EU claims that “Wish's business model allows Chinese manufacturers to sell directly to Western consumers, cutting out the middleman. Wish.com is the 444th most visited website on the planet, so has a large reach among US and European consumers looking for cheap products. In addition to 1:1 replicas/counterfeits, knockoffs are very popular on this platform. This creates a significant counterfeiting problem for most large and small European brands.”
As you can see, Wish’s counterfeit and grey market issues are raising a flag with brands and authorities worldwide. The newly public company has to make a bigger stand against the problem if it wants to be successful on the stock market.
While “educating sellers on the wrongs of counterfeits” is definitely welcome, it seems to be an inadequate solution as counterfeits are still very much present on the marketplace. As we wait for Wish to introduce tougher measures, online brand protection experts like globaleyez have to pick up the pieces to combat counterfeits and grey markets on this marketplace (and many others).
Counterfeits and grey market products (authentic brand products traded outside the brand’s authorized distribution network) have a tendency to pop up unnoticed on marketplaces. globaleyez’s monitoring services ensure that they don’t remain unnoticed for long.
We regularly check marketplaces and social media for brand names and copyright imagery. We even monitor domain names to make sure that nobody uses your brand’s name without authorization. Our comprehensive monitoring services work together to create thorough, optimal results for your brand.
Another great way to ferret out counterfeits and grey markets is marketplace sales tracking.
We look for discrepancies in the price structure or turnover, which are telltale signs of products traded without your brand’s authorization. globaleyez collects all the necessary data on vendors, prices, and turnover that will give you a clear insight into sales on a specific marketplace.
Our test purchase service provides the ultimate proof about the behaviour of a seller and whether they trade counterfeit goods. We order the product as a regular customer and document everything from the initial order to the arrival of the product. We conduct test purchases in over 40 countries, both online and offline.
All our services include thorough documentation that is admissible in court. Should it come to a legal dispute with counterfeiters or grey marketers, globaleyez stands by your brand and provides the necessary documentation to help you make your case in court.
By going public, Wish has taken a big step. We believe that with this step should come another, even more important act: a stronger stand against counterfeits and grey markets on the platform.
Wish’s counterfeiting issues have caused significant damage to many brands and consumers. As a public company, Wish has a responsibility towards its shareholders. We wish that from now on, this responsibility would include customers and brands as well.
This way, Wish could not just be public, but serve the public as well.