The Problem With Buying Cheap Stuff Online
Sites like Wish.com are taking out the middleman in retail. Will customers like this new dynamic?
The package came in a small black box, covered in tape. It had no return address. Under layers of packaging, there was a box labeled Smart Watch, with no brand name. Inside the box was the watch itself, which looked nothing like the inexpensive Apple Watch I’d hoped it would be. Instead, the large digital face featured icons for Twitter, Facebook, a pedometer, and a photo-taking app called “Camina” rather than “camera.” It was about what you’d expect for a smart watch that cost less than $20.
I ordered the watch from Wish.com, one of a growing number of sites that allows consumers from around the world to buy deeply discounted goods from China, directly from sellers or manufacturers there. After receiving promotional emails from Wish offering bikinis for $4 (marked down from $75!), camera drones for $29 (down from $1,399!), and, for some reason, a spoon that says “My Peanut-Butter Spoon” for $1 (down from $12), I could no longer resist. I ordered the smart watch, advertised as “Hot Sell New product Q18S Smart Wrist Watch” for $18, marked down, supposedly, from $896. The product had more than 8,000 reviews in dozens of languages, averaging four stars. “Its cool I like it for the price,” read one.
Wish is emblematic of a growing trend in e-commerce: shoppers buying directly from Chinese manufacturers and merchants. Wish and sites like AliExpress, LightInTheBox, and even Amazon have enabled more Chinese sellers to penetrate the U.S. market, where they compete with U.S. manufacturers and U.S. retailers who themselves have been importing goods from China. Though the products from these sites take longer to arrive because they’re coming from overseas, some analysts think sites like Wish represent the future of shopping. Wish is, according to Forbes, worth $8.5 billion, about the same as Macy’s, J.C. Penney, and Sears combined. Its valuation has more than doubled since a year ago, when it received $500 million in funding. Its logo now appears on the jerseys of the Los Angeles Lakers.
These sites represent a different type of shopping than customers have engaged in for decades, even with the rise of e-commerce. For much of the 20th century, shoppers would drive to a store, browse through rows of goods, and then buy the clothes or headphones or cameras they wanted and then drive home. Then, they would browse the websites of stores and retailers and order clothes or headphones or cameras delivered to their doorsteps. But now, these new sites are helping consumers skip that retailer middleman; the websites are themselves the retail middleman. People can buy cheap stuff like bikinis or drones directly from the manufacturer or seller, no matter where that retailer is based.
“As long as retail has existed, you’ve always had retailers sell to customers, because many manufacturers were unfit to do so,” Juozas Kaziukėnas, the founder and CEO of Marketplace Pulse, an e-commerce research site, told me. “But over time, as information has spread and it becomes easier, you have manufacturers selling, too.” Kaziukėnas estimates that as many as one-third of Amazon’s sellers are based in China. Often, Chinese sellers will ship products in bulk to the United States, where they’ll sit in warehouses operated by Amazon, Wish, or other companies, until U.S. companies order them, he said.
Though it’s difficult to track just how much the direct-from-China market has grown, the number of packages received from overseas in the United States has exploded in recent years. The U.S. Postal Service delivered 175 million letters and packages from overseas in the first three months of 2018, up from 97 million in the same period in 2013, according to the USPS. The Postal Service makes it easy for Chinese sellers to ship cheaply to the United States: Under a program called ePacket, merchants can ship items that weigh less than 4.4 pounds, and receive tracking and delivery confirmation services for a low rate. Often, it costs less to ship a package to a U.S. destination from China than it does to ship that item domestically.
Sites like Wish have created a whole new type of shopping for customers whose first priority is low prices. They include Darlene Echaverria, 58, who stumbled across Wish when shopping for her grandson in 2016. He had asked for some Adidas Yeezy shoes, which sell for about $300. Echaverria, a retired nurse, wasn’t going to spend that much on sneakers, so she googled the shoes to see if she could find a cheaper version. Her search brought her to Wish, where a sneaker that looked similar to the Yeezy sneaker was selling at just $16. “I thought it was too good to be true,” she told me. When they came after a few weeks, her grandson loved them, but she had ordered the wrong size, so Echaverria now wears them.
Since then, she’s purchased dozens of things on Wish, including $4 bras, $6 jeans, and a $60 coat. She bought a $400 pool vacuum cleaner that was marked down to $75, and it still works, she says. She estimates that she bought things from the site a few times a week, until her husband nagged her to cut it out. Sometimes, the site will offer her things for free, like clothing for her Chihuahua rat terrier—she just has to pay for shipping. Since the goods aren’t coming from a retailer, they’re often packaged oddly: Shoes come wrapped in bubble tape with no shoebox, electronics come without any English instructions. But Echaverria says that as long as people know they’re getting a cheap item from China, they’ll like Wish. “You have to set your expectations realistic. If you don’t you’re going to be disappointed,” she says. “It’s not like you’re going to Dillard’s and spending $100 on jeans. You’re getting $5 jeans.”
Wish presents a significant challenge to the U.S. importers and manufacturers who have to compete with websites selling cheap stuff directly from China. “If you’re a manufacturer in the United States, you’re not happy about this, because you can’t make anything as cheaply as the companies in China can,” Kaziukėnas told me. It’s much cheaper to make goods in China because of the low cost of labor and lax labor requirements. That’s why shoppers once flocked to stores like Target or Walmart, where they could buy low-priced goods imported from China. Target and Walmart provided quality control, but for customers willing to take a risk, sites like Wish work well. Why buy a $40 bikini made in America when you can buy a $4 bikini directly from China? For that matter, why buy a $20 bikini made in China but imported by a U.S. company like the Gap when you can buy a $4 bikini directly from China?
Sites like Wish also create problems for localities trying to collect sales tax on items sold online. Most sellers from China are third-party sellers, which means that sites like Amazon and Wish do not have to collect sales tax on items sold in most states. (Many states are currently fighting this practice in court.) Even if more states begin requiring third-party sellers to begin collecting sales tax, it will be more difficult to enforce the law against companies based in China than those with a U.S. presence. “A lot of states say a lot of these Chinese companies are not paying taxes at all because they are foreign entities and they don’t care,” Kaziukėnas said.
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Still, there are signs that some customers won’t stand for low-quality products. As I’ve written before, sites like Amazon that enable third-party sellers—including those in China—to sell counterfeit and knockoff products are facing a wave of lawsuits from consumers and companies that say the websites themselves should be responsible when customers receive poor-quality or counterfeit products. One series of lawsuits blames Amazon for selling hoverboards from China whose batteries explode. Customers who buy products from Wish or other direct-from-China sites may be so disappointed with their purchases that they’ll return to buying from brand-name merchants whose products they trust. “We have a pretty high bar for quality in this country,” Sucharita Kodali, a retail analyst at Forrester, told me. “People will try this stuff once, have a bad experience, and they never buy it again.”
Reviews of Wish suggest that many customers have indeed had bad experiences. The 512 customer reviews of Wish on Hiya.com are mostly negative, with one-star reviews and customers calling the company a “scam” and a “rip-off.” They tell stories of the site sending rings that turn fingers green, products paid for and never received, and requests for returns and refunds ignored. “Yes, you save money, if you actually get your stuff! Never again will I ordered [sic] from Wish,” one customer, Regina Ashley, wrote. (Ashley, a Virginia resident, confirmed to me in an email that she had written the review.)
I reached out to Wish to ask them about their business model and negative customer reviews, but the company doesn’t appear to have much of a presence in San Francisco, where its website says its headquarters are located. In the “Contact Us” section, Wish shows a Google Map of downtown San Francisco, but with no pin on the map to show where the company is located. I emailed support, which was the only way I could figure out how to contact Wish, and said I was a reporter hoping to talk to a spokesperson. The reply was cryptic: “Unfortunately, it doesn’t sound like we require your services at this time, but thank you for your interest and thank you for contacting us,” an email from a customer-support member, Justin, read. When I replied that I wasn’t looking for customer support, but a press person, I didn’t hear back.
My own Wish shopping experience didn’t make me likely to go back to the site. The “Smart Watch” pedometer does not measure my steps, no matter how hard I stomp. Reading the tiny two-page user guide, which is printed in Chinese on one side and English on the other, does not help. Here are the first two sentences about the pedometer function: “Pedometer designed specifically for those concerned about the health. recommends the use of chest stride proudly state of motion, the magnitude of the normal walking arm, enabling a more accurate count to the number of steps.”
The watch keeps asking me to insert a SIM card to use most of its functions, yet none of the three phone stores I went to in San Francisco’s Chinatown could find a SIM card that worked. One store kept feeding the watch different SIM cards, just to receive an error message. I bought a memory card so I could use the watch’s camera function, but the camera takes photos upside down, and only if you hold the watch at an odd angle.
For now, I plan to relegate it to my drawer of cheap crap I’ve bought from different places: dollar stores, vending machines at supermarkets, Amazon.com. At the end of the day, it seems, you still get what you pay for.