(Bloomberg)—When Kathleen Knight isn’t teaching belly dancing classes in Tulsa, Oklahoma, she’s often searching for bargain clothes, nail art and knickknacks from overseas merchants on Wish. But the one product Knight wishes she’d never bought from the e-commerce app is makeup.
The 41-year-old purchased cosmetics last year that she said were listed as Urban Decay and MAC products. The makeup took about two months to arrive, and when they did, she saw immediately something was off. The eyeliner fell out of its tubes, and some of the eyeshadows had to be chiseled to get any of the product out. The powders smelled vaguely sulfuric, she said, and when she applied them onto her right eye, her skin promptly broke out. “It looked like somebody had punched me in the face,” Knight said. “There was pus coming out of my eye.”
Wish, reportedly valued at more than $8 billion, has built one of the fastest-growing e-commerce businesses today by offering a dizzying range of products that sometimes sell for as much as 90% off regular prices. Its gross merchandise value grew to an estimated 37.5% year over year to $5.5 billion, according to Top500Guide.com.
The bulk of merchandise available through the app comes from distributors overseas. A $30 smartwatch on Wish might take longer to ship, come in nonstandard packaging and lack the specs of an Apple Watch, but shoppers don’t mind because it costs a fraction of the price. That calculus becomes riskier, though, when it comes to cosmetics.
Fake makeup is a widespread problem online. In a recent report, the U.S. Government Accountability Office tested frequently counterfeited consumer products from the marketplaces of Amazon.com (No. 3 in the Internet Retailer 2018 Online Marketplaces), Walmart.com (No. 11), Sears Marketplace (No. 21), Newegg (No. 29) and EBay (No. 4). Officials found that of the 13 cosmetics they purchased, none were authentic. The companies said at the time that they were committed to ferreting out counterfeits.
Wish has largely avoided scrutiny over sales of potentially counterfeit or harmful consumer goods. That’s despite a Danish Consumer Council advisory in April warning consumers against purchasing cosmetics from the app, which is the fifth-most-popular online store in the country. Out of 39 cosmetic products purchased for the study, the group found 21 did not display an ingredients list as required by European Union regulations, and one face cream in the sample contained two prohibited preservatives.
Online—on sites like Reddit and Twitter and in comments on beauty blogger YouTube videos—and echoed in interviews with several customers who spoke to Bloomberg, complaints abound of rashes, pink eye and other skin problems resulting from cosmetics purchased on Wish. The company didn’t respond to multiple requests for comment.
Wish got its start in 2011 as an e-commerce shop for everything from ultra-discounted makeup, to clothing, to home supplies. The San Francisco-based company—co-founded by a pair of Google and Yahoo veterans—quietly generated more than $1 billion in revenue last year and currently lists more than 200 million items, largely from sellers in Asia.
The ascendance of Wish into the global shopping ecosystem was swift. It has been among the 100 most-downloaded mobile apps in the U.S. almost every day since 2015, according to research firm App Annie, and was the 17th most-downloaded iPhone app last year, just ahead of Twitter. It’s backed by more than $1 billion in venture capital.
11% of U.S. consumers are using the Wish app in 2018, up from 6% in 2017, according to Internet Retailer data.
With a million sellers, Wish is about half the size of Amazon’s marketplace and has a mostly young, middle-class customer base. People who shop there love the sheer variety and low price of its goods. Need a corn sheller? It’s $2 on Wish. How about a human-sized Pikachu plush? For $7 and the tap of a smartphone screen, that can be yours, too. The platform’s web interface looks like the lovechild of Pinterest and a swap meet. A search for “makeup” conjures up rows of colorful mascara, eyeliner and eyeshadow, alongside more exotic glittery and metallic polishes. Most are under $10.
But with great scale, comes greater room for error. The site is among the top 10 global platforms with the most counterfeits, said Joan Porta, of Barcelona-based brand protection company Red Points. That places Wish alongside EBay Inc., Amazon.com Inc., Facebook Inc. and Instagram. “We find hundreds to thousands of counterfeit listings every week,” Porta said.
Khue Nong, a bookkeeper from Maryland, bought some eye makeup from Wish early last year. The 25-year-old looked to the app as an affordable way to experiment beyond her usual brown-eyeliner-only routine. “Because I’m not too good with makeup, I didn’t want to spend $50,” she said. She’d been buying discount clothing on Wish for the past couple years and decided to take the plunge into cosmetics, picking up an eyeliner pencil and a black-and-gold cheetah print tube of mascara. “The mascara was really goopy and slimy,” Nong said. “It made strings, like when you pull cheese off of a pizza.”
Nong’s symptoms began shortly after applying the eyeliner. Her eyes swelled, and the skin around them turned bright red. “The next morning, it wasn’t any better,” she said. When the swelling didn’t subside, she finally went to the doctor and received her diagnosis: pink eye.
Concerns surrounding the sale of counterfeit cosmetics are well-documented: In April, the Los Angeles Police Department confiscated $700,000 worth of counterfeit makeup in the city’s Fashion District. The products tested positive for bacteria and animal waste. Fake name-brand makeup seized in Houston that same month had high levels of lead, aluminum and arsenic. Dr. Jessica Weiser, of the New York Dermatology Group, said her practice routinely sees patients with skincare-related reactions to counterfeit cosmetics.
The rise in e-commerce spending has exacerbated the spread of counterfeit goods in the U.S. Consumer demand has been met by manufacturers in China and Hong Kong, which are “able to produce knockoffs very cheaply,” said David Patterson, health and beauty industry lead at Clarkston Consulting. Sites like Wish, where anyone can sell directly to shoppers, are particularly vulnerable. “I don’t think any platform is specifically safe from this,” Patterson said.
Typically, responsibility for policing false merchandise falls to the platforms themselves, said Kimberly Gianopoulos, director of international affairs and trade for the GAO. Companies like Amazon and EBay have built-in mechanisms to try to root out potentially counterfeit products. But enforcement on hundreds of thousands of sellers at once has proven a challenge.
Fakes have plagued Wish for years. In 2016, CEO Peter Szulczewski told TechCrunch that the company had to “educate” Chinese merchants on anti-counterfeiting. “We have to literally tell them that you can’t just put an Apple logo on something and sell it, that that’s wrong,” Szulczewski said. Wish’s website lists a merchant guide prohibiting the sale of counterfeit branded goods. But it remains a problem. Streetwear brand Off-White sued about 160 merchants on Wish in March for allegedly selling garments bearing the brand’s signature stripe-and-arrow logo.
Ashley Essenpreis, 30, said she isn’t surprised by how little she’s heard about problems with makeup on Wish. She didn’t file a claim or ask for a refund from the site after unintentionally purchasing counterfeit Dermacol foundation a couple years ago. When applied, the knockoff had a “greasy oil” consistency and caused a breakout that resembled eczema or psoriasis, she said.
Essenpreis said she realized it was fake based on slight color and detail differences on the toothpaste-style tube compared with the real thing. Because the makeup cost her $6 or $7, she didn’t bother taking action against the seller. “When it’s such a nominal amount of money, you just kind of move on,” Essenpreis said. “I just deleted the app and thought, ‘I’ll never recommend this to anybody.’”
Wish is No. 12 in the Internet Retailer 2018 Online Marketplaces.Favorite