Peter Szulczewski knew there would be questions when his young e-commerce company, Wish, agreed to spend more than $30 million to put its logo on the Los Angeles Lakers’ jerseys over the next three years.
Wish is the maker of one of the most popular shopping apps in the world — and is a likely IPO candidate in the next two years. But it is also known in industry circles for its heavy spending on advertising and other marketing.
Still, when it came to the decision to shell out a reported $36 million to $42 million for the three-year Lakers deal, Szulczewski called it “basically a no-brainer.” I spoke to him in late September, before the start of the NBA regular season. Here are some of the main reasons he laid out for doing the deal.
Los Angeles is Wish’s biggest market
More than half of Wish’s business comes from shoppers living outside of the U.S., but Los Angeles still accounts for more sales than any other metro area. Even so, there’s still a huge opportunity to build awareness there because the majority of Los Angelenos have never shopped with the company. “It’s not like we have 50 percent penetration there,” he said. “Maybe it’s double-digit (percent).”
Credibility by association
Wish’s popularity has been built on super-low prices and its vast selection, but not the brand names on the products it sells because they are, in fact, mostly unbranded. With 35 of the team’s 82 games being televised nationally thanks to the hype around rookie point guard Lonzo Ball, the Wish brand will be in the spotlight.
“The Lakers are an iconic, everlasting, global brand that people admire. That has a lot more impact for us as a lesser-known, young brand than it does for, say, Goodyear (the Cleveland Cavaliers’ jersey sponsor),” he said. “It does a lot for helping establish credibility, and because we’re selling unbranded goods to consumers, our brand really matters.”
The Lakers are huge in China
Thanks in large part to the celebrity of Kobe Bryant, the Lakers are one of the most popular NBA teams in China. And China is where the vast majority of businesses that sell on Wish are based.
“One thing people are overlooking is that we have 600,000 merchants and they were the loudest when we announced this,” Szulczewski said.
A wake-up call to big-name brands
Wish has been able to register billions of dollars in gross sales annually by selling no-name brands. But Szulczewski recognizes we are living in a time where more and more brands are willing to experiment with selling through online marketplaces because of the challenges facing their traditional retail partners.
“Does this open up doors to brands and merchants in the U.S. and Europe?” he said. “I think it does.
This article originally appeared on Recode.net.