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Here's Why Wix Just Launched a Mobile App for Customers

After wrapping up its latest fiscal year, Wix (NASDAQ: WIX) CEO Avishai Abrahami optimistically said he believes Wix could power 50% of anything new built on the internet within five to seven years. To fulfill that goal, Wix is going to have to build out a comprehensive suite of tools to meet every possible need, and this latest innovation is one step in that direction.

Last week the drag-and-drop website building and hosting platform launched its first customer-facing mobile app, called Spaces. Let's take a look at what this could ultimately mean for Wix shareholders.

Image source: Getty Images.

What is Spaces?

Traditionally, Wix helps businesses establish an internet presence. However, Spaces was designed not to help the businesses specifically, but their customers instead. Spaces is a mobile app that allows customers to access their favorite Wix-powered websites to book appointments, buy products, receive notifications, and more.

Although Spaces intends to put the customer first, this ultimately helps the businesses as well, since each one becomes more accessible and easier to interact with. In fact, according to Wix, 70% of business owners' customers interact through mobile. With merchants, restaurants, bloggers, photographers, and a bunch of other types of businesses already being powered by Wix, this is one more way that Wix can help its businesses strengthen their customer relationships.

What's so important about Spaces?

It's no secret that Wix has been expanding away from purely subscription revenue lately. Over the last year, business solutions revenue grew from 15.3% to 20.8% of overall sales. Spaces is free to download and doesn't provide any direct revenue on its own, but it enables customers to make easy purchases directly from the app.

While having a mobile app experience is helpful for just about any business today, Spaces should bode particularly well for Wix's restaurant and e-commerce businesses, as customers will be able to make easy purchases or reserve tables at their favorite places. Recent growth in e-commerce transactions has helped Wix increase its gross payment volume by 126% over the last year to $5.6 billion -- and that was done without any real mobile capabilities for customers.

Now, with Spaces already boasting more than 5 million downloads, the process for customer interactions should be even more fluid. In fact, Wix reports that business owners who have adopted Spaces are experiencing a 150% increase in purchases made through Wix Stores (Wix's e-commerce specific store solution).

What does this mean for shareholders?

As I already mentioned, Spaces is free to download and won't be driving any direct revenue. However, greater accessibility to customers' favorite businesses should eventually result in more transactions. With Wix Payments' revenue already growing by 382% over the last year, this new innovation should help Wix sustain strong growth in that area.

While this was Wix's first foray into the customer-facing side of its business, it shouldn't be the last. At the end of the company's latest press release, Wix stated, "The app is the first in a series of native mobile apps Wix will be releasing," implying that there are plenty more innovations in the pipeline.

As Wix continues to innovate on behalf of its users, it further establishes itself as the most comprehensive platform for building and hosting a website of any kind. Not only should that build strong retention, but the robust functionality of Wix's platform should also attract new businesses. This constant rate of improvement from management should instill plenty of confidence for shareholders.

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Ryan Henderson has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Wix.com. The Motley Fool has a disclosure policy.


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