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Israel: the e-commerce gateway to a skyrocketing market

Israel’s e-commerce market is rapidly expanding thanks to rising consumer incomes and a vibrant digital landscape, with Israel serving as a strategic destination for IT and logistics services. This unique pairing makes Israel the gateway to e-commerce in a skyrocketing market .

Local consumers are increasingly eager to buy online, which creates perfect conditions for international sellers. In this article, you’ll find valuable insights into the opportunities that await merchants, buyer behaviors and preferences, as well as an outlook for the future. Let’s start with a quick overview of the e-commerce market.

General landscape

The pandemic has led to a massive increase in new online users in the European market very quickly. 

A growing number of consumers, as well as online stores and logistics solutions, is driving online purchases.

Currently, most online stores marketed in Europe export to countries within the European Union; however, recently there is an interesting shift regarding European exporters focusing specifically on Israeli markets.

Europe’s e-commerce retailers have discovered Israel as the perfect market for their business. There are many good reasons why.

Israel e-commerce market

Globalization makes cross-border e-commerce the norm for shoppers around the world. The following analysis of Israel’s opportunities revealed some interesting data points.

The number of Israeli e-commerce users is predicted to rise from nearly 4 million in 2023 to 5.2 million by 2025. From $7.1bn in 2022 and $8.1bn in 2023, total e-commerce revenues are expected to rise 48.3% to $12bn in 2025. In addition to its relatively high wages, low unemployment, and the fact that 73% of online shoppers prefer to buy clothes, footwear, electronics, household appliances, and cosmetics with their disposable income, Israel becomes a very promising destination for e-commerce retailers in Europe.

Israel e-commerce market growth

Since the pandemic, Israel has led the way for e-commerce developments, further the country’s digital transformation efforts are set to escalate. Fashion, footwear and apparel are all seeing exponential growth, demonstrated by the market’s largest segment, women’s apparel, with an estimated market volume of $2.3bn in 2021. That’s up from $1.8bn in 2020, an increase of 26%. When physical stores were closed, online – specifically, mcommerce – became the primary channel used across Israel, reflective of the retail landscape worldwide.

Relationship with the DACH market

Emerging markets such as Switzerland, Austria and Germany, which export hundreds of thousands of packages each month to end customers in Israel, benefit greatly from cross-border trade and localization. 

Online shopping is popular among Israelis, and the variety of goods available to them is expanding, including pharmaceuticals, cosmetics, electronics, contact lenses, books, textiles, food, and household goods.

Based on the U.N.’s COMTRADE database on international trade, Israeli imports from Germany reached US$5.71 billion in 2021.

Trade picture

As of 2020, Israel represents 0.9% of the EU’s total trade in goods; In the Mediterranean region, it is also a major trading partner of the EU.

According to the World Trade Organization, the EU is Israel’s biggest trade partner, accounting for 29.3% of its goods exports in 2020. Israel imported 34.4% of its goods from the EU and exported 21.9%.

Also, a total of €31.0 billion was traded between the EU and Israel in 2020. Its imports from Israel were worth €11.5 billion, with chemicals accounting for 44.3% (€5.1 billion), machinery and transport equipment accounting for 20 percent (€2.3 billion), and other manufactured goods accounting for 11.3% (€1.3 billion). Machines and transport equipment accounted for 39.5% of EU exports to Israel, followed by chemicals (20.5%), agriculture (2.4 billion, 12.3%), and other manufactured goods (10.2%).

A total of €15.9 billion was traded in services between Israel and the EU in 2019. EU-based imports of services accounted for €6.6 billion, while exports accounted for €9.3 billion.

Returns

One of the distinct services recently developed are the returns services. The digital purchase experience, along with the convenient payment options for consumers all along arises the need to provide return services as a simple and efficient process.

German consumers are an excellent example – German e-commerce does not heavily rely on credit cards, unlike in English-speaking countries. Due to this, buyers do not have to pay in advance. The customer is free to try the product once the order has been sent. In this case, they can either return the goods or pay within the agreed time frame, usually between two and four weeks.

European most common payment methods are PayPal, direct debit, and credit cards; Bank transfers and invoices are accepted by many sites. Any customer can cancel or return an order online within 14 days, no matter what the reason is. 

Therefore, Germany has a high return rate, especially in the fashion industry, where 32% of product purchases were returned in 2021.

In contrast to the German consumer, the Israeli consumer is completely different. In comparison, the Israeli return rate is significantly lower, due to the fact that the Israeli market mainly uses credit cards for payment. Therefore, payment is accepted before receiving the product, which reduces return requirements.

Additionally, not all e-commerce companies offer return services.

Gaash WorldWide handles huge volumes of parcels every month and recognizes a growing demand for return services. That is why the company invested in technological innovations that created a smooth integration between all the suppliers involved in the supply chain process and thus created an efficient and simple return process. That gives e-commerce store owners more confidence to increase sales by providing quality logistics service to their customers.

Where to find Israeli online shoppers?

Are you planning to enter the Israeli market? You might need an active Facebook account

Facebook is undoubtedly the preferred social media platform among leading retailers in Israel.

Live streaming, and promoted content make social media a crucial element of e-commerce. The key to reaching young consumers on social media is to be present on the networks they use.

Therefore, it is not surprising that all the leading retailers in Israel use Facebook, while only about 64% use Twitter. Instagram has also been growing in popularity in recent years, with 91% of Israeli retailers using it.

By analyzing these statistics, we can see that different sectors use Twitter significantly less; About 54% of the leading food and personal care retailers used Twitter in 2020, according to ecommerceDB. A similar percentage is found in the electronics, media and fashion sectors. In contrast, only 17% of top retailers selling furniture and electrical products and a fifth of retailers selling toys used Twitter.

A first official meeting of the Israeli Metaverse community was held in early January 2022, attended by 120 developers, including entrepreneurs, academics, and government officials. As long as Mark Zuckerberg’s bet on virtual reality proves successful, Israel will be well positioned as a focus for significant inward investments.

Logistical solutions – delivery as the key to success

For reliable visibility in the e-commerce supply chain, as well as for customer satisfaction, efficiency, and service delivery process is essential. To meet the changing needs of businesses and consumers in the field of e-commerce, logistics and infrastructure are essential to the success of online sales and delivery of goods. This seems to have been well understood by many European countries.

As e-commerce grows, suppliers also seek to improve the quality of their services by expanding their logistics networks. In order to achieve this, they invest in infrastructure management centers. In addition to upgrading existing facilities, new sorting and delivery centers will be established.

In modern commerce, Gaash Worldwide offers an interconnected network of professional warehousing, fulfillment, and delivery services through its Logistics-as-a-Service platform.

Our advanced technology and cloud software allow trading businesses to find the right logistics providers in the required target markets, while managing and optimizing all logistics processes. No matter which channel products are sold, we connect, optimize, and expand independent brands with high-speed delivery.

We provide B2C brands with access to best-in-class logistics. Our goal is to empower modern businesses by providing them with this technology.

A connected network across Europe and Israel is available to merchants through our technology platform.

We provide simple access to businesses that sell products worldwide to end customers.

It takes only one simple integration with our platform to manage and monitor all locations using one unified cloud platform.

Having handled approximately half a million packages per month on the Europe-Israel route, we have developed export and return solutions, creating an envelope that creates trust between customer and seller.

Gaash Worldwide provides a wide range of services, including returns, customs clearance, warehousing, distribution centers and international air freight.

Unique opportunities waiting for international sellers

In summary, the Israeli e-commerce market is poised for rapid growth, and the attitude of consumers toward online shopping offers numerous opportunities. There are some unique behaviors of buyers that merchants must pay attention to in order to access this market. There is a strong preference among Israeli consumers for trusted domestic brands and marketplaces. A growing marketplace share, rising consumer incomes, and younger generations entering the market will increase the interest in products offered by international sellers in the near future. Delivering fast and convenient, and reaching the consumer where they are most likely to be, will help unlock not only the big e-commerce market in Israel but also the opportunities for further expansion in Israel.


Article author: Guy Snir
Growth Leader at Gaash Worldwide

If you would like to learn more about logistical solutions for Israel, you can contact: [email protected]

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