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Yarkon Insight

Israel – eCommerce

Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.

Last Published:12/10/2019

Israel represents an excellent opportunity for foreign sellers of consumer goods because of high retail prices in Israel and the lack of domestic ecommerce competitors. The country’s middle class is looking for high quality, less expensive goods and are willing to buy from foreign eCommerce merchants

According to research firm Statista, 2019 eCommerce revenues in Israel are predicated to reach $3.8 billion and rise to $5.5 billion in 2023, a compound annual growth rate of 10.4%. The market’s largest eCommerce segment is Toys, Hobby & DIY, with a market volume of U.S. $1.2 billion in 2019.

While Israel is known for innovation and sophisticated technology, its consumer goods are often inferior in quality to those made in foreign countries and more expensive. Residents are eager to purchase everything from jeans to shoes to kitchen gadgets from foreign countries. China’s Alibaba, the largest eCommerce company in the world, has invested in several Israeli technology startups. Israelis like to purchase goods from Alibaba, which contributes to Chinese companies, collectively, being the top eCommerce source for Israelis.

Current Market Trends

  • A strong presence of foreign eCommerce in Israel has created a more competitive local environment and has pushed the Israeli players to offer equivalent services and products to retain their position in the local market.
  • The average annual revenue per user is $641.17. 53.8% were male users and the remaining 46.2% were female. The dominant user age groups are 25-to-34 and 18-to-24 of eCommerce buyers.
  • In 2017, the Israeli government changed its rules to make foreign companies subject to Value Added Tax (VAT) collection on digital services. A company must collect VAT if it has an online presence targeting Israeli consumers or has representatives seeking to find Israeli customers. Downloaded apps, software, music, games, television programs, films, and online gambling are all subject to the country’s 17% VAT.
  • Physical goods worth up to $75 are exempt from all taxes and purchases of up to $500 are exempt from duties but still subject to VAT. For example, Amazon must charge VAT on virtual products like ebooks, but not on physical books costing less than $75.

eCommerce Intellectual Property (IP) Rights

The Israeli IP law is written pursuant to the TRIPS agreement, therefore, Israel’s custom department is authorized to follow up on any IP, trademarks, and copyrights violations caused by imported products.

Online Payment

Israelis are avid credit cards users, with MasterCard being the most popular. PayPal is growing in popularity. Other leading payment processing firms include the following:

  • AllCharge, based in Israel, specializes in billing and processing services for merchants. The company is a full-service provider offering credit card processing, fraud and risk management, and content management.
  • ImGlobal Payments is an Israeli payment service provider offering payment solutions and multi-currency processing (supporting 150 currencies).
  • Tranzila is a merchant services and ecommerce payment processor based in Israel. Tranzila offers credit card processing in addition to eCommerce hosting, eCommerce management, and fraud detection.
  • Zooz enables merchants to link back-office functions to global payment systems. It connects with multiple financial institutions and integrates acquirers, e-wallets, alternative payment methods, fraud management, and other third-party services, while routing transactions through the payment process.

Major Buying Holidays

  • Local religious holidays, including Passover, Rosh HaShana (Jewish New Year), Sukkot (Feast of Tabernacles) and Hanukah, are all popular gift-giving holidays.
  • Black Friday and Cyber Monday have both become popular sales opportunities for the Israeli retail market.

Social Media

Social eCommerce has become a strong division of eCommerce that involves social media platforms and online media that support social interaction and consumer contribution to assist online buying and selling of products/services.

Today, social eCommerce has become the focus of competition between eCommerce companies. As a country, Israel is very active on social media. According to Internet World Statistics there are nearly 4 million Facebook subscribers, which accounts for 50% of the population. As a result, eCommerce companies spend increasing resources on their social media presence.Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.

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