In the past month, one after another, three major players have announced the closure of their e-commerce platforms: Azrieli Group closed Azrieli.com; Shufersal abandoned its Marketplace after just a year; and Melisron gave up on Groo and Baligam, which it acquired two years ago.
The arena that was meant to have become an asset for these players became a burden, even though the volume of e-commerce in Israel is high in relation to the size of the market - so high, that global e-commerce platform Shopify, which has a market cap of $100 billion, has decided to open a first Shopify Plus agency in the country, offering advanced strategies and technological tools adapted specially for the Israeli market and making it easy to expand to overseas activity.
"Up to now, the assumption was that the Israeli market was very small, but Shopify looked at the number of online stores and at surfer traffic in Israel, and saw that revenue was higher than expected in relation to the market. In the past two to three years, our market has overtaken other markets around the world," explains Amos Shacham, CEO of BOA Ideas, which will be a Shopify Plus agency in Israel.
"Of curse, the war has had an impact on e-commerce activity, but not always downward. The brands that have been hurt are those based on mall and street stores, but there are also consumer brands that have experienced growth in revenue. We are not seeing a hit to e-commerce and a downturn in business, only a shift. For the time being, the market is stable and strong. True, there are those that have been hurt, but others were in difficulties even beforehand, and announced their closure only because of the timing of Azrieli."
Shacham says that the failure of the marketplaces in Israel was not to do with the Israeli consumer, but with the technology. "The platforms that shut down are those that chose to develop the solutions themselves, and not buy something ready made. This means very high expenditure on software development and routine maintenance, amounting to tens of millions of shekels annually. They could have been profitable and successful, had they not spent these sums on technology."
Tools for global expansion
BOA Ideas was founded in 2007, and since 2014 it has specialized in developing websites and apps for mid-size and large brands in Israel selling directly to the consumer on the Internet. Among its clients are Nestle Israel, Sodastream, New Pharm, Terminal X, Bit, Golf, and Adika.
The Shopify Plus program is aimed at businesses with monthly sales of at least NIS 1 million. It offers a payment service with clearing in several currencies; sophisticated sales offers and checkout; warehouse management solutions; and more.
"This move will also facilitate global sales for the brands. Moving into overseas sales is a complex operation because of different regulation, taxation, and logistics, and technology can make things much easier," says Shacham. "When I buy from abroad, say on Amazon, the transaction already includes the amount of customs duty. That’s something that wasn’t available on Shopify Israel, and now it is."
Published by Globes, Israel business news - en.globes.co.il - on January 1, 2024.
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