Israeli Retailers Opportunities in eCommerce

eCommerce
Guest Lecture at Arison School Of Business
IDC Herzliya
Guest Lecturer: Dave Yakar
Founder @ Go Global | eCommerce Agency

Today’s Subjects
1. The Rise Of eCommerce
2. The opportunities in eCommerce for Israeli
Retailers
3. eCommerce Models

1. The Rise Of eCommerce
1. Israeli Entrepreneurship in eCommerce
Channel
2. Trends In The World Of eCommerce
3. The Israeli Consumer and Online
Shopping

(Israeli) Diamonds are a girl’s best friend
Israeli Entrepreneurship in eCommerce Channel

(Israeli) Diamonds are a girl’s best friend
Flourishing trade in The Diamonds Exchange Center

Jewish Jewelry and Judaica

From Bnei Brak With Love
Prescription Glasses Online

Namefully - Name Jewelry
It started as a small business, today there is an arrangement with the
Israeli Post, a truck comes specially every day to pick up the packages

Tactical Gear

Gas Masks On ebay
Family Deals Available

Rising demand for workers in the field

Small businesses succeed in their eCommerce ventures

For the first time - eCommerce School

Creativity In Product Illustration
How many cards are in your wallet?
http://bellroy.com/slim-your-wallet
Trends In The World Of eCommerce

360 degrees product illustration
https://www.magictoolbox.com/magic360/examples/

Virtual Try On
http://www.trylive.com/demos/trylive-eyewear/player-fitting-room

Mobile vs. In-Store
Mobile phone becomes an integral part of In-Store shopping

Mobile vs. In-Store
Threat for retailers: a quarter of mall shoppers in the US on Christmas
2014 say they made purchases with mobile phones while waiting in lines

It’s all about the customer
"We believe that
customer service
shouldn't be just a
department; it should
be the entire
company.“
Tony Hsieh
(CEO Zappos.com)

Israel Post fails to adapt

Operation Save Santa
http://kdvr.com/2015/12/23/usps-deliveries-arriving-late-check-your-porch-before-bed/

But who needs Christmas??

Traditional retail is transforming
“By 2022, brick and
mortar retail spaces will
be little more than
showrooms.”
Eddie Machaalani &
Mitchell Harper
(Co-CEOs of
Bigcommerce)
The Israeli Consumer and Online Shopping

Or maybe brick and mortar retail spaces
are a little more than showrooms today
-An article explaining how Israeli shoppers use retail store for size
measurement and than buy the product online from abroad

Offline / Online – Is there any difference?
Macy’s Goes Omnichannel
https://www.youtube.com/watch?v=L62N0XOsmgU

Threat for local retailers: 60% of the Israelis’ online shopping
are Cross Border. A large share of the online retail market

Top sites in Israel
Right after Facebook and News – Shopping Online

Big spenders in global scale

A threat to Israeli retailers
The Chinese are coming!!

And it looks like they have secret weapon

Wait one moment!
There is high Demand: The Israeli consumer shops
online and would prefer buying from local retailers
There is enough Supply: Local retailers offer more than
enough goods tailored to the Israeli taste
There’s an Economic Vacuum, the local consumer’s
choice to shop Cross Border when all the goods are
available in the local market is an Economic Distortion

Why are the Israeli retailers sleeping while on duty?

Summary - The Rise Of eCommerce:
 Small Israeli businesses are thriving in eCommerce sales
channel to the global market
 The Israeli consumer shops online... and a lot!
 With the rise of eCommerce comes a critical threat on a
significant share of the online (and offline) market

2. The opportunities in eCommerce for Israeli Retailers
1. The Opportunities in the local market
2. The Opportunities in the global market

Bricks and Clicks
Synergy: Integration between the store chain to the online shop
Opportunities in the local market

A completing channel for the store chain channel
For customers in areas where there is no store

Online catalog, new arrivals updates
Anything that would bring the customers to the stores

“Innovation
distinguishes
between a
leader and a
follower”
Steve Jobs
(1955-2011)

Rare opportunity to lead the
market and differentiate the brand

Opportunity to take a bite of the Cross Border
competitor’s market share, 60% of total online spending

A new Marketing Channel
Endless markets in the global arena
Opportunities in the global market

Global traders benefit of 17% Sales Tax
exemptions for export shipments

Taxes benefit for exporters of Israeli goods

Taking advantage of free trade agreements
such as Mercosur Agreement

Argentina USA
Usage of different brand name in
other markets for many reasons

Bargaining power as a buyer

Forward integration – expand activities to include
control of the direct distribution of the market
Becoming a retailer instead of wholesaler

The perfect solution for seasonal product categories
Australia and New Zealand: Coats in the summer, swimwear in the winter

So why retailers are not doing anything about it??

3. eCommerce and organizations
1. The organizational challenge
2. Awakening demand for consultation
3. Business models

“It is not the strongest
or the most intelligent
who will survive but
those who can best
manage change.”
Charles Robert
Darwin
(1809-1882)

The venture is treated as branch # 155, another store
eCommerce activity has completely different set of needs
and requires focus as a separate independent channel
The organizational challenge

Today’s Status: many companies in recent years got burnt in an attempt to
set up eCommerce activity by suppliers without sufficient knowledge
I will build you a website... For only $100,000

A website is not a solution, without formulating clear vision and strategy
funds will be invested on an online venture and the project will fail

Many retailers are afraid of losing the current physical
advantage in a new channel (and beginning)

Inflexibility of organizations in containing new ventures
Formal organization built many complex processes
and may act as a barrier to effective entrepreneurial activity

eCommerce venture - a new realm of high technology
marketing and is not a part of the core activity of the firm

Technology
Implementation of knowledge and many processes along with
a shortage of qualified suppliers in the domestic market

Lack of knowledge in product management in international markets
Conversion of thousands of products to different languages

Lack of global marketing experience / strategy
Loss of brand value in a foreign environment

Cannibalization
Competing with the company's physical stores

Low customer service awareness in Israel comparing to the world
The heart of eCommerce activity is customer experience

eCommerce project is a cross-organizational
The challenge is cooperation of senior management in favor of
changing the perception of the organization from top to bottom

At first no manager in the organization
would want to adopt the new kid

After the first 100K all managers will seize the opportunity

This will be the CIO’s reaction after understanding
the necessary integration with the ERP system

And this is the CMO after hearing the
extreme change in the marketing strategy

And the CFO when he found out about the
need for bank accounts in Japan and the US

And the COO’s response to the need of a dedicated
warehouse and shipping within 24 hours

And the this is how the consultant will feel

And all this with the difficulty of proving the ROI
When the venture didn’t show a first shekel in sales

Today’s status: re-awakaning of demand for consultation
Many companies assigned budgets for eCommerce and it looks
like organizations are willing to invest on ‘Round Two’
Awakening demand for consultation

Golf acquires Adika for 40 Million Shekels

Organizations understand and feel the threat from cross border
competitors and the need to align to today’s market requirements

There is an understanding that the nature of eCommerce is not
a site, it is a vision and strategy and these activities require
professional consultancy in setting up the project

In-House model
Establishment of eCommerce
SBU within the organization
Business models

In-House model
Starting points of the organizations who choose this model:
 Refresh the existing online presence strategy of the organization
 An organization that wants the ability to manage the brand presence
across all channels
 Improving and refreshing an existing eCommerce business unit
 An organization with a vision and strategy for the online channel
 An organization with a centralized nature
Business models

In-House model
Abilities and functions involved in this model:
 Cross organizational project
 Needs to be sponsored by one of the senior ranks or by the CEO
 Support most or all of the functions in the organization (as noted in
previous chapters)
 Online marketing vision and strategy development
 Implementation of technological knowledge in the organization
 Rewriting of many processes
 Recruitment and building the eCommerce unit in the organization
Business models

“An important
re-engineering
principle is that
companies should
focus on their core
competence and
outsource
everything else.”
Bill Gates
Outsource model
Cooperation with a company that specializes in eCommerce
Business models

Outsource model
Reasons for choosing this model:
 Professionalism
 Quick launch and GTM
 Each party is measurable and maximizes its capabilities
 Different needs in moving the project away of the organization
 Minimum investment
 Strategy: First step is outsource and the next step will be
implementation of capabilities within the organization
Business models

 In this model there is a minimal dependence on the
organization’s capabilities
 IT level: There is a need for integration to the corporate’s ERP
 Product and service level: SLA development for the online
channel, inventory availability, quality control, deliveries within
24 hours of orders and implementation of many other
processes
Outsource model
Business models

Back to Back Wholesaler model
Selling to online retailers
The organization
as a wholesaler
Online retailerOnline retailerOnline retailer
Consumers
Business models

Wholesaler model
Reasons for choosing this model:
The lack of eCommerce strategy
Minimal investment and risk
A decision to stay as a retailer in the local market and
operate on a B2B model in other markets
Strategy: Learning the market at the expense of other
retailers
Business models

 IT level: Integration to the corporate’s ERP
 Product and service level: SLA development for the online
channel, inventory availability, quality control, deliveries within
24 hours of orders and implementation of many other processes
 Sales and marketing level: development of a sales unit
specializing in acquisition of retailers as clients
 On development level: Website, lead generation system and
other technological solutions
Wholesaler model
Business models

Dave Yakar
Linkedin: linkedin.com/in/daveyakar
Facebook: facebook.com/dave.yakar
email :dave@goglobal.co.il
Phone: 052-5744444

Israeli Retailers Opportunities in eCommerce

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