Israel Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in israel, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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eCommerce
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General Overview

The International Trade Administration has established the eCommerce Innovation Lab (EIL) with the aim to position the U.S. Commercial Service as a pacesetting resource for U.S. businesses through empowering client-facing staff with a baseline understanding of digital trade, enabling quicker response to client needs by providing value add digital client counseling.

EIL has created a U.S. field-based client digital strategy counseling process that focuses on these key concepts such as a digital strategy that addresses the basic needs of a business required to succeed in cross-border ecommerce sales channels; eCommerce is a sales channel, that crosses all industries that sell or promote brand awareness online; eCommerce Key Performance Indicators allows businesses to understand where their digital efforts are paying off and lastly, eCommerce Business Service Provider Directory (BSP) provides the much-needed follow-up to our digital strategy recommendations that will help the US companies to succeed in overseas markets.

The eCommerce industry in Israel keeps growing. According to a survey on eCommerce activities conducted in Israel in 2022, over 48% of the respondents purchased a product or service online weekly. Estimates show that the revenue of the eCommerce industry will increase from $7.55 billion in 2023 to $11.83 billion in 2027. eCommerce comprehends various segments such as electronics, tourism, food and beverages, and fashion.

In 2021, the online expenditure on fashion in Israel amounted to $1.82 billion. The spending on this type of product was the highest of all the commodities. Nowadays, many physical stores in Israel offer complete eCommerce services for purchasing apparel items, shoes, and accessories. The online fashion shopping industry is thriving. According to estimates, the revenue of the fashion eCommerce industry will increase to over $2.75 billion in 2027 compared to $1.89 billion in 2023.Being a tech driven market, Israel has a growing number of companies and startups that specialize in eCommerce activity and infrastructure; from secured payments to shipping logistics. The increase of eCommerce focused companies, along with the growth in volume of online shopping, advances the development and improvement in the eCommerce supply chain.

In 2022, 74% of online purchase transactions in Israel were paid for by credit card. Paying with a credit card is common for online payments and payments in physical stores. As of January 2023, 79.1% of the people aged 15 and older in Israel owned a credit card. In Israel, there are different types of credit cards issued by global and local companies, and most eCommerce websites accept them as payment methods. In 2022, Israel’s most common card scheme was Visa, at 37% of the market.

Legal & Regulatory environment

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 delivery of digital products like eBooks, but not on physical books costing less than $75.

Consumer Behavior

Purchasing products or services online is widely common in Israel. According to a survey conducted in the country, nearly 50% of the respondents using the internet purchased a product or service online weekly, as of the third quarter of 2022. In addition, around 37% of the surveyed population reported that they used an online price comparison service, while some 21% ordered groceries through an online store. Estimates showed that the e-commerce market revenue in Israel will reach over $12 million in 2025.

Free order delivery is an important driver for online purchases in Israel. A survey considered that most people in the country found it most encouraging to obtain free delivery services when buying online. Other incentives for online purchases were the availability of coupons and discounts as well as next-day deliveries. Generally, online shopping is common among people of all ages in Israel, especially among individuals aged 35-44. According to a survey conducted in the country, as of the 3rd quarter of 2020, the share of internet users who had purchased an online product in the month prior to the survey was between 35 and 44 years.

Intellectual Property Rights

The Israeli Intellectual Property (IP) law is written pursuant to the WTO TRIPS agreement; therefore, Israel’s Custom Authority is authorized to follow up on any IP, trademarks, and copyrights violations caused by imported products.

Digital Marketing & Social Media

The social media advertising industry in Israel is thriving and is a crucial segment of the digital advertising market. Social networks attract large numbers of internet users, especially younger audiences, that see social media as an essential tool for identifying market trends. Therefore, advertisers invest in advertising activities on social networks such as Instagram, TikTok, and Facebook. In 2022, the social media advertising spending in Israel accumulated a value of $358.7 million, and forecasts suggest it will rise drastically to nearly $800 million in the next five years. In addition, influencers – actors, models, musicians, or people without expertise – advertise products or promote content on social media. Projections showed that Israel’s influencer advertising market revenue would reach over $97 million by 2027, a growth of nearly 45% compared to 2022.The high season of online shopping in Israel is Black Friday, Cyber Monday, and around the Jewish holidays when sales are offered (usually September and April). The largest eCommerce conference in Israel is Go eCommerce, which showcases the latest trends & forecasts, innovative solutions, and breaking-through technologies in the eCommerce industry. eCommerce focused companies also participate in broader focused conferences, such as Cybertech Global TLV and International Conference on E-Commerce, E-Payments and Entrepreneurship (ICECEPE).

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Global Business Navigator Chatbot Beta

Welcome to the Global Business Navigator, an artificial intelligence (AI) Chatbot from the International Trade Administration (ITA). This tool, currently in beta version testing, is designed to provide general information on the exporting process and the resources available to assist new and experienced U.S. exporters. The Chatbot, developed using Microsoft’s Azure AI services, is trained on ITA’s export-related content and aims to quickly get users the information they need. The Chatbot is intended to make the benefits of exporting more accessible by understanding non-expert language, idiomatic expressions, and foreign languages.

Limitations

As a beta product, the Chatbot is currently being tested and its responses may occasionally produce inaccurate or incomplete information. The Chatbot is trained to decline out of scope or inappropriate requests. The Chatbot’s knowledge is limited to the public information on the Export Solutions web pages of Trade.gov, which covers a wide range of topics on exporting. While it cannot provide responses specific to a company’s product or a specific foreign market, its reference pages will guide you to other relevant government resources and market research. Always double-check the Chatbot’s responses using the provided references or by visiting the Export Solutions web pages on Trade.gov. Do not use its responses as legal or professional advice. Inaccurate advice from the Chatbot would not be a defense to violating any export rules or regulations.

Privacy

The Chatbot does not collect information about users and does not use the contents of users’ chat history to learn new information. All feedback is anonymous. Please do not enter personally identifiable information (PII), sensitive, or proprietary information into the Chatbot. Your conversations will not be connected to other interactions or accounts with ITA. Conversations with the Chatbot may be reviewed to help ITA improve the tool and address harmful, illegal, or otherwise inappropriate questions.

Translation

The Chatbot supports a wide range of languages. Because the Chatbot is trained in English and responses are translated, you should verify the translation. For example, the Chatbot may have difficulty with acronyms, abbreviations, and nuances in a language other than English.

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