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 is continuing to grow rapidly. According to a survey of eCommerce activities conducted in the 3rd quarter of 2023, over half of respondents were making online purchases of products or services on a weekly basis. Estimates suggested that the revenue of the eCommerce industry is projected to exceed $10 billion by 2027. Furthermore, the eCommerce landscape in Israel is diverse, spanning electronics, tourism, food and drink, and fashion.

In 2024, online expenditure on fashion reached to over $1 billion, making it the most lucrative segment among observed products, second only to consumer electronics. The role of eCommerce in retail is becoming increasingly central, with numerous traditional players now offering complementary online services for apparel items, shoes, and accessories. As the online fashion industry continues to flourish, it is projected to generate over $2 billion in annual eCommerce revenue by 2028.

In keeping with global trends, many traditional Israeli retailers are migrating to online platforms, with some even becoming predominantly online sellers. A case in point is KSP, which transformed from a conventional computer retailer to one of the largest eCommerce sites specializing in electronics. Shufersal, Israel’s largest FMCG retailer, has also emerged as one of the country’s leading online retailers, with online revenues making up over 15% of its total revenue. As of November 2024, AliExpress was the most popular eCommerce platform in Israel on the global stage, followed by SHEIN at a significant gap.

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, 90% of Israelis shop online with over 50% of the respondents using the internet purchased a product or service online weekly, as of 2024. In addition, Israelis have been increasingly turning to online grocery shopping and delivery services due to their busy lifestyles. Many consumers prefer the convenience of having groceries delivered to their doorstep rather than going to the store themselves. Additionally, the COVID-19 pandemic has accelerated the shift towards online shopping, as more people opted for contactless delivery to reduce the risk of infection.

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 

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.  The ad spending in the ‘Social Media Advertising’ segment of the advertising market in Israel was forecast to continuously increase between 2024 and 2030 by in total $383.8 million (+83.8%). 

After the ninth consecutive increasing year, the ad spending is estimated to reach $841.75 million and therefore a new peak in 2030. Notably, the ad spending of the ‘Social Media Advertising’ segment of the advertising market was continuously increasing over the past years. 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). 

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. The ad spending in the ‘Social Media Advertising’ segment of the advertising market in Israel was forecast to continuously increase between 2024 and 2030 by in total $383.8 million (+83.8%). 

After the ninth consecutive increasing year, the ad spending is estimated to reach $841.75 million and therefore a new peak in 2030. Notably, the ad spending of the ‘Social Media Advertising’ segment of the advertising market was continuously increasing over the past years. 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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