OpinionSkeptical shoppers: Overcoming Israeli hesitancy to online purchases
Opinion
Skeptical shoppers: Overcoming Israeli hesitancy to online purchases
The startup nation fears buying online, but it has the potential to change according to Ariel Boucai, Marketing Director at Trafficpoint
Israel is respected worldwide both for its innovation and sophisticated technology. Yet, many Israelis still seem to struggle with fully trusting the online world, especially when it comes to purchasing items of significant value.
There is no denying that eCommerce is on a fast track to becoming the dominant way of doing business worldwide. On top of that, the effect of the Coronavirus pandemic was like adding gasoline to a fire. Virtually overnight, the eCommerce industry exploded. So why does the start-up nation remain largely hesitant to buy online?
At least part of the reason for the slower growth of eCommerce lies in cultural differences. For Israelis, the weekly errand run is all about interacting with shop owners. How else will they find the greatest bargains, pick out the best products that week, learn the neighborhood gossip, and, on a good day, discover the well kept secrets of the storeowner's grandmother's recipes? You see, for many, it isn’t just about picking up a few items, it's also about connecting with neighbors and feeling part of a community.
Turning our attention to the United States, we see an entirely different mindset. America is a nation that always seems to be on the move especially when the move is in the pursuit of an upwardly mobile career. Because pulling up stakes and starting life over in a new city is expected, Americans rely less on the immediate community.
It is interesting to note that online merchants in the US put a great deal of emphasis on nurturing a relationship with their customers. Reaching out to customers via email and e-newsletters creates a sense of community in the virtual world, and although the person has moved, they take comfort in the fact that their online retailers stay the same.
The premier example of this would be Amazon.com. Amazon has proven that by concentrating on the customer journey and removing the friction points in the buying process, online searchers become buyers. Amazon has over 200 million PRIME members worldwide. These are consumers who pay an annual fee of $139.00. That’s $278 million just for the right to access special benefits BEFORE making any purchases. Israeli merchants would do well to study the Amazon online model, to increase their own sales volume and customer loyalty.
According to Pew Research, eight out of ten Americans regularly shop online. One might assume that it’s the convenience that attracts Americans. After all, they can open an app on their mobile phone and order food from their favorite restaurants in seconds. They can easily purchase their groceries online and have them delivered that day.
Americans have become so comfortable with online purchasing that companies like Tesla have migrated most of their marketing efforts and customer acquisition online. Today the average American does not even hesitate at buying a car online. Israelis, on the other hand, take larger financial decisions seriously and even buying a laptop online can be a stressful event. However, the potential of the Israeli eCommerce scene is apparent to companies like Tesla, which has entered the Israeli market strictly online.
Online purchases in America are predominately influenced by convenience followed closely by price. Research has shown that US shoppers are deal seekers and use the convenience of the Internet to identify the best price point before moving forward with their purchase. The tipping point for many online purchases was free shipping.
So how does Israel compare in the eCommerce market? Israel’s population is over 35 times smaller than the United States, which has a population of 334,000,000. This goes hand in hand with Israel placing 36th in the world in eCommerce market size, whilst America comes in second. America’s readily available high speed internet, click, buy and pay later culture, and extensive dependable nationwide delivery systems, headlined by the postal service with several additional national delivery companies, all contribute to America’s eCommerce heavy culture.
The numbers and eCommerce contributors speak for themselves. What America has in terms of population size, willingness to buy, and a trusted online infrastructure Israel still clearly lacks. For a retailer looking to expand online the American market is mature and ready, while Israel remains skeptical.
The future of eCommerce in Israel.
Israel is certainly not limited when it comes to innovation and technology so that is obviously not the issue. On the other hand, when it comes to culture and tradition it takes a powerful shift in society to overcome these self-imposed limitations.
The impact of the pandemic with the forced sheltering in place has already caused a massive surge in online purchases in the already dynamic American market. If the same can be expected here, the Israeli eCommerce market should also see a positive breakthrough based on current trends with a massive upsurge in volume by 2025. IF online merchants will adopt proven American methods.
- Simplified returns of purchased items.
- FREE shipping upon reaching a set cart amount threshold.
- Special memberships with additional benefits.
It is only a matter of time until Israeli merchants continue to expand their online efforts, respond to the concerns of their customers, make the effort to cultivate brand loyalty and ultimately shift their communities to a digital sphere.
Watching this unfold in the days and months ahead will be interesting.
Ariel Boucai is the Marketing Director of Trafficpoint.
