Azrieli Group closing shopping site Azrieli.com, laying off dozens of employees
Azrieli Group closing shopping site Azrieli.com, laying off dozens of employees
Six years after it went live, the Azrieli Group is closing down its e-commerce site, which had difficulty reaching profitability. Azrieli.com amounted a loss of around $90 million over the years
Six years after it went live, the Azrieli Group is closing the activity of the Azrieli.com e-commerce website, which had difficulty reaching profitability. The majority of Azrieli.com's 70 employees will be laid off. The site will continue to operate until December 22.
The site's activity has resulted in a loss of NIS 333 million ($90 million) for the group since it was established. In 2016, the shopping malls group decided to enter the online field and purchased the buy2 e-commerce platform founded by Aviv Medical, for NIS 62 million ($17M), and a year later launched the e-commerce activity under the name Azrieli.com.
However, the activity failed to pick up, and today, the group announces its closure, stating, "The decision to close was made based on the group's assessments that the e-commerce market in Israel is still not developed enough, with a low penetration percentage and a significant presence of global websites. This is in addition to local regulation that strengthens global websites at the expense of local sites, such as exemption from VAT for international sites only."
The group also noted, "Over the years, the group's e-commerce activity has undergone a significant transformation, and changes were made to adapt the product offering to the tastes of the Israeli consumer. Additionally, the entire technological infrastructure was rebuilt. However, these efforts did not meet a large enough market to justify additional investments in the field." The site's CEO, Daniel Koren, will remain with the group and continue to develop the group's application and data.
Azrieli was unable to attract major fashion retailers such as Zara, the Fox Group, Castro, Renoir, and other companies to its website. As a result, it suffered losses compared to the online platforms selling these fashion brands, especially Terminal X, established by the Fox Group, which sells all the group's brands as well as international brands.
The launch of online platforms by real estate groups has sparked conflict with retailers, as they perceive it as competition. Despite several attempts by malls to enter the e-commerce domain, they have all failed. Azrieli's move comes six years after its competitor, the Big Group, realized it couldn't compete with its tenants and abandoned the launch of the trade platform Big Plus, which it had invested NIS 10 million in establishing.
