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Wednesday, January 16, 2013

The Israelis Are Coming To eBay

Source: Haaretz
By Maya Epstein



For years, Israel was no more than a store for eBay. The e-commerce behemoth viewed it as a land of plenty indeed - for new technologies. Not income.

That may be changing.

eBay has operated an R&D center in Israel since 2007, after buying start-ups Shopping.com and The Gifts Project. It employs 350 people at its R&D center in Netanya and at its subsidiary PayPal in Tel Aviv. Now eBay is courting not only potential acquisitions, but small businesses as well, urging them to hawk their offerings through its global shopping platform.

It's talking and Israelis are listening. Tens of thousands of Israelis have sold one or more product on eBay in the past year, says eBay Israel's manager of business development, Elad Goldenberg.  Several hundred Israeli small businesses (meaning companies with one to 10 employees) have begun to sell significant quantities of goods through the site.

What are the Israelis selling? A vast cornucopia of goods, from diamonds to spare auto parts, from olive oil to hookahs. 

As for what people are buying, one eBay customer was noticed placing orders every week for packages of Bamba peanut puffs and Bissli snacks from Israel.

The company's business model is based on charging fees that range between $0.10 and $4.00 for any item sold on the site. The average total commission charged by eBay for a sale made on the site lies somewhere between 6% and 12% of total sale value, depending on the goods category and the use of additional services to help promote sales on the site.

How much does all this add  to for eBay? Well, it's expected to launch a Hebrew language version of its e-commerce portal at the web address export.ebay.co.il.

Challenges of global commerce

It isn't just minnows eBay hopes to coo into its embrace. The firm has been wooing some of Israel's largest retailers of clothing, consumer electronics, cosmetics and eyewear to open online stores on the company's website. 

If Israeli retail chains can handle the logistical and marketing challenges of global e-commerce, they could expand their market reach from Israel's roughly 7 million consumers to 114 million eBay users.

So far about a dozen underwear, eyewear and clothing accessories Israeli retail chains sell goods through eBay. For some, this is their only online presence. None operate on eBay using their brand name because by sending products directly from warehouses abroad, the chains save money on store space and import costs.

eBay hopes that in the coming months more retail chains and Israeli online commerce companies will start using its e-commerce platform.

"Chains like Tommy Hilfiger, Timberland and Toys-R-Us are active on eBay," says local manager Elad Goldenberg. "There is no reason for Israeli chains not to have a presence."

Logistics is the weakest link

As eBay attempts to encourage Israeli businesses to sell through its website, an industry of Israeli start-ups specializing in setting up eBay stores has popped up.

"To set up an international sales network, you need people who know how to work in an eBay environment, to handle the logistical aspect," says Goldenberg. "They need to know how to set up a customer service system that communicates with customers in their own language and how to brand the store."

eBay wouldn't reveal how much Israeli companies are turning over through its platform, but would say that the roughly 100 Israeli companies they've been assisting report 30% percent growth in sales turnover.  

"Every 20 seconds, an Israeli vendor sells something on eBay, but one of the major obstacles facing Israeli sellers is shipping and logistics," says Goldenberg. "An American client expects to receive a product they order within two to three days. We encourage our sellers to meet their target audience's expectations."

To lower this barrier to business, eBay has engaged in talks with shipping companies to develop appropriate options for eBay sellers in Israel.

FedEx Corporation, for example, will propose 24-hour delivery service to the United States at the conference on Monday. DHL will offer overnight shipping to destinations in the United States and Europe. TNT Express will let sellers pay using their PayPal accounts, something that wasn't possible until now. Lidor Logistics will offer drop-shipping services to pick-up and distribute goods locally, including from customs, and bring them to customers' homes in the United States. The Israel Postal Company and United Parcel Service are expected to present their own offers to sellers at the conference.