The rapid development of online communications and trading has dramatically increased the global potential for UK retailers to explore international shipping opportunities. Today, a company’s customer base isn’t limited to inside our borders or a hop across the Channel – new, highly attractive markets across the globe are now open in this border-free marketplace.
The UK’s e-commerce export market is incredibly healthy and is growing rapidly. A study conducted by OC&C Strategy and Google UK suggests e-commerce exports could be worth £45 billion by 2020.
This makes it one of the biggest cross-border B2C exporters on the planet, supported by the global popularity of many leading brands. In fact, many reports suggest the UK is the most popular destination for cross-border online shopping among European online shoppers.
In this extremely positive environment, the timing is ideal for UK retailers to explore areas of untapped potential to expand their international trade. Israel is a standout name among these markets, presenting a lucrative market, an active customer base and innovative development.
Israel: Sizing the Opportunity for UK Export Businesses
For an immediate picture into why Israel is an incredible opportunity for international trade, a 2016 report by the Organisation for Economic Cooperation and Development identified Israel as the number one country for online shopping per capita, with Israelis generating 52 million parcels worth NIS 11.8 billion (equivalent to around £2.4 billion).
This already impressive performance grew by over 18% through 2017, as Israel exported over 61 million parcels through e-commerce worth NIS 14 billion (approx. £2.8 billion). The growth rate is expected to remain at around 20% for the foreseeable future and pass the 100 million parcel mark in 2020.
While the popular sites for international e-commerce include familiar names like eBay, Amazon, Next and ASOS, there is a very long tail for other UK retailers to operate in, with a healthy appetite for online buying and international shipping. Around 75% of Israel’s population order online and 79% of these shoppers purchase from foreign websites.
Understanding Israel: The Local Picture
With a population of just 8.2 million, many retailers may at first glance wonder why Israel represents such a significant international shipping opportunity. Looking deeper into this though reveals a number of domestic circumstances combine to promote it as one of the most lucrative untapped markets.
Only a quarter of Israeli businesses sell goods online, and their prices are considerably higher compared to foreign companies due to high VAT and monopolies on many products.
This can make receiving goods ordered online from Israeli firms an ordeal. Many domestic online orders are never delivered, and those that do can take weeks to arrive. In contrast, international shipping services from Amazon are usually delivered in five days.
Additionally, while Israel is highly regarded for its innovation and sophisticated technology, its consumer goods are often inferior in quality to those made abroad. This, coupled with the higher prices and less reliable service, means the population is more inclined to exports from foreign retailers.
Know Your Market, Work with Experts
Earlier in 2018, Israel’s government changed its rules concerning VAT collection on imports from foreign businesses. Local nuances such as this relating to taxation and preferred methods of delivery can be difficult for many retailers to stay on top of. But, these are the sort of obstacles that need to be overcome to ensure impeccable, hassle-free delivery in this lucrative market.
Therefore, it is important to partner with experts in international shipping, such as P2P. We are well equipped to monitor delivery patterns in Israel and across the globe, managing the entire process on our clients’ behalf through flexible, tailored delivery solutions.
We help retailers throughout the UK overcome potential hurdles of language barriers and legal/financial differences, streamlining the process and adapting to any changes in the local market.
While the UK’s e-commerce export numbers are in a great place right now, there are still major opportunities out there to tap into relatively unexplored markets. Israel remains an unfamiliar market to many, despite its very impressive online shopping statistics and the popularity of purchases from foreign businesses.
The good news for UK business is that P2P’s expert help is at hand to support entry into Israel and markets worldwide. If you would like to learn more about our innovative international delivery solutions, get in touch with our team to start your journey today.
Gary Tervit, International Director, P2P