Israeli pharmacy store chain Super-Pharm is founding Super-Pharm Marketplace, an online sales platform for sellers in Israel and elsewhere, sources inform "Globes." The platform will be connected to the sales website currently operated by the chain, and will enable consumers to buy products directly from sellers in Israel and around the world. Like third-party sellers on Amazon, for example, sellers on Super-Pharm Marketplace will be responsible for the selection and delivery, and Super-Pharm will charge them a commission.
Super-Pharm will invest several million shekels in the venture, mostly in the platform and its promotion. Like the systems of players such as Amazon, eBay, AliExpress, and others, Super-Pharm's system will enable customers to write criticisms and rate each product after they buy it.
The new venture is designed to take advantage of the customer traffic entering Super-Pharm's website by offering them a selection not available in its stores. In the initial stage, the products involved will match Super-Pharm's current portfolio: health products, cosmetics, and baby products. Later, however, the commercial platform will expand to areas and categories in which Super-Pharm has never operated, such as electrical appliances, electronics, and home products.
Suppliers who want to sell through the platform will have to obtain Super-Pharm's approval, which will assemble the mix of sellers and choose the suppliers operating on the platform. Super-Pharm's commercial platform will offer products of both international brands and small boutique manufacturers from around the world.
The company is currently hiring personnel to manage this activity, and will recruit sellers from around the world to sell to Israelis on the platform. A catalogue will be assembled in cooperation with these sellers, with a relevant selection and a framework that includes matters such as bargains and service.
The advantage of selling through third-party sellers is the ability to offer a wide variety of products, while not having to deal with inventory or hold expensive real estate in order to store it, because the sellers are responsible for the inventory and delivery. Super-Pharm will be an intermediary charging a commission on each deal.
The sales share of external sellers on Amazon, which was 58% in 2018, currently exceeds its share of direct sales. Amazon says that this activity is an effective method for products with lower profit margins.
Super-Pharm, managed by CEO Nitzan Lavi, is currently the largest chain of its type in Israel. It has 257 branches around the country, with a NIS 5 billion annual sales turnover. In the past two years, however, there have been changes in its competitive environment, leading the company to search for new growth engines in both the physical and online retail sectors. This includes in toiletries, given that Shufersal Ltd. (TASE:SAE), Israel's largest food retailer, acquired its own pharmacy chain, which operates on a similar format, and also because of competition from Good Pharm, controlled by Rami Levy.
At the same time, Super-Pharm is also being affected by the open skies policy, which has increased the number of people traveling overseas, many of whom shop at duty-free stores, where most of their purchases consist of brand-name cosmetics.
In addition, the growth of online shopping has also intensified competition in makeup and perfumes. Super-Pharm has consequently taken a number of steps to provide a response that will enable it to differentiate itself, among other things by switching to independent imports of cosmetics brands, such as Tony Moly from South Korea and Pixi Beauty from the UK.
Super-Pharm is also now taking steps to set up a new chain named Daily, which will market fresh food, a first for the company. The first branch of the new chain will be opened in the second quarter of 2020 in the Ramat Gan Diamond Exchange area, and another branch is scheduled to open in the Azrieli Sarona mall in Tel Aviv.
Published by Globes [online], Israel business news - en.globes.co.il - on January 22, 2020
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