Commerce via the Internet is a problematic issue all over the world, but in Israel its even more complicated. It’s not only the matter of data security but also the fact that the net operates mainly in English, there are no Hebrew-language shopping programs and the Israeli mentality still involves testing, or feeling, the goods before buying them.
"We rely on the Internet to get familiar with the international market, and for information distribution. But we prefer to receive orders by fax," explains David Mahal, general manager of Vectronics, which represents electronic component manufacturers in Israel. Most of the company’s clients are high-tech firms, who are aware of the Internet’s commercial potential but in a different light. "The idea is frightening and, as there is money involved, I’m waiting for someone else to start the ball rolling."
Consumer Habits
Consumers in the western world are more aware of the Internet option. The market for shopping via the net is estimated at $200 million. One-quarter of Internet surfers have already made at least one purchase via the net.
It should be noted that, as in Israel, the future of Internet commerce still lies with the rest of world’s shopping habits. A telephone survey conducted by AT&T shows 37% of North American company managers reported sales were made via phone, without the need for a face-to-face meeting between buyer, seller and merchandise.
Ofir Bar-Orian, deputy general manager in charge of sales at Bezeq Gold is convinced that, despite massive exposure to the Internet, "Israeli consumers have still not integrated it into their lifestyle." Eli Ventura, deputy general manager of Ventura Communications Internet, estimates that Israeli users prefer to do their Internet shopping abroad, not in Israel. "They prefer to buy abroad because they know they’re buying from major companies, which give them a feeling of confidence. In addition, prices are lower and similar to those at duty free shops.
Local Psychology
Ventura: "There is a psychological problem which I don’t know how to explain. The minute they need to buy something, the average Israel wants someone to talk to. Israeli consumers will need more time until they’re ready to buy products on an ongoing basis via Internet."
In Ventura’s estimation, customers will prefer to buy well-known, brand-name products including services such as banking. "Right now its clear that whoever wants to sell via Internet must also invest in advertising outside the net."
Internet strategic marketing consultant Dan Herman does not believe Israeli consumers are afraid to buy things they can’t touch. "Its true that buying sight unseen is a new phenomenon in the Israeli market, but there have been many developments in this field in recent years. The Migdal insurance group assessed market potential for direct insurance at 30% of the general public but their experience put that figure at a far higher level. TV’s Shopping Channel also reports their success, as do phone in auction companies."
A Neglected Language
Which products will succeed in the Israeli Internet shopping bazaar? Ventura believes that even in the near future, Israeli marketers will sell products that don’t need to be pinched, rubbed or smelled such as CDs and books, particularly products which can be heard, read or tried out in advance. "People won’t buy a blouse or a washing machine via Internet". In Ventura’s estimation, sales of foreign goods will be very successful in Israel, not because of the low prices - they are not cheap - but because "they have an air of luxury."
Bar-Orian of Bezeq disagrees with this analysis. "Even if the first wave of web surfers was interested in shopping abroad, the reason was due to problems with Hebrew-language Internet technology. Over the past half-year, a number of solutions to the problem have been formulated. These will provide Israeli suppliers with new opportunities to do business over the Internet."
Shoppers Want Security
"The problem is not language," maintains Ventura. "People are afraid to buy via Internet and give out their credit card numbers. In all, no more than 50-60,000 sales made via Internet in Israel, per month."
Compare this situation to that of the cellular phone. It took ten years for the cell phone market to develop in Israel, until it reached the million subscriber mark. The Internet also needs time to penetrate the market; in the meantime it is doing so at a much faster rate. The accepted figure is that there are presently 150,000 Internet subscribers but in fact, the number of surfers is around 300-400,000.
Surfing habits also indicate that the curiosity phase is over, and users are looking for ways to get real use out of the net. Over 60% of US Internet subscribers spend over 5 hours a week on the web. According to a March 1997 Nielsen survey, 73% of those subscribers devote part of their time to seeking out specific information or service, not aimless surfing, the way they used to.
In terms of technological solutions, AT&T recently announced a new solution. Called Secure Buy, it enables direct purchases via Internet. This sort of safety net could give the market a big push. Bezeq Gold is already considering bringing the product to Israel.