While internet shopping has yet to catch on in Israel as it has in the US or the UK - estimates place it as less than 4% of the retailers’ revenue - it is an undeniable phenomenon which is continuously growing. It is unsurprising, then, that fashion brands have been hopping onboard alongside specialized online retailers.
The new player on the scene offers a slightly different spin by building a virtual mall of retailers and brands from Israel and abroad. BIG Shopping Centers announced it will enter the field with an online shopping platform called BIG+ that will offer apparel, home products, travel goods, electronics, and a variety of items found at its shopping malls as well as international brands that are not currently sold directly to the Israeli consumer and not through parallel import.
The online mall will launch at the beginning of 2017; BIG VP Hay Galis says they have high aspirations. When asked if they model their offering on Amazon, Galis answers: “We intend to stand on the shoulders of giants and we believe in Israel we can be as strong as they are as we offer a physical, financial, and marketable platform that will be a significant player in e-commerce.”
Will the virtual mall compete with the brick and mortar stores in the malls from which BIG generates its revenue?
“The digital arena is growing, and it will continue to grow even if we do nothing. Out of the entire e-commerce pie in Israel only 18% of transactions occur on domestic sites versus international outlets; in the US that figure is 70% of online sales and in Europe it is 60%. The Israeli consumer does not have a centralized platform to buy every brand and that’s where we come in,” says Galis.
“The shopping malls will need to work to retain customers; they’ll need to provide a different shopping experience. The mix of renters should be revamped towards entertainment and leisure and the ones who failed to change over the years will disappear like several retail giants have in the past few years.”
The physical outlet provided by the shopping malls will be used to collect the goods, try them on, exchange them, and provide service and in places where BIG doesn’t have a presence, like Tel Aviv, Galis says they will open specialized stores.
Galis says this is the first initiative of its kind at an investment of dozens of millions of shekels in an online shopping mall with brick and mortar outlets working in synergy. He says the investment today was forward-looking: “We understand that in the next 5-10 years we will have to take part of e-commerce, even if it hurts the shopping malls. We can’t stop that. Our kids are growing up into this trend and we are building the platform for it.”
Part of the idea is for the fashion brands who want to participate to pay BIG for managing the platform. Galis welcomes the competition with the websites run by chains like Castro, with the prices “set by the chains. We will work hand-in-hand to offer good prices.” He emphasized consumers will be able to shop at several stores at the same time.
“I believe any player, any branded chain, that wants to have an online presence will participate in our platform. We will provide a commercial configuration that will be a ‘win-win’ for both sides. We successfully did that at 22 centers in Israel where most of the renters make money and I am convinced we will succeed online. Our goal is for the stores to sell a lot more, while we handle the logistics.
And looking even further into the future, they hope to offer home and vehicle delivery using drones. “Shipping costs too much, and the drone solution will lower expenses by 90% and we will get there once regulation permits.”
BIG Shopping Centers, run by CEO Eitan Bar Zeev, operates commercial centers in Israel and the US. The company earned NIS 309 million in 2015. As of the end of December 2015, the group holds and manages 54 assets in Israel and the US.
Published by Globes [online], Israel business news - www.globes-online.com - on May 19, 2016
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