Shufersal launches website for US products

Shufersal Ltd. (TASE:SAE) is stealing a march on Amazon in Israel by launching an international website enabling Israelis to order from 2.5 million items from the US with an exemption from purchase tax up to $75 and delivery to the customer's door at a cost of $15 for packages up to three kilograms.

18 months after Shufersal's plan to found a website for products from warehouses in the US was revealed by "Globes," and after a one year delay, accompanied by lengthy pilots, Shufersal today begins one of its most important moves in the retail sector this year: it has put online a new website called American Outlets.

The website facilitates personal imports by customers without paying VAT or customs duties, from huge US warehouses through the UPS delivery service. A broad range of items can be purchased on the new website, ranging from well-known fashion brands to electrical and electronics goods, and household products. Prices will be displayed on the website in dollars, but the final payment on the website will be in shekels.

Delivery will be made to the customer's home in 7-14 days, and will cost $15 (NIS 55) for a package the size of a shoebox weighing three kilograms. The consumer will have to pay more for delivery of a heavier product.

Due to legal restrictions, Shufersal does not currently own the import company behind American Outlets; it is merely an intermediary, marketing the products from huge logistical warehouses in the US sending products to Israel, with headquarters located in Miami.

The owner of the import companies is Hollywood-based Lev Cargo, founded in 2016 and led by Gil Elias. Lev Cargo is a logistics and supply chain company. Shufersal will receive commissions on every transaction on the website, varying according to product category.

If you want to customer services from the new website, you will have to contact the call center in the US, but Shufersal is making strenuous efforts to change this legal restriction. "As of today, we cannot be the owner of a personal import company, but we are working with regulatory and government agencies to change this," Shufersal CEO Itzhak Aberkohen said today.

What can you find on the new Shufersal website? Apple, Dell, and Lenovo computers and headphones; Uniqlo coats; items from well-known fashion houses, such as Ralph Lauren, Lacoste, and Hugo Boss; Lego toys; Adidas, Nike, and New Balance shoes; Lacoste bags; MAC, Esti Lauder and other brands of makeup; and luxury watches and jewelry.

Trying to be Amazon

"We aren't replacing Amazon, the banks, or the insurance companies; we're making something more complete for our customers," Aberkohen said today at a press conference. According to Aberkohen, this step gives Shufersal a substantial advantage over local players in selling products without VAT and enables the company to play by the same rules as Amazon and other online retailers outside Israel.

What does this involve? Shufersal's partnership in the US ecommerce website whose warehouses are located in the US enables it to bypass the online difficulty currently encountered by local retailers: selling goods exempt from customs duties and VAT up to $75 per purchase. The high cost, however, will challenge Shufersal in competing with the international online platforms favored by Israelis, such as Amazon, Asus, and Next.

Online sales currently account for over 13% of all Shufersal's NIS 12 billion annual sales, the highest proportion for an Israeli supermarket chain.

At the same time, Shufersal is scheduled to launch a new website in four weeks that will enable it to study consumer behavior and offer personally adapted products. What does this mean? Today, 86% of purchases at Shufersal are identifiable purchases (via credit card or buyers' club card). From now on, the chain will display its products in the order of the consumers' preferences, and bargains will be adapted to those preferences. A consumer who regularly orders gluten-free food will get a display of products relevant for his or her diet, and a consumer who consumes vegetarian food will receive a display of products relevant to him or her. The website will go on the air only in December, and will be introduced gradually for use by the chain's customers by the end of the first quarter of 2019.

In any case, Shufersal's entry into sales via American Outlets and the personalized website comes on top of several more important measures by the group. Next month, Shufersal is scheduled to inaugurate its new chain of 60 drugstores, New Pharm, the acquisition of which was completed in late 2017. The new chain, as revealed by "Globes," will be launched under the name Be. The chain's road to recovery after being acquired from Hamashbir 365 Holdings Ltd. (TASE:MSAH) as a money-loser, however, is liable to be a long one. Shufersal's CEO recently said that New Pharm would reach break-even only in 2020.

Published by Globes, Israel business news - en.globes.co.il - on November 4, 2018