Economy Ministry Director-General Amnon Melhav and Google Israel Country Director Barak Regev discussed ways to boost Israeli businesses and maintain a fast-growing economic environment during difficult times at the Google-Calcalist e-commerce conference on Tuesday.
“E-commerce has turned into the lifeblood of Israel's business community,” Regev said. “At Google, we are celebrating Shopping IL's 10th anniversary. Ten years ago, only around 4% of total business sales in Israel were online. Today, it's at 20%, and 50% of Shopping IL's businesses operate exclusively in the digital sphere. This ability to continue operations during evacuation or reservist duty is a vital support. On October 7, Shopping IL launched an initiative to support businesses and reservists to increase their online presence. Over the past decade, we have grown from 150 to 3,400 active businesses on our platform. We support businesses by running academies and acceleration workshops, allowing them to thrive and maintain a dignified life.”
1 View Gallery
Amnon Merhav (right) next to Barak Regev (center).
(Photo: Cobi Cuencas)
Amnon, what role does the state of Israel play?
“At each ShoppingIL event, the government works closely with Google to highlight its importance in promoting e-commerce and strengthening economic competitiveness,” Merhub emphasized. “The growth of online commerce, addressing the rising cost of living with limited competition, opens up new avenues for small businesses to compete with industry leaders. As a government, we strongly support this transformation, with the support of the Small Business Administration.”
Did the war accelerate these trends?
“While clear signs are yet to emerge, we are seeing a noticeable change, especially among displaced people from places like Kiryat Shmona, where small businesses have been relocated,” Merhab said. “Through our business agency, we are providing comprehensive support, including consulting on developing strategic plans and establishing online commerce capabilities.”
Barack, how do you inspire consumer engagement?
“In times of crisis, we see a surge in demand as Israelis increasingly embrace online shopping,” Regev emphasized. “In 2023, 93% of Israelis will make online purchases, with 77% preferring Israeli brands. The Ministry of Economy is working together through ShoppingIL Israel's headquarters to support local businesses. ShoppingIL serves as a key platform, pushing businesses to the forefront and stimulating their growth.”
“For consumers, the platform is invaluable as it improves product availability and price comparison,” Merhav added. “We will continue to challenge certain top brands that redirect Israeli users to local websites, blocking international options to protect local importers. Our goal is to open up the global e-commerce marketplace for Israeli consumers.”
Has the international boycott affected Israel's economy?
“We have not seen any significant impact on trade with Israel,” asserts Melkhaf. “The Turkish embargo, which represents $8 billion in annual imports, has brought challenges, but Israeli importers have responded quickly. We oppose the Ministry of Finance's proposal to remove the $75 VAT exemption for online purchases, as this would increase the tax burden. We advocate increasing the exemption to $150 to promote competition and consumer access. The biggest challenge in e-commerce remains supply chain optimization.”
Regev agreed, saying, “Seven years ago, I identified supply chain logistics and 'last mile' challenges as significant barriers to online expansion. Great progress has been made, but recent logistical disruptions during the conflict have highlighted the need for further strengthening.”
What are the next steps you need to take?
“Logistics companies have a unique opportunity to streamline their operations towards same-day delivery capabilities,” Melhub suggests. “Establishing supply centers similar to global hubs like London and New York would significantly accelerate economic activity.”
“In addition, the Ministry of Economy is working on a substantial 'European Standard' reform initiative aimed at eliminating port inspections and aligning with European practices. Integration into the vast European market with more than 500 million consumers will boost e-commerce and reduce consumer costs by around 500 shekels ($133) per household per year. Our vision includes a digital transformation in which all government services will be available online,” Merhab continued.
Barack, how does AI relate to e-commerce?
“For many entrepreneurs, the move online requires overcoming significant digital barriers,” Regev acknowledges. “At Shopping IL Academy, we focus on equipping companies with the right tools and strategies. AI has a pivotal role to play in simplifying operations, with the potential to leverage virtual assistants to effectively manage digital complexities.”
