High prices drive Israelis into eBay’s arms

High prices drive Israelis into eBay’s arms

To combat the cost of living, consumers in droves are buying from overseas sites, according to research by PayPal

Efi Dahan (left), director of  Israel and Africa region for PayPal; Dr. Amir Etzioni (center), director of community relations and regulations at ISOC; and Dina Be'er (right) chairperson of ISOC (photo credit: Courtesy)
Efi Dahan (left), director of Israel and Africa region for PayPal; Dr. Amir Etzioni (center), director of community relations and regulations at ISOC; and Dina Be'er (right) chairperson of ISOC (photo credit: Courtesy)

It’s taken a little longer than elsewhere, but Israel has caught up to the rest of the world in online purchasing — to the extent that Israelis are now the third-largest per-capita online international consumers.

A whopping 72% of all Israeli consumers have bought something online in the past year, and 82% of them purchased it from a website outside of Israel — with nearly half those purchases made on eBay.

The statistics were part of a new study unveiled this week by international payments platform PayPal, which enables online consumers to make purchases without revealing their credit-card information.

The study was conducted in 22 countries by the international research firm Ipsos MORI on behalf of PayPal. The results were presented by PayPal Israel and Africa region head Efi Dahan, and Dr. Amir Etzioni of the Israel Internet Association (ISOC).

For Israelis, statistics show there is one overriding reason to purchase online from abroad — price. Fifty percent of all online shoppers cited cost as the main reason to buy online, while 31% said it was more convenient to order from a website than to shlep to a store. Even among the 28% of Israelis who shop only on domestic sites, nearly four out of 10 said that saving money was the most important factor in their purchasing decision.

The most popular sources for Israelis to order from were China and the United States; 57% of Israeli cross-border shoppers said they bought something from a site in either — or both — of those countries in the past year.

That the US features so high as a source of Internet purchases was somewhat puzzling; unlike in China, where many sites offer free worldwide shipping, popular sites in the US like Amazon, Gap, Land’s End, and others charge a significant amount for shipping. Often, said Dahan, a buyer will find an item for $5, and spend $20 for shipping.

According to the study, 52% of Israelis are hesitant to order from the Internet because of the high cost of shipping — a statistic that clearly applies to sites like Amazon, which has a base international-shipping charge, with additional costs according to the weight of the item.

Moreover, the research shows that only 8% of Israelis buy from Germany, where Amazon also has a site — and from where the cost of shipping would presumably be less, since it is closer to Israel.

Not necessarily, said Dahan. “It’s true that air shipping from the US is expensive, but some sites offer shipping by sea. It takes much more time, but costs a lot less. But Israelis buy even from American sites that don’t offer lower-cost shipping: Even with the freight charges, the price of many items they buy from US sites is lower than that of Israel.”

Besides shipping, Israelis said they were hesitant to order online because they were unsure about customs fees and duties. Indeed, there is still a great deal of confusion about what Israelis have to pay when they order from abroad.

Dahan explained: “According to the new rules adopted by the government last year, items of $75 or less are exempt from all taxes. However, buyers of items valued at $75–$500 have to pay the 18% value-added sales tax (VAT) on the purchase” if it is flagged by the customs authorities.

According to many sources, customs personnel inspect one out of every five packages, so there is an 80% chance that no fee will be assessed at all.

The cost of shipping, in addition to the tax issue, has indeed had a big influence on Internet purchases. The most popular items ordered by Israelis are light, relatively inexpensive ones — such as clothing, footwear, jewelry, small electronics and cosmetics.

According to statistics, 57% of Israelis have ordered apparel and accessories online. But far fewer ordered higher-ticket — and bigger-sized — items, such as household appliances, furniture, and sports or outdoor equipment.

The most popular shopping site for Israelis, by far, was eBay, the worldwide auction/shopping site, where independent merchants sell just about anything imaginable. Forty-eight percent of purchases are made on eBay, with Chinese site AliExpress a distant second in popularity, accounting for 19% of purchases.

And, as the study’s sponsors had hoped, PayPal turned out to be the most popular method of purchasing for Israelis. Fifty-nine percent of those polled said that a safe method of payment was an important factor in their buying decisions, and that they used PayPal in 77% of their online purchases. This makes Israel — along with Spain, Italy, and Australia — one of PayPal’s top customers in the world.

That suits PayPal just fine, said Dahan: “Technology is changing the patterns and consumption habits of consumers, and the great advantage of online purchasing lies in its power to blur the physical boundaries and enable everyone to engage in e-commerce easily — from anywhere in the world and with the click of a button.

“Our research shows,” Dahan continued, “that Israel is one of the leading countries in the use of technology in general and PayPal services in particular. Israelis have adopted smart buying habits that save money and have maximum security.”

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