This time around, though, businesses in Israel have the benefit of hindsight to guide them through what is certain to be another painful economic period. One of the key lessons that they can draw from the recent past is that if they want to survive, they're going to have to start embracing eCommerce as a sales channel.That lesson was reinforced in a recent analysis conducted by Israeli credit card issuer Max, which revealed a huge surge in eCommerce spending during the first and second quarters of 2020. The report found that online sales had jumped to record highs, surging to account for 90% of all apparel sales, 75% of book purchases, and 45% for furniture. In every category listed, the increases reflected at least 100% growth over pre-pandemic levels. In some cases, the growth was many times that figure.
Local Israeli firms also enjoyed a fair amount of the increased business. One of the reasons for that was the fact that online retail giants like Amazon had difficulty scaling up to meet demand since they still lack any local warehouses or logistics centers. At the same time, import sites that carried inventory from China like Ali Express had to suspend deliveries to the region and cancel orders due to restrictions in place at their origin facilities.
It's also important to note that the early lockdown went a long way toward pushing new populations in Israel to try eCommerce for the first time. Older adults and those concerned about payment security had little choice but to turn to online shopping to procure the goods they needed while local stores remained shuttered. And many reported that their experiences were positive and that they were open to continuing to patronize online retailers.
This time around, though, local Israeli businesses are going to have to marshal their resources early if they want to take advantage of online sales in the event of another lockdown. And there's plenty of room for growth in the space. Industry data indicates that Israel was only the 30th-largest eCommerce market in the world at the end of 2019, meaning that there's still plenty of market share to go around.
And, critically, local retailers can now opt to connect with a local China sourcing agent to set up new product supply lines now that the pandemic is under control in that region. That will give them a decided advantage in the types of inventory they can bring to market. And it's a move that has become increasingly important in recent years.
That's because product imports into Israel from China have skyrocketed of late, and China has also emerged as a major export destination for Israeli products. It's a trend that began well before the pandemic hit, but that posed some difficulties in the earliest days of the outbreak. But now, any Israeli business looking at an online expansion could hardly consider the move without building an import partnership with Chinese producers first. Those that don't risk creating an online presence that has little hope of competing in a post-coronavirus market that will be dominated by that all-important bilateral relationship.
Beyond that, the only remaining difficulty that retailers face in getting their eCommerce operations up and running to meet the soon-to-be surging demand is how they'll be able to operate with reduced staff in the event of a lockdown. But in an age where it's possible to automate your customer acquisition processes, operate customer service operations remotely, and even arrange for drop-shipping from suppliers, that shouldn't present as much of a hurdle as it might have in the past.
The bottom line, though, is that local Israeli businesses that are staring down the possibility of yet another costly and economically damaging lockdown do have options. And unlike the way the first round of restrictions played out, this time there's enough advance warning to allow for some preparatory maneuvering.
The question that remains is how fast those businesses can adapt and how willing they are to do so. The first half of 2020 demonstrated that there's a way forward, even under the direct circumstances. Now that way forward might be about to become the only path to economic survival – and a critical lifeline for Israelis as they work to contain this latest crisis.