Israeli Cosmetics Shoppers Prefer Stores Over Websites

Israel's pharmacy chains are still the preferred place to buy cosmetics and personal care products

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A shopper at a Super-Pharm drugstore branch.
A shopper at a Super-Pharm drugstore branch.Credit: Tomer Appelbaum

Even as apparel and electronics retailers are struggling against the onslaught of online competition, Israel’s brick-and-mortar pharmacy chains are still the preferred place to buy cosmetics and personal care products.

A survey by TheMarker found that prices for 18 products sold at Super-Pharm, Israel’s biggest chain, were higher by as much as 56% than those sold online. For instance, the price for Solgar vitamin B12 (60 tablets) was 59.90 shekels ($16.60) at Super-Pharm and 43 shekels at the Teva Zol site. On the other hand, Huggies moist wipes just 16.90 at Super-Pharm versus 21.90 Med-Link.

One reason Israeli shoppers still prefer buying in stores is that online competition has been late in arriving. Super-Pharm, which controls 87% of sales, only launched its e-commerce site last August and hasn’t done much to promote it. No. 2 New Pharm is losing money will only launch one in the fourth quarter of this year after it was acquired by Super-Sol, Israel’s biggest supermarket chain.

The biggest players online are overseas sites, like Strawberry and Sephora, which have been joined more recently by local offerings like Medi-Link and Telepharma. However, one of them has captured a big share of sales

According to the consulting firm TASC, online sales account for just 10% of all sales of cosmetics and personal care products. That’s up from 8% in 216, or 800 minion shekels ($221 million) and 400 million in 2013.TASC predicts online’s share will grow to 12% by 2020, or 1.3 billion shekels.

By comparison, in fashion online sales captured a 12% share already in 2016 and are expected to reach 20% by 2020. The same proportion of electronics sales will be online by 2020, it estimates.

But sources in the industry said it won’t be long before online conquers the pharmacy segment as well.

Shaul Sela, the CEO of Medi-Line, said he thinks e-commerce retailers will capture a quarter of all sales and doesn’t even regard market leader Super-Pharm as his true competition.

“They’re the old world, the world of stores,” he said of the chain. “Even today, they operate an online site and expect their customers to come to the store and collect their order and not get it delivered at home. Our competitors are sites like Amazon eBay, Sephora, Strawberry, Lookfantastic and others.”

Super-Pharm takes issue with the idea that it’s prices are higher than online, but Ofer Levi, its vice president for marketing and trade, admits the segment is poised for big changes.

“Online is still in diapers and hasn’t realized its potentials because there is an obstacle the consumer needs to overcome: Cosmetics is an area where consumers are always looking for something new and different. Also, in cosmetics, for women it’s important to try a product – to see a range of different make-up,” he said.

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