In short: what is ecommerce?
Ecommerce (electronic commerce) is any process in which a product or service is sold and paid for over the internet, with no physical meeting between buyer and seller. It covers a standalone store a business builds for itself, selling through marketplaces such as Amazon or eBay, selling through social platforms, and selling digital products such as courses and subscriptions. In Israel, online is no longer a marginal channel: according to ECDB, the Israeli ecommerce market generated roughly USD 10.2 billion in revenue in 2025, and online sales account for 15-20 percent of total retail.
This guide is written from the perspective of a team that manages media budgets for Israeli stores day to day. It starts with real market data by category, moves on to the distinctions that actually cause confusion (ecommerce versus dropshipping, own store versus marketplace), and ends with the part most guides skip: the numbers that have to work for a store to be profitable.
Ecommerce in Israel by the numbers: how much is actually sold online
Most definitions of ecommerce stop at "buying and selling online" and never give a business owner the figure they actually need: is my category even selling online in Israel, and at what scale. The gap between categories is enormous, which makes the table below worth more than any definition.
The data below is from ECDB for 2025. "Online share" is the share of category sales already made online.
| Category | Ecommerce revenue 2025 | Online share of category | What it means for a business |
|---|---|---|---|
| Israeli ecommerce market, total | approx. USD 10.2 billion | 15-20 percent | Most Israeli retail is still offline, leaving room to grow but also requiring an omnichannel strategy |
| Fashion | approx. USD 1.68 billion | 40-45 percent | The most mature online category in Israel. Competition is high and branding is the differentiator |
| Electronics | approx. USD 2.13 billion | 35-40 percent | The largest category by revenue. Aggressive price comparison, therefore thin margins |
| Sports equipment | approx. USD 491 million | 35-40 percent | A mid-sized market with relatively high online penetration for its size |
| Health and pharma | approx. USD 423 million | 20-25 percent | Lower penetration, meaning a category that is still opening up |
Two practical conclusions. First, if you are in fashion or electronics you are entering a market that has already moved online, which means attention is expensive and your edge will come from brand, service and repeat customers rather than from simply "being online". We cover what makes the category different in our fashion website promotion guide. Second, in categories with lower online penetration, such as health, the hard part is usually not competition but educating the market, and organic content performs particularly well there.
The background figure that explains all of it: according to DataReportal (Digital 2026: Israel, October 2025 data), Israel has 8.72 million internet users, 91.3 percent of the population, and 7.01 million social media users. The audience is almost entirely online. The question is not whether they are there, but whether your store reaches and converts them.
The four ecommerce models: B2C, B2B, C2C and D2C
The model you choose changes almost everything: sales cycle length, payment methods, pricing approach and which advertising channels will work for you.
| Model | Who sells to whom | Key characteristic | Example |
|---|---|---|---|
| B2C | Business to individual consumer | Fast transaction, relatively low average order value, emotional decision | An online fashion or homeware store |
| B2B | Business to business | Long sales cycle, per-customer pricing, sometimes a minimum order quantity | A supplier selling to retailers or manufacturers |
| C2C | Consumer to consumer | The platform intermediates and takes a commission; the seller is not necessarily a registered business | Second-hand marketplaces and auction sites |
| D2C | Manufacturer directly to consumer | Cuts out the distributor, higher margin but full responsibility for marketing and service | A brand that manufactures and sells only through its own site |
The common mistake is building a classic B2C store for a business that in practice sells B2B. If your customers buy in volume, need individual pricing or credit terms, the store needs registered-customer login and differential pricing, and that is defined before you choose a platform, not after.
Ecommerce versus dropshipping: what the difference really is
This is the most common question on the topic, and the short answer is that these are not two parallel things: dropshipping is one operating model within ecommerce, not an alternative to it. The difference is not in how the customer buys but in who holds the inventory and who ships the parcel.
| Comparison point | Ecommerce with own inventory | Dropshipping |
|---|---|---|
| Who holds inventory | The business buys and stocks in advance | The supplier. The product ships only after an order is received |
| Initial investment | High, capital is tied up in stock | Low, almost no inventory purchase |
| Typical gross margin | Higher, thanks to volume purchasing | Low, often only single-digit to low double-digit percentages |
| Control over quality and delivery time | Full | Limited. A supplier delay or defect is charged to your brand |
| Main risk | Unsold inventory | Margin erosion to the point of losing profitability as ad costs rise |
| Best suited to | A brand building repeat customers for the long term | Testing demand for a new product before committing to inventory |
The critical point for dropshipping is margin. When gross margin is low, paid customer acquisition eats the profit very quickly, so dropshipping succeeds mainly where there is a genuine advantage in audience, creative or niche, and not in the product alone. Anyone planning to rely on paid advertising should run the numbers before launch, not after.
Own store versus marketplace: where should you sell
An own store is an asset you own; a marketplace is a distribution channel someone else owns. For most businesses the right answer is a combination, but the order of operations matters.
| Comparison point | Own store | Marketplace |
|---|---|---|
| Ownership of the customer | Full. The SMS and mailing list and the data are yours | Partial or none. The customer belongs to the platform |
| Initial traffic | Zero. You have to generate it yourself | Exists from day one |
| Cost | Hosting, platform and payment processing, plus a marketing budget | A commission on every sale, often in double-digit percentages |
| Control over brand and experience | Full | Limited to the platform template |
| Main risk | A store with no visitors | Dependence on a single channel and unilateral changes to rules or fees |
The practical rule: a marketplace is an excellent way to validate demand and generate first sales, but it does not build an asset. Once a product is selling, moving to an own store is what lets you build a customer list, sell to them again cheaply and control your margin. Businesses that stay only on marketplaces usually discover they built revenue rather than a company.
Which platform to choose: Shopify, WooCommerce or Wix
Platform choice is the hardest decision to reverse later, so it is worth the time. The comparison below covers the three platforms most common in Israel.
| Consideration | Shopify | WooCommerce | Wix |
|---|---|---|---|
| Type of system | Managed cloud service | A plugin on a WordPress site you host yourself | Managed site builder |
| Operational complexity | Low. Updates and security are the platform's responsibility | High. You are responsible for hosting, updates and performance | Very low |
| Flexibility and customization | High via apps, limited for deep changes | The highest. Open source | The most limited of the three |
| Best suited to | Stores that want to sell quickly without managing infrastructure | Stores with unusual business logic or a complex catalog | Small businesses with a small catalog |
| What usually goes wrong | Accumulating fees and paid apps | Neglected performance and security over time | A growth ceiling as the catalog expands |
No platform is right for everyone. The rule we work by: the more unusual your business logic, the more WooCommerce pays off, and the more you want to focus on selling rather than infrastructure, the more Shopify pays off. If you have chosen Shopify, it is worth understanding advertising and promotion for Shopify stores before launch, because some store-structure decisions directly affect what you will be able to measure and advertise later.
Ecommerce store economics: the numbers that have to work
This is the part almost no guide writes, and it is the difference between a store that grows and a store that closes. An ecommerce store is not measured by revenue but by the profit left after product cost, shipping, payment processing and advertising. The four numbers you need to know:
| Metric | What it measures | Why it is critical |
|---|---|---|
| Gross margin | What is left of the sale price after product cost | This is the ceiling for everything else. A thin margin cannot support a meaningful ad budget |
| Average order value (AOV) | Average revenue per order | Raising AOV is the fastest way to earn more without bringing in more traffic |
| Customer acquisition cost (CAC) | What it costs in advertising to generate one order | If CAC exceeds gross profit per order, every sale increases the loss |
| Repeat customer rate | The share of customers who buy again | The second purchase costs almost nothing in advertising, which is where the real profit is |
Those four metrics collapse into one practical number: break-even ROAS by gross margin, meaning how much the store has to return on every media shekel just to avoid a loss.
The simplest check: take your average order value and subtract product cost, shipping and payment processing fees. What remains is gross profit per order, and that is the absolute ceiling on what you can afford to pay to acquire a customer. If that number is smaller than your cost per order in advertising, the problem is not the campaign but the pricing or the product mix. To run the calculation on your own numbers, use the ecommerce profitability calculator we built for exactly this purpose.
How to set up an ecommerce store: seven steps
The order is deliberate. Most failures come from skipping the first steps and jumping straight to design.
- Validate demand. Before building anything, check how many people actually search for the product and in which words. Keyword research at this stage saves months of building in the wrong direction.
- Model and economics. Set pricing that leaves margin for advertising, using the metrics in the previous section.
- Choose a platform. Based on the complexity of your business logic, not on what is popular.
- Category tree and store structure. The structure should reflect what customers type into search, not your internal inventory structure. It is also the foundation for organic promotion of an online store.
- Payments and shipping. A range of payment methods and a clear shipping and returns policy. Ambiguity here is one of the biggest causes of cart abandonment.
- Measurement before traffic. Install tracking and verify that a purchase is recorded correctly before spending anything on advertising. A store advertising without working measurement is deciding in the dark.
- A valid product feed. If you intend to advertise on Google Shopping, a clean product feed in Google Merchant Center is a prerequisite. A feed with errors simply will not show.
What generates sales after launch: priority by return
Once the store is live, priorities change. In the order we usually recommend working:
- Improve conversion rate before increasing budget. Improving conversion makes existing traffic more valuable without spending more, so it is almost always the first move.
- Google Shopping and intent-based advertising. Someone searching for a specific product is at the decision stage, so this is usually the highest-return channel early on.
- Remarketing. Someone who already visited costs less to bring back than a new customer.
- Marketing to existing customers. Email and loyalty programs are the cheapest channel, and this is where most of the long-term profit sits.
- Site speed. A slow store loses sales before the customer has even seen the product, especially on mobile.
Five mistakes that repeat in Israeli stores
- Measuring revenue instead of profit. A store can grow its sales and lose more money every month. The right metric is profit after product cost and advertising.
- Advertising before measurement works. Without reliable purchase tracking you cannot know what worked, and ad platforms receive a false signal and optimize in the wrong direction.
- A catalog built around inventory rather than search. Categories that mirror the warehouse instead of the customer's language hurt both experience and organic rankings.
- Vague returns and shipping policy. Uncertainty at checkout is a direct cause of cart abandonment.
- Treating the first purchase as the end of the process. In most categories profit begins with the second purchase, and a business with no retention mechanism pays for every customer again.
Frequently asked questions
What is ecommerce in simple terms?
Ecommerce is the buying and selling of products or services over the internet, with no physical meeting between buyer and seller. It includes a standalone online store, selling on marketplaces, selling through social platforms and selling digital products such as courses and subscriptions.
What is the difference between ecommerce and dropshipping?
Dropshipping is not an alternative to ecommerce but an operating model within it. In both cases the customer buys online, but with own-inventory ecommerce the business buys and stores products in advance, while in dropshipping the supplier ships directly to the customer only after an order is received. In practice dropshipping requires a low initial investment but produces a low margin and only partial control over quality and delivery times.
How large is the Israeli ecommerce market?
According to ECDB, the Israeli ecommerce market generated approximately USD 10.2 billion in revenue in 2025, and online sales accounted for 15-20 percent of total retail. The 2026 forecast is continued growth at a rate of 5-10 percent.
Which category sells the most online in Israel?
By revenue, electronics is the largest category at approximately USD 2.13 billion in 2025. By online penetration, fashion leads with 40-45 percent of category sales already made online, compared with 35-40 percent in electronics and 20-25 percent in health and pharma.
What is an ecommerce company?
The term is used in two senses. The first is a business whose entire activity is online selling, meaning an online store or a direct-to-consumer brand. The second is a service company that supports other stores with setup, build, organic promotion or advertising management.
How much does it cost to set up an ecommerce store?
Cost splits into three components: a one-time store build, ongoing platform, hosting and payment processing costs, and a marketing budget. The item most businesses underestimate is the third, because a new store starts with no traffic at all and every early visitor arrives through paid channels.
Is it better to sell in my own store or on a marketplace?
A marketplace provides existing traffic from day one and is an efficient way to validate demand, but commissions are high and the customer remains the platform's. An own store starts with no traffic but gives you ownership of the customer, the data and the margin. For most businesses the right combination is to validate demand on a marketplace while building the own store as an asset.
Which ecommerce platform is best?
No single platform is right for everyone. Shopify suits stores that want to sell quickly without maintaining infrastructure, WooCommerce suits stores with unusual business logic or a complex catalog, and Wix suits small businesses with a limited catalog. The more unusual the business logic, the more WooCommerce pays off.
Why does my store get traffic but no sales?
The most common causes are a mismatch between what the visitor searched for and what they found on the page, an unclear shipping and returns policy, a checkout process that is too long, a slow site on mobile, or faulty measurement that leads ad platforms to bring irrelevant audiences. The first check should always be that a purchase is recorded correctly in your measurement systems.
How long until an ecommerce store becomes profitable?
There is no single number, and it depends mainly on gross margin and repeat purchase rate. A store with a high margin and returning customers reaches breakeven far faster than a store with a thin margin that depends entirely on paid acquisition of new customers. This is why the economics are calculated before launch, not after.
Sources
Israeli ecommerce market size, revenue by category and online penetration rates are taken from ECDB (2025 data and 2026 forecast). Israeli internet and social media penetration figures are taken from the DataReportal, Digital 2026: Israel report (October 2025 data). Figures that appeared in earlier versions of this guide and could not be verified against their stated source were deliberately removed.
The channel that brings a new store its first traffic is almost always paid rather than organic. A breakdown of CPM, CPC and ROAS ranges, and of the order in which to open networks for an online store, is in paid social for online stores.
