azrieli com
Azrieli.com: How Israel’s Real Estate Giant Tried—and Failed—to Win E-Commerce
It sounded like a slam dunk: Israel’s biggest mall owner launching its own online shopping empire. In reality, Azrieli.com burned through hundreds of millions and shut its doors in seven years.
The Big Swing into Online Retail
Back in 2016, the Azrieli Group—famous for skyscrapers and shopping malls—bought Buy2, an existing e-commerce site, for around NIS 62 million. They rebranded it as Azrieli.com, pumped in capital, and told the market this was the future. The thinking was simple: malls bring foot traffic, an online store could bring clicks.
But that’s like assuming running a food court means you can run a restaurant chain. Real estate and e-commerce share the word “retail,” but the skill sets are miles apart.
The Platform’s Promise
Azrieli.com set out to be a one-stop marketplace. Home goods, electronics, baby gear, cosmetics—you could find it all. The brand was a trusted household name, and there was hope that trust would translate to online spending. The company even built mobile apps promising special deals and exclusive coupons.
From the outside, it looked like a smart hedge against declining mall visits. And during COVID, online shopping in Israel jumped sharply. For a moment, Azrieli.com’s gamble seemed perfectly timed.
The Hidden Tensions
The catch? Azrieli’s bread and butter was renting space to retailers. Many of those same retailers—big names like Zara, Fox Group, Castro, and Renuar—didn’t want their products on Azrieli.com. Why? They saw the platform as competition, not a partner.
It’s the classic landlord-turned-rival problem. Imagine leasing your best stall in a food market to a baker, then opening your own bread stand next door. Not many tenants would stay friendly.
The Cost Problem
Azrieli.com didn’t run its own warehouses or delivery network. It relied on third-party logistics, which meant every shipment carried extra fees and slower handling. That might work for a niche store, but at marketplace scale it’s a weight around the ankles.
And the losses piled up fast. First year: around NIS 44 million down. By 2022: losses near NIS 60 million annually. Over the life of the project, the burn rate totaled roughly NIS 300–333 million—about $85–90 million. That’s before counting the opportunity cost of tying up money and management focus.
The Global Headwind
Even without internal issues, Azrieli.com was fighting uphill. Global e-commerce giants had structural advantages in Israel thanks to a tax quirk: imports under $75 were exempt from VAT. That meant a shopper could order from Amazon or AliExpress and skip a 17% tax entirely. Local sites like Azrieli.com couldn’t match those prices without gutting margins.
It’s like running a marathon where some competitors get to start five kilometers ahead.
The Endgame
By late 2023, the writing was on the wall. On December 22, Azrieli.com officially closed to purchases. Around 70 staff were let go, with only a few—like CEO Daniel Koren—staying on briefly to wind things down and work on other digital projects inside the Group.
The shutdown was framed as a strategic refocus, but the financial reality spoke louder. In an industry with thin margins and relentless competition, Azrieli.com’s model couldn’t break even, let alone win market share.
What It Tells Us About Crossing Industries
The Azrieli.com story isn’t just about one failed website. It’s about how hard it is for companies to jump from one industry to another without fully absorbing the rules of the new game.
Real estate is about long leases, location strategy, and capital investment. E-commerce is about logistics speed, product range, and customer acquisition cost. Success in one doesn’t hand you the keys to the other.
And then there’s the tenant relationship trap. A mall operator that tries to sell directly online risks alienating the very brands that fill its properties. Without their participation, the product catalog looks thin—and consumers notice.
Lessons That Stick
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Don’t assume brand strength transfers across models. Shoppers trust Azrieli malls, but that trust didn’t automatically translate online.
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Solve supply chain before you scale. Third-party logistics is fine early on, but it kills margins if you never take control.
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Watch for channel conflict. If your partners see you as competition, you’re already on the defensive.
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Factor in regulatory asymmetry. Competing against tax-advantaged imports is a different battlefield entirely.
What’s Next for the Group
Azrieli hasn’t abandoned digital entirely. They’re still developing apps tied to their malls and real estate services. That’s closer to their core—digital tools that enhance physical properties rather than replace them.
The experiment may have cost hundreds of millions, but it also clarified where their strengths lie. And for investors, that clarity matters more than chasing every new trend.
FAQ
Why did Azrieli.com close?
Because it consistently lost money—hundreds of millions of shekels—while facing competitive disadvantages from both global e-commerce giants and a lack of cooperation from its own retail tenants.
Did COVID-19 boost Azrieli.com’s chances?
Briefly. Online sales spiked during lockdowns, but the momentum didn’t last once malls reopened and price competition from overseas returned.
Could Azrieli.com have survived with different strategy?
Possibly—if it had built its own logistics network, secured stronger retailer partnerships, and found a niche insulated from import competition. But that would have meant starting from a very different blueprint.
Azrieli.com will likely be remembered as a rare misstep for a company that dominates Israel’s skylines. It’s proof that even market leaders can stumble when they step onto unfamiliar ground without the right tools.
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