Israeli Discount Grocery Venture HaHeshok Battles Costs Despite Growth
Israeli online grocery venture HaHeshok is challenging retail giants by cutting major brands and offering low prices on dry goods. Despite monthly orders surging to 17,000, founder Kobi Lee reports ongoing operational losses while pushing toward financial break-even.
Can a supermarket slash grocery bills without relying on major food brands or running promotional sales? Kobi Lee, founder and CEO of the Israeli online venture HaHeshok, is trying to prove that it is possible. However, behind the promise to combat the high cost of living lies a complex business reality, where rapid growth has yet to translate into profitability.
In an interview with local media, Lee detailed how he transformed the social initiative launched in mid-2023 into a business handling tens of thousands of orders every month. According to company figures, October saw 17,000 orders placed on the platform, compared to just 5,000 monthly orders at inception, with monthly turnover reaching 5 million shekels including VAT.
HaHeshok operates on a model distinct from traditional supermarket chains. Rather than maintaining physical retail storefronts and stocking a wide array of dominant brands, the venture focuses primarily on dry goods with long shelf lives, partnering directly with small and medium-sized suppliers. Consumer prices are determined by adding a fixed markup of roughly 25% to the wholesale price paid to the supplier, covering operational overhead including rent and staff wages.
Despite expanding operations, the business continues to operate at a loss. Lee noted that over the past year, significant expansion-related expenditures pushed monthly losses to between 50,000 and 100,000 shekels. Cumulative losses for the year are projected at 600,000 to 700,000 shekels. "I have burned money and I am still burning money," Lee admitted, adding that his immediate target is to reach financial break-even by the end of the year.
A defining feature of HaHeshok is its deliberate alternative to household brands. Shoppers will not find major labels from dominant manufacturers like Osem-Nestle, Tnuva, or Strauss Group on the platform. Instead, the venture works with lesser-known suppliers capable of offering lower price points. Nevertheless, responding to customer demand, certain well-known brand products have been gradually introduced.
The business model does not guarantee absolute lowest prices on every single item, and Lee acknowledges that competing across every benchmark is impossible. "You cannot be the cheapest on everything," he said, while criticizing the marketing strategies of major retail chains that subsidize select loss-leader items while overpricing the rest of the shopping basket.
Competitive Pricing Across Household Goods
A review of pricing on the HaHeshok website reveals numerous low-cost items. Premium walnuts are priced at 13.80 shekels for 400 grams, Kerem extra virgin olive oil sells for 24.60 shekels per 750 milliliters, and refined canola oil is offered at 7.70 shekels per liter.
Pantry staples are similarly economical: one kilogram of basmati rice costs 6.50 shekels, 500 grams of rolled oats sell for 3.30 shekels, and 400 grams of pasta are priced at 2.90 shekels. Natural peanut butter made entirely from peanuts costs 23.60 shekels per kilogram.
Additional category pricing includes ready-to-eat chickpeas at 5.30 shekels for 550 grams, two-ply paper towels in six-packs at 17.50 shekels, and a 240-pack of Babysitter unscented baby wipes for 11.90 shekels. A three-pack of Mutti chopped tomatoes is listed at 18.90 shekels.
Tackling Delivery Costs
To overcome one of the biggest financial hurdles in online grocery shopping, HaHeshok utilizes designated pickup points in residential apartment buildings, hi-tech companies, and academic campuses, consolidating multiple orders to reduce delivery costs down to one shekel per kilogram.
Standard home delivery fees stand at 30 shekels for central residents, 35 shekels for other regions, and 40 shekels under a newly introduced northern route. The venture is also running a free delivery pilot where shipping costs are partially factored into product pricing, alongside a free warehouse pickup option.
Lee, a former software industry entrepreneur who has invested between 1.5 million and 2 million shekels of his own capital into the venture, hopes continued order growth and operational efficiency will turn HaHeshok into a profitable enterprise, targeting a modest monthly profit margin of 2% to fund future expansion.
