Terminal X's turnaround: Instead of selling other people's brands, they buy them

Four years ago, Terminal X made a relatively small deal: it paid less than 5 million shekels to acquire control of Sister-M, a young fashion brand founded by sisters Alona and Daniela Tzur. At the time, it did not look like a strategic shift for the Fox Group—Terminal X remained a large fashion site, and Sister-M was just another small brand in its catalog.

Since then, five more deals have followed. The list of Terminal X brands has been joined by Strongful, Ada Lazorgan, AINKER, Ronit Yam, and Sadeh Bar. The company identifies promising local brands, buys a controlling stake, and leaves the founders in charge, providing them with access to the logistics, marketing technology, and purchasing power built since its 2017 launch.

Changing the Economic Model

Looking back, the acquisition of Sister-M marked the beginning of a transformation in the business model. The site, originally created as a digital mall for the Fox Group to concentrate third-party brands, began actively acquiring them. This is a fundamental change in identity: while the platform previously focused on selection and next-day delivery to compete with international sites, it is now becoming the owner of the "stores" within its ecosystem.

Terminal X does not seek giants; it bets on entrepreneurs who have built a product with character, a loyal audience, and a community. In this partnership, Terminal X provides the commercial scale-up.

Nir Horovitz, CEO of Terminal X, explains: "At the beginning, the focus was on building infrastructure for the best service and next-day delivery. We realized our capabilities could help young companies grow faster and be more profitable. We look for brands with a distinct DNA and strong entrepreneurs who are ready to use our resources to create significant synergy."

Prof. Michal Shapira, head of the School of Marketing and Digital at Ono Academic College, notes: "Terminal X is effectively buying what is hard for a corporation to build on its own. When selling a third-party product, the company shares profits with the owner. By owning the brand, it enjoys margins from both levels—the platform and the manufacturer."

Investment Portfolio

In total, Terminal X has invested about 39 million shekels in acquiring controlling stakes in six companies. This diversification strategy allows the company to reach different audiences using a single operational machine.

Motti Azulay, CEO of the strategic marketing consulting firm Success Code, emphasizes: "The 51% acquisition model allows them to enjoy both worlds: gaining control while keeping the entrepreneur in the business. However, there is a risk: it is crucial not to erase the brand's original DNA during integration. Terminal X's challenge is to prove it can improve brands without stripping them of what made them successful."

Goals and Outlook

CEO Nir Horovitz has set a target: each acquired company should reach revenues of at least 50 million shekels. Second-quarter results confirm the model's effectiveness: the company's revenues grew by 20% to 161 million shekels. Meanwhile, revenues from independent brands jumped by 77%, reaching 37 million shekels.

The share of these brands in total revenue rose from 16% to 23%. The gross profit margin for independent brands stood at about 69%, compared to 44% for Terminal X's core activity.

The company is now targeting expansion into cosmetics, vitamins, and nutritional supplements, where its market share is currently small. Despite competition from giants like iHerb, Terminal X is confident that its local advantages—delivery speed and adaptation to the Israeli consumer—will lead to success. The company's marketing strategy also relies on direct engagement with a community of over 400 influencers, maintaining a personal connection with its audience.