Amazon Is Coming to Israel, and Upending the Local Market

The e-commerce giant has invited Israeli merchants to sell to local customers on a Hebrew-language site

An Amazon distribution center in Leipzig, Germany, November 2015.
Jens Meyer,AP

The long-awaited arrival of Amazon in Israel appeared to have come on Tuesday as the e-commerce giant invited Israeli vendors to sell products directly to local shoppers through the site.

The move by itself wasn’t dramatic but it caps months of signals from Amazon that it plans to establish a local presence in Israel. While some retail executives and stock market analysts discounted the significance of the move, others said it was the first step in a wider rollout in Israel, which would include a local logistics center and warehouse.

In a Hebrew-language email, Amazon invited its Israeli vendors to become part of a local delivery program in Israel, including a Hebrew-language site. “The plan enables you to use the Amazon.com account you already are familiar with to sell and supply orders directly to customers in Israel, by means of your inventory in Israel,” the company said.

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Dvir Cohen, whose company, Amazon in a Click, offers support services to Israeli companies and individuals selling wares online, noted it was the first time Amazon had communicated with local vendors in Hebrew, marking a milestone in the company’s presence in Israel.

“What is new is that Amazon is recognizing Israeli merchants. Amazon developed its platform and in effect is enabling anyone with an Amazon account to expand its target audience to nine million Israelis,” Cohen said. “That’s very nearly a revolution, and it’s a big step for the Israeli consumer and for merchants who can now sell their wares without any need for huge contracts with large distributors.”

A year ago, as reported in TheMarker, Amazon began to develop a local website in Hebrew and was looking for translators and editors who specialize in Hebrew-to-English translation. Meanwhile, Israel has been abuzz with reports that the company has been observing the Israeli market and taking small steps to upgrade its local presence.

In October 2017 it expanded the number of products available to Israelis by about one million, which has led to a double-digit increase in Israeli sales. Amazon executives have reportedly visited Israel several times to meet with local delivery companies, and the company has reportedly sought warehouse space.

Amazon in Israel would be great news for Israeli consumers, who have become avid online shoppers in the last few years – making their purchases mostly at sites overseas, like Amazon and Alibaba. The Israeli government has encouraged the trend by exempting so-called personal imports of up to $500 from customs and up to $74 from value-added and purchase taxes.

For Israeli retailers and mall operators, however, Amazon poses a serious threat. Shares for retail stocks plunged on the Tel Aviv Stock Exchange on Tuesday.

Among those who are most likely to be hit hard are apparel retailers, and the fashion chains Fox and Castro fell 2.5% and 2.35% respectively by late afternoon. Electronics retailer Electra Consumer was down 2.6% while mall developers and operators Melisron and Azrieli Group were off 2.7% and 2% respectively.

“Amazon’s entry into Israel will increase competition in retail while increasing the awareness of online shipping,” said Ilanit Sherf, head of equity research at the Psagot Investment House. “Eventually it may harm Israeli shopping malls and local retailing – even if they succeed in setting up their own [e-commerce] platforms.”

Many Israelis already shop on Amazon – usually from its British site – but a local platform would make it easier in terms of language and access to products that meet Israeli needs, Sherf said.

Others, however, were more skeptical about the impact of Tuesday’s news.

“It’s nothing but a joke – I’m laughing,” one mall executive, who asked not to be identified, told TheMarker. "All that happened is that Amazon approached a few Israeli suppliers about selling in Israel. Amazon won’t be in Israel for real without opening a warehouse and [developing] logistics.”

Tal Levi, a stock analyst at Halman Aldubi Investment House agreed. “There’s still no news about Amazon’s setting up an independent logistics center and nothing about the addition of overseas products,” he said. “Without these things, the threat is just a headline – all the more so, the goods that will be sold will be subject to VAT, in contrast to products brought in as personal imports via Amazon or other platforms.”