Is This the Revolution? A Guide to Amazon’s Israeli Site

The American commerce giant is trying to bite into the profits of its Chinese competitor Alibaba, offering its own Singles Day version in Hebrew and adding free deliveries to Israel on orders over $49

The logo of Amazon is seen at the company logistics centre in Boves, France, November 5, 2019.
PASCAL ROSSIGNOL/ REUTERS

After a soft and disappointing launch in September, the new version of Amazon’s Hebrew-language website went online, perhaps not coincidentally, on November 11, China’s Singles Day – the largest online event in the world.

Amazon is now offering free international delivery to Israel on orders of over $49, and making shopping for Hebrew-speaking customers more convenient. Is this enough to advance the local retail market and bring consumers closer to better quality and faster customer service? Let’s try to answer some of the questions.

What exactly did Amazon launch on Monday?

The company launched its official, more comprehensive site, which made the customer experience more convenient along with special offers like the free international deliveries to attract more visits to the site. However, Amazon’s method of sales in Israel is still different than in the rest of the world, and not as good for consumers.

Amazon announced its entry into Israel in September – what’s changed?

The September version only offered local delivery, enabling local suppliers to sell to Israelis, but there was no translation of the site. That version disappointed consumers and traders alike. The consumers expected deals and low prices but didn’t get them, so they returned to global sellers. The Israeli sellers complained that traffic on the site was sparse and sales didn’t meet expectations.

I visited the site and it’s in English. Where’s the change?

There is an icon of a globe on the top you need to click on in order to get to the Hebrew site. After you click, you will see a drop down menu. Hebrew is the last language on the list. After you save changes, the banner and products will be in Hebrew.

What’s different between Israel and the rest of the world?

Amazon doesn’t plan on opening a logistics warehouse in Israel, at least at this stage, so its entry to the country is partial. The upshot is that Amazon won’t provide goods directly to Israel consumers but will use the site primarily as a platform for sellers.

Amazon calls its selling method in Israel Fulfillment By Merchant, rather than Fulfillment by Amazon, in which Amazon is responsible for the supply chain.

So how are consumption habits expected to change?

Amazon is known for disrupting competition and changing every market it enters. It redefines standards of customer service – in speed of delivery, quick refunds, reliability, variety and price. The company is already demanding that Israeli sellers offer delivery times of up to five days within Israel. That’s a significant improvement over the status quo: no defined range for local delivery via Amazon. The product can take two weeks to arrive to the consumer.

Amazon is also pressing its sellers to offer free delivery and more competitive prices. The more sellers answer to Amazon’s demands, the higher up they will appear in the search results, which will lead to more sales. It’s a method that rouses competition within Amazon, and is likely to seep into the rest of the market.

Will the move lead to cheaper products in Israel?

Yes. Dozens of suppliers will compete over each product, offering quick delivery and better return policies.

I want to sell products on Amazon. What should I do?

You have to fill out a form, get verified by Amazon and open a U.S. bank account (either on your name or that of a proxy). Still, it’s not easy to sell on Amazon. It has a complex protocol, including a long list of rules and standards sellers have to uphold – from customer service through inventory management to communication with suppliers and more.

Companies and sellers on Amazon are solely responsible for their success, and so they have to worry about effective marketing and prominent placement in search results.

What is the commission for sellers on Amazon?

15% for each transaction.

What lies behind the claim that if Amazon enters Israel, consumers will lose the advantages of personal imports?

Every delivery or package from abroad purchased for less than $75 is VAT-free, while products sold within Israel by local retailers are not eligible for this exemption. In contrast, private consumers, chains and stores in Israel are forced to pay 17% VAT on every product, starting from the first shekel.

This exemption gives a distinct advantage to sellers abroad. This advantage is neutralized when consumers are required to pay VAT for purchases from local sellers, which directly impacts the price, so sellers through Amazon will lose this relative advantage.

If Amazon loses the VAT advantage, is it still worth it for consumers to buy through it?

It depends. It’s reasonable to assume that even if the products would be a bit more expensive because of VAT, consumers will still be able to buy products at prices significantly lower than they are in Israel because of the volume of competition among the many sellers in Israel and abroad offering their wares on Amazon.