Vendors Disappointed With Amazon Israel, a Month After Its Launch

E-commerce experts say site got off to weak start but that shoppers will start coming as improvements are made

Amazon's Israel site.

When it launched, the Amazon Israel site captured headlines as the harbinger of a new era in online shopping. But a month later the Israeli merchants who have been selling their wares on the site say it’s been a disappointment.

They say there is little traffic on Amazon Israel pages and sales have not met their expectations. “There’s almost no sales traffic on Amazon Israel. There was a little buzz at the start but the last two weeks it’s gone silent,” complained one vendor, who asked not to be named.

Another added: “I expected that the High Holidays would give a boost to sales, but I sold only a little merchandize and haven’t begun to recover the big up front costs that Amazon required from me whether it was for customer service, logistic and fees.”

Amazon spent a year getting the site, the terms and the timing right for its local webpage and launched it in September. However, there's no full Amazon site in Hebrew with a full line of products and there are no local logistics centers. The site is mainly a place for Israeli vendors to sell to local shoppers as long as they meet Amazon’s strict standards for, among other things, delivery times.

The vendors blame Amazon for the failure and say that apart from the home page the company has done little to support the platform in terms of marketing.

Elad Goldenberg, who advises the retailer on online strategy and a former eBay executive, said he wasn’t surprised by the slow start. “We’re feeling it in the field. There were very big expectations for Amazon Israel and everyone was talking about it, but now almost no one is – not on the social media networks and not in the media,” he said.

Goldenberg said he was working with several brands selling on Amazon and they have all reported thin sales since they began operations.

“You can’t blame shoppers – they expected to see good deals and low prices, but they discovered there weren’t any, so they went to back to shopping on global sites. They’ve become accustomed to finding good deals and of there aren’t any, it’s just not as attractive from their viewpoint,” he said.

Israelis have become avid online shoppers, encouraged by prices lower than they can find at home at overseas sites like Alibaba, eBay and Amazon in other countries. Delivery times and reliability remain poor, but most purchases are exempt from the value-added tax and customs, and the selection is bigger than they can get locally. Amazon Israel was supposed to provide a happy medium, enabling Israelis to shop in Hebrew, pay in shekels and get their purchases delivered faster. But as a local site, it wasn’t exempt from taxes.

A view of the Amazon logistic center with the company's logo in Dortmund, Germany November 14, 2017.
Thilo Schmuelgen/ REUTERS

Goldenberg agreed that Amazon was partly to blame. “There’s a lot of unexpressed anger toward Amazon because the vendors expected it to create something more attractive and help them earn back their investment,” he said.

“They pictured a glittering launch, billboard advertising, big online advertising and banners on all the local websites. What they got is a referral from Amazon’s home page. The problem is that a lot of shoppers don’t enter through the home page but by searching for a product on Google or a link from a friend or recommendation from a social media network, so they miss the Israeli vendors,” Goldenberg said.

Still, Goldenberg said the company needed time. The problem, he said, was that Israeli businesses think short term – if they can’t starting making a profit in three to six months, they leave the platform. He said it takes at least a year to gain customer trust and develop a portfolio of products that will generate profits.

“That’s not enough time to get the business established, certainly not in a competitive arena like Amazon. You need patience to build a business, just like a brick-and-mortar store,” he said.

Other online consultants who work with Amazon agreed that it was too early to reach any conclusions about whether the site will be a hit.

“Israelis have no patience. It isn’t serious to look at data after a month. There were holidays and half the country was abroad. Amazon didn’t go to sleep and hasn’t yet done anything to upgrade its offering, They have ways of promoting sales and bringing traffic that Israelis have yet to learn,” said one consultant, who asked not to be identified.

“I’m confident that they will start to move things along ahead of the big sales months of November and December,” he added.

Another e-commerce expert said he had been seeing more and more companies joining Amazon as re-sellers. Strauss, Israel’s second-largest food maker, said it would be opening a page on Amazon and others are considering doing the same. “There’s growing interest and those who figure out the system of deliveries and logistics and don’t sit on the fence will profit at the end of the day. I believe that sales will within a few months starting reaching the levels they are supposed to,” he said.