Israeli shoppers who have had the impression there were more items available for them to order in recent months are right: Since last October, the number of products that can be ordered for delivery to Israel has grown by about a million.
The products are those being sold by third-party vendors, i.e., merchants other than Amazon who use the e-commerce giant’s platform.
Local sources said this marks a change that has led to a big increase in orders – by some estimates a 40% increase from January to April this year, compared to the same time a year earlier.
Amazon has led third-party vendors in selling products outside the United States via its Fulfilment by Amazon service. Even so, until last October the number of products that could be delivered to Israel was very limited.
Third-party vendors amount to about half of Amazon’s sales. By opening up foreign markets to them through the FBA, the company has enabled its sales and their sales to grow and widen the product choices available on the site. Israel is not the only country to be affected by the change.
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The increased offerings on the site began shortly before reports last November that Amazon was in talks to rent space for a giant warehouse in Israel that would have enabled it to ship many local orders from inside Israel.
Nothing followed after the reports, but if the company eventually acts it threatens to shake up Israeli retailing – shipping companies will compete fiercely for its business, shoppers will expect orders from Amazon’s rivals to be delivered within 24 hours as Amazon does, and bricks-and-mortar stores will be under massive pressure to meet Amazon’s low prices.
As it is, online shopping in Israel is growing at about 25% annually and the number of packages delivered to Israel from overseas has doubled in the past three years to 61 million items in 2017, according to Israel Post. Amazon is one of the top five most-shopped sites in Israel, together with Ali Express, Asos, eBay and Next.
In response, many Israeli retailers have stepped up their online offerings, among them Super-Sol, fashion retailer Fox, Gold Bond and mall developer and owner Azrieli Group. Super-Sol, Israel’s biggest supermarket chain, launched a website enabling Israelis to buy goods in the United States.
Amazon is not only expanding its offerings to Israeli shoppers, but also is now hosting more Israeli third-party vendors: Recent estimates in the advertising industry put the number of active Israeli vendors at 6,000, most of them men in their 30s or 40s seeking to supplement their salaries.
However, only 9% to 15% of them earn a profit.
“You can make money on Amazon, but you need to be patient, creative and more than anything else flexible,” said Dvir Cohen, whose firm Amazon in a Click advises Israeli e-commerce entrepreneurs, especially those trying to sell on Amazon.
Cohen himself sells children’s books that he writes himself as well as other products he makes.
In fact, developing “private label” products to sell on Amazon, like the kind Cohen makes and sells, are a is a very popular option for Israeli third-party vendors. The product itself is made in China or another country and sent directly to an Amazon warehouse, where all the storage, shipping and handling are taken care of in exchange for a fee of 15% to 30% on the final sale price.
The other popular option is to arbitrage low prices from retailers like Walmart and Target and sell them at a markup on Amazon. Many shoppers with Amazon Prime accounts, which provides unlimited free shipping for $99 a year (now being raised to $119), prefer the ease of ordering from the site to shopping at other sites for a better price.