Amazon has taken initial steps to launching a marketplace in Israel, enabling Israeli merchants to sell domestically via Amazon.com. U.S. retailers say offering Fulfillment by Amazon would be essential to interest them in selling on any full-blown marketplace in the relatively small Israeli market.

Amazon.com Inc. operates online marketplaces in 16 countries in addition to the United States, and those sites are an increasingly important way for North American retailers to reach shoppers abroad. The ecommerce giant has taken the first steps toward what might become a new marketplace in Israel, but U.S. sellers say they would need to see a broader commitment before investing in a relatively small market like Israel. Israel has a population of about 9 million.

Speculation that a separate Amazon Israel marketplace might be in the works has picked up since Amazon began allowing Israeli merchants to sell to Israeli shoppers on Amazon.com in September. When Amazon.com detects that a site visitor is in Israel, based on the consumer’s IP address, it shows products offered by Israeli retailers for delivery to shoppers in Israel.

That section of Amazon.com initially was only in English, but in November Amazon added an option that lets Israeli shoppers see content in Hebrew, says Refael Elbaz, CEO of Unicargo, an Israeli company that handles international shipping for online sellers, including transporting goods to Amazon’s Fulfillment by Amazon service. That’s similar to the options offered at the marketplace Amazon launched in May in the United Arab Emirates, which is in English and Arabic.

In addition, Amazon began offering this month free shipping to Israel for orders of $50 or more, but only for merchandise Amazon itself sells. “It’s probably to encourage people to buy on Amazon during the holiday season, to get Israeli people used to the Amazon service, how convenient it is, free shipping, to get more traffic from Israel,” Elbaz says.

Amazon declined to comment for this article.

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Israeli consumers are mostly focused on price and will go that extra mile to find the best deal.
Refael Elbaz, CEO, Unicargo

However, sales are off to “kind of a weak start” for Israeli marketplace merchants on Amazon.com, Elbaz says. He says prices of goods offered by Israeli sellers are higher on Amazon than in Israeli stores, and that’s turned off shoppers.

“Israeli consumers are mostly focused on price and will go that extra mile to find the best deal,” Elbaz says. “When the word about the higher price tag on Amazon.com is out there, it is not really helping.”

He says Israeli retailers have to charge more than they do in stores to cover Amazon’s commission, any free they’re paying an outside company to set up their Amazon store and the cost of fulfilling orders. And when Amazon began offering free shipping to Israel for its own merchandise, Elbaz says, that made it even harder to compete for Israeli marketplace sellers that have to charge for shipping or build it into their prices.

Fulfillment by Amazon would be key

A Hebrew-language Amazon.co.il site would be easier for Israelis to shop, especially for older consumers, Elbaz says. And offering Fulfillment by Amazon, which is not yet available to sellers in Israel, would help attract more merchants to sell on a dedicated Amazon Israel ecommerce site. “Of course, they have to get the traffic and the sales volume to justify such a move,” he says. “For now, it looks like they have a long way to go.”

While he’s heard rumors that Amazon could launch an Amazon.co.il site before the end of the year, Elbaz thinks it won’t be before the middle of 2020.

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Would such a site attract North American sellers? There are aspects of the Israeli market that are attractive, says Eytan Wiener, chief operating officer and co-founder of New York City-based online retailer Quantum Networks. He says the country’s population is tech-savvy and buys a lot from online Chinese retailers, particularly Alibaba Group’s AliExpress, showing a willingness to shop online on foreign sites to get better prices.

In fact, Israel ranks 10th among countries in terms of traffic to AliExpress.com, the international marketplace Alibaba operates that sells mostly China-made goods to consumers around the world, according to website traffic monitor SimilarWeb.

But products can take months to arrive in Israel from China, Wiener says, and that would give Amazon sellers an advantage if they could store goods in Fulfillment by Amazon warehouses in Israel for fast delivery to consumers in that country. “If I can rely on FBA, great,” says Wiener, who uses Amazon’s fulfillment service to sell on Amazon marketplaces in Europe. Otherwise, handling fulfillment from his headquarters in New York “doesn’t work,” he says.

The added burden of translation for online retailers

That’s also the view of Jared Ebrahimoff, CEO of jewelry brand Lila Moon, part of New York City-based Lavari Jewelers. “I don’t want to be dealing with the end-customer, particularly last-mile delivery, for people who speak a different language and who are in a different time zone,” he says. Selling on Amazon Israel would only make sense for him if he could ship in bulk to an FBA warehouse and let the Amazon service handle delivery and customer service.

Sellers also must determine if they have to register in a new market like Israel and how to collect taxes, says Stuart Cohen, owner of online apparel retailer Invisible World, who sells on several Amazon marketplaces around the world. And translating product descriptions into Hebrew adds additional complications because Hebrew uses a different alphabet from English, he says. Cohen says he had to switch to using Microsoft Windows in Japanese during the short period when he sold on Amazon Japan because otherwise Japanese characters corrupted the product files he uploaded to Amazon.

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Cohen is not sure the effort would be worth it to sell into a small country.

Cross-border ecommerce sales data

While Israel is not a big country, many of North America’s leading retailers ship to consumers there, according to Digital Commerce 360 Research. Of the retailers ranked in the Internet Retailer 2019 Top 1000, 367 accept orders from consumers in Israel. That’s not far below the 372 that ship to China and more than the 365 that ship to India, putting Israel in the same league as the world’s two most populous countries in terms of access to North America’s leading online retail sites.

And any new Amazon marketplace is likely to get a look from retailers already selling on other Amazon portals. Amazon operates the most popular marketplaces for online retailers that sell internationally. In an August 2019 Internet Retailer survey of 57 companies that sell abroad via the web, 82% said they sell on Amazon marketplaces. That made Amazon easily the top choice, with eBay Inc. second at 54%.

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The penchant of Israeli consumers to look to online retailers abroad for lower prices combined with Amazon’s proven ability to attract sellers makes the launch of an Amazon marketplace in Israel plausible, despite the relatively small size of the market.

Amazon is No. 1 in the Internet Retailer 2019 Top 1000.

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