The world’s largest online retailer may be finally opening up operations in Israel, in a move that could lower shipping prices, waiting times, and import fees for Israeli consumers – while also placing greater pressure on traditional brick-and-mortar retailers.
Amazon.com, the Seattle-based online marketplace, is currently in talks to open up its first shipping center in Israel, Calcalist reported on Sunday.
While the now ubiquitous retail giant began as an online book, music, and computer software store, Amazon has since expanded to a wide range of consumer goods, from food and clothing to car parts, toys, and appliances.
After hitting the US market in 1995, Amazon has expanded across the globe, opening shipping centers across North America, Europe, Australia, India, China, and Japan.
Shoppers outside of the above regions have also fueled the company’s expansion, with international orders increasingly able to compete with domestic retailers.
Until now, however, Israeli consumers, like many other international customers, have been limited by shipping costs and other restrictions, which leave some products unavailable or excessively expensive to import.
While US customers often have the option of guaranteed one or two-day shipping times, international shipments to Israel can take weeks – and are often slowed by delays at Israel’s import and customs authority. While free shipping is available on many items in the US, extra international shipping charges apply to all orders to Israel, as do Value Added Tax charges for all orders over $75, as well as import tax fees on shipments over $500.
According to sources with first-hand knowledge of the negotiations, however, Amazon is planning to open its first Middle East shipping center in Israel, with an eye on the Modi’in area on Highway 443.
The company is interested in building a storage center with 270,000 square feet or more of storage space, and will launch a separate website catering to the Israeli market.
Earlier this year, Amazon announced it was opening new offices in Israel for its research and development operations.
If Amazon does open the shipping center in Israel, the move would likely accelerate the trend away from brick-and-mortar stores towards online retailers. Israeli shoppers are expected to spend some $4 billion by the year’s end online, an 18% increase over 2016. With reduced restrictions on items, shipping times, and import fees, an Amazon shipping center in Israel could lead to a multi-billion dollar increase in annual online sales in Israel, a senior Israeli logistics company executive told Calcalist.
“A direct local presence can double or even triple its activity in Israel, generating billions of shekels a year from local consumers.”
As for the dreaded Value Added Tax, however, Israeli consumers are unlikely to find relief even from the expansion of Amazon operations in Israel, with shipments processed in Israel liable for the same 17% flat rate imposed on all consumer goods in Israel.