Amazon Moving in on Local E-Commerce in Israel

YERUSHALAYIM -

The online retail giant Amazon is negotiating for acquisition of a major warehouse site in central Israel, according to financial news site Calcalist on Sunday.

The 260,000 square feet warehouse is slated for Modiin, say “people familiar” with the negotiations.

If the talks bear fruit, it will likely mean faster shipping and lower rates for Israeli consumers, and tough competition for local online vendors.

Israel has not been notably hospitable to companies shipping orders to addresses around the country, and Amazon will have to contend with that.

“I’ve almost given up on it in Israel,” said David Bleicher, CEO of Invertex, an Israeli e-commerce footwear company which does almost all its business abroad. “A year or two ago, it was almost impossible [here] to get a parcel from the postal services.”

Then there’s the issue of taxes. Delivery fees and local taxes can make online shopping more expensive than in traditional brick-and-mortar outlets. In Israel, mail-order purchases totaling less than $75 are exempt from VAT (value added tax), while purchases up to $500 are not subject to import taxes.

The Israeli Chamber of Commerce and shopping mall owners have been fighting demands to raise the tax exemption ceiling, Calcalist said. The offline businesses are not keen on seeing online prices go down, especially as many have not themselves invested in online commerce.

Meanwhile, Amazon announced last month that it plans to open research and development centers in Haifa and Tel Aviv with a total of 100 employees at the start. That in itself was noteworthy, but the top salaries being offered – nearly NIS 100,000 ($28,500) monthly — approximately around ten times the average Israeli monthly salary – rocked the industry.