Global on-line retailer Amazon has notified Israeli retailers that it was set to begin conducting retail sales in Israel – and almost immediately after that notification, Uriel Lynn, head of the Israel Chamber of Commerce, fired off a letter to Finance Minister Moshe Kahlon urging him to prevent Amazon from opening up shop in Israel.
“From the moment Amazon begins activities in Israel the company will not limit itself to sales by local merchants and manufacturers, but it will become a major force for personal imports by Israelis. The result will be a much greater deterioration in the inequality of conditions between Israeli and foreign on-line merchants, which has already caused great damage to Israeli businesses,” Lynn wrote. “This is not a minor issue. There are 50,000 stores in Israel that will be negatively affected, many of them small businesses, each of which supports a family.”
There have long been rumors that Amazon was seeking to set up retail operations in Israel. In 2018, reports said that the company had met with executives from Israeli manufacturers and importers in an effort to determine the best way for the company to enter the marketplace, and to understand current market conditions in preparation for its Israeli launch.
The report said that Amazon executives met with Israeli food manufacturers as well, even though according to previous reports the company is not planning to sell food in Israel. Because of issues of distance and storage, the company plans, at least initially, to concentrate on selling clothing, books, electronics and other items with indefinite shelf lives.
Amazon also reportedly hired a staff of Israeli translators to deploy a Hebrew-language version of its site.
On Tuesday, Amazon informed its Israeli suppliers that it could add “local delivery” to its options for delivery; generally, shipping is done via the international Amazon sites Israeli shoppers order products from, even if those products are made in Israel. It is not clear if suppliers in other countries received the notification as well.
Nevertheless, the news that Amazon was making a move toward retail in Israel was enough to cause a tailspin on the Tel Aviv Stock Exchange, with the TASE top 35 stocks closing down 1.15% on Tuesday – mostly from losses to Israeli retailers and real-estate firms, who are invested in the malls that Amazon will presumably be taking business from.
Lynn said that the government needed to intercede to protect Israeli jobs. “The expanded inequality that will result will cause massive damage to Israeli businesses. Already there are many businesses that are suffering because they have to pay VAT sales taxes, and conduct their books in accordance with Israeli tax laws – which the foreign suppliers they are competing with are exempt from. The Israeli business sector is severely discriminated against, and this will just make things worse,” Lynn said, adding that the only way Amazon could be allowed to do business in Israel was to even the playing field for Israeli businesses – either by exempting their sales from VAT and other taxes, or imposing those taxes on online purchases from foreign sources.