Early this week, online retail giant Amazon, controlled by Jeff Bezos, officially landed in the Israeli market by launching a local delivery website. The brands that went on the air, however, at least so far, are not the most desirable and popular brands in a large proportion of categories in Israel, to say the least. Were the current local version of Amazon a new shopping mall, Israeli consumers would probably stay away from it.
The feeling today when the local plan went on the air was that a new mall was being opened with only 30% occupancy, while most of its stores were not yet operating at full throttle. At the same time, keep in mind that only two days have passed since Amazon went on the air.
Nevertheless, the retail sector wondered yesterday following the launch why Amazon had been in such a rush to go on the air, even at the cost of what is perceived as lack of preparedness, reflected by the limited range of suppliers, most of whom are not tier-1. There were some who said, "This is exactly like the opening of a mall. They always open with at least 70% occupancy; otherwise, it's a disaster."
Amazon, however, is not a shopping mall; it is commercial arena, and Israeli consumers have used, and are using, its platform even without being exposed to the local launch. In this sense, the plan that Amazon launched in Israel, Local Delivery, is merely a convenient solution for consumers: Did you search for a product lacking from the inventory of the Israeli suppliers? You can find it in the search engine, which also includes the products sold on Amazon in the US.
To Amazon's credit, let it be said that less than five months passed between the time it began contacting Israeli sellers and going on the air this week. This lightening speed did not give the market enough time to get organized. Why did Amazon insist on going ahead with the launch when they were only partly ready? First of all, Amazon wanted to establish facts in the field. The timing of the elections and the momentum of the Jewish holidays period in Israel unquestionably influenced the decision. Furthermore, Israel is just one more stop for the international giant, which will launch new activity in another country by the end of the year - probably Ireland. All in all, Amazon is merely planting its flag in another location and hurrying on to the next stop.
Amazon's start in other countries where it launched operations was also slow (e.g. Australia, Turkey, and Japan). It takes time for the market to understand what is happening and join this activity, which includes competition by suppliers with their customers, the retailers, and makes them change the way they do things.
In any case, it appears that the current "quiet" launch is just preparing the spadework for what is to come. There are still suppliers that have not yet gone on the air, such as toiletries giant Sano, which already sells products on Amazon overseas. When the Hebrew interface goes on the air, the Hebrew language will facilitate an entirely different experience for Israeli consumers, and international shopping holidays that have already become part of consumer culture in Israel will be an important milestone.
What about the price? Despite the misleading hopes, Amazon is not the solution to the Israeli consumer's cost of living problem. Amazon has never pretended to be a player with cheap prices; it uses its capability to create constant downward pressure on prices, so that even if it is not the cheapest, it is relatively cheap, and it is not too late yet to prove this.
Published by Globes, Israel business news - en.globes.co.il - on September 24, 2019
© Copyright of Globes Publisher Itonut (1983) Ltd. 2019