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How Israelis are beating the high cost of living

Local prices on stuff from soap to electronics are insane, but plenty of people have found ways to pay less [Start-Up Israel content]
Thousands of social protesters demonstrate in Tel Aviv in the summer of 2011. (Gili Yaari/Flash90)
Thousands of social protesters demonstrate in Tel Aviv in the summer of 2011. (Gili Yaari/Flash90)

While Secretary Kerry globetrots the world in the pursuit of peace in the Middle East, Israelis are focused on the high cost of living. Our dairy companies milk the public even more than the cows. Food costs 25%-50% more in Israel than in the US and Europe. The prices of L’Oreal, Neutrogena and Old Spice products are 3 times what they should cost. Why does Listerine cost 5 times more in Israel than at Wal-Mart? Steimatsky sells CDs for 70 shekels ($20) apiece. It’s no wonder Israelis are addicted to the MP3.

How are Israelis dealing with the high cost of living? The startup nation is no less innovative when it comes to dealing with high prices.

Free Shipping

Smartphone chargers and basic mobile/electronics items are ridiculously priced in the Holy Land. Every Israeli under 50 that I’ve met knows about Deal Extreme, AKA “DX.” Deal Extreme has cheap, generic Asian brands. You won’t find Samsung or Armani, but you will find mobile accessories for $1-$20 that costs 5 times that here.

Another hugely popular site is Alibaba, the Amazon of China. Not everything ships to Israel for free, but the deals there are incredible. Israelis are buying kitchenware, home and office supplies from Asia instead of handing over money to local tycoons and cartels.

Book Depository is replacing our two local bookstore chains. This site ships to Israel for free. I have friends who buy children’s books from Book Depository for a fraction of the cost that Steimatsky or Tzomet Sfarim charge. The David Baldacci books that I enjoy reading cost a third to half of what they cost here. Israeli stores are known for “1+1” discounts, while the popular online stores offer discounts from the first item purchased.

Overseas Shopping List

Israelis flying to the US put Santa’s shopping list to shame! We can’t exactly take road trips to Lebanon or Syria, so we fly a lot. From the moment we buy flight tickets, we open the notes app on our smartphones and start to work on a shopping list.

It begins with what we can get at Wal-Mart and Costco (find a family member or friend with a membership card) and moves on to Best Buy and other electronics and mobile device stores. We all have guilty pleasures (buying every possible release of The Who’s Tommy is mine) and things we need (M&M’s and Keebler cookies). Even M&M’s cost a few times what they should cost and you’ll never find the super-size packaging here.

What about clothes? Is there any reason that jeans and polo shirts cost 3-4 times what they cost in the US? On the high end, Factory 54 sells Armani Jeans for 1,200 shekels ($340). The same jeans cost $95 in Florida, $50 at the end of the season (September – perfectly matching the rush of Israelis flying overseas for Rosh Hashana).

Changes on the Horizon?

The older generation in Israel should be called “the passive generation.” They pretty much accepted things the way they were. When Israelis protested, it was about peace and war. This generation is different. They know what things cost overseas and have higher expectations for their country.

One day we will wake up and Tnuva (the dairy cartel) will be split into 3 companies. As they currently control over 50% of the market, those new companies won’t exactly be small.

I wonder how much of our potential GDP is lost because of the high cost of living? How many billions of dollars of products are shipped and flown to Israel every year?

Until then, you can expect Israel’s young generation to keep finding innovative ways to beat the cartels!

Read Start-Up Israel to keep your finger on the pulse of Israeli high-tech and innovation!

About the Author
Kenny Sahr is a startup marketing executive. His first startup, founded in 1996, was featured in Time Magazine and on 60 Minutes. Kenny moved to Israel from Miami, Florida. In his spare time, he is an avid music collector and traveler.
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