It’s no secret that the cost of living is high here in Israel. In fact, the Taub Center’s “State of the Nation Report 2017” showed that while wages are up in Israel, the cost of living is among the highest in the OECD (23% higher than the average of countries).
To combat the high cost of living, many Israelis are now doing their shopping online. But is that a good thing?
In 2017, Israelis purchased two online orders per second — up 15% from 2016. In total, Israelis purchased 61 million packages. Vitamins, gadgets, shoes, clothing, homeware, cosmetics and accessories were among the most commonly purchased items.
The town of Karmiel did the most online shopping, with an average of 3.4 packages each year per person, totaling 163,000 package deliveries.
TASC, which offers strategic counseling, estimates that online shopping in Israel will double or more by 2020 and reach more than 15 billion shekels a year.
With more Israelis buying products online, Amazon is showing signs that it may be ready to get serious about plunging into our retail market. That would mean that Israelis would be able to purchase locally-made products directly through Amazon.
Rumor has it that the company was recently in negotiations to rent a large storage space in Israel to provide products to the local market.
The company has been asking Israelis about their shopping habits, including how often they shop and which websites they visit. They did the same thing in Australia months before launching commercial operations in the country.
High shipping prices may deter some Israelis from buying online, but if Amazon opens a storage facility here, those prices will come down. Right now, Amazon products reach Israel by way of the UK, Germany or the US, which means longer and more expensive shipping.
An article on Huffington Post highlighted the potential impact of Amazon on the US job market. Could the same thing happen in Israel? Nearly $1 out of every $2 spent online flows through Amazon. Retailers there can’t compete with the low prices, which is putting some companies out of business. The article estimates that about 149,000 jobs have been lost since Amazon has expanded.
It’s estimated that Amazon has caused more than 135 million square feet of retail space to become vacant in the United States. That’s equivalent to the closure of about 22,000 Main Street businesses.
Israelis are already very familiar with Amazon. It’s among our top five favorite websites, along with AliExpress, eBay, Next and ASOS. Taking a deeper plunge into retail is a logical next step. And with the success of their grocery delivery service, I can see Amazon offering fresh food in the future.
But ultimately, we have to wonder whether online shopping is good for Israel as a whole. It’s convenient, it saves us money, but it also takes money out of the pockets local businesses. This isn’t a problem that’s unique to Israel, but it is one that we’re only now starting to face.