Amazon set to launch local retail operations in Israel

The launch of FBM sales in other global locations has previously served as a precursor to the establishment of Amazon-operated warehouses.

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May 1, 2019 03:57
2 minute read.
Amazon set to launch local retail operations in Israel

Amazon.com's logo is seen at Amazon Japan's office building in Tokyo, Japan, August 8, 2016.. (photo credit: KIM KYUNG-HOON/FILE PHOTO/ REUTERS)

 
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Following months of rumor and uncertainty, e-commerce giant Amazon is officially on its way to Israel.
 
Overnight on Monday, Amazon contacted existing Israeli suppliers on its platform, inviting them to be among the first to sell locally to blue-and-white customers through its Fulfillment By Merchant (FBM) sales method.
 
“Dear friend, We are pleased to invite you to be part of a group of selected sellers and to participate in the Local Delivery program in Israel,” Amazon, headed by co-founder and CEO Jeff Bezos, wrote in the Hebrew-language invitation.
 
“The program allows you to use your regular Amazon.com account to sell and deliver orders directly to customers in Israel, using your Israeli inventory via Fulfillment By Merchant.”
 
FBM is when sellers list their products on Amazon but ship the products to buyers themselves, rather than utilizing Amazon’s distribution service, commonly known as Fulfillment by Amazon (FBA). In 2018, 58% of gross merchandise sales sold on Amazon were by independent third-party sellers.
 
The launch of FBM sales in other global locations has previously served as a precursor to the establishment of Amazon-operated warehouses.
 
“Sign up now to contact customers in Israel and expand your business,” Amazon told Israeli sellers.
 
“Be among the first to offer unique offerings that provide an enhanced delivery experience for local customers, offer a local choice including unique products relevant to local customers, and improve your chances of winning a Buy Box for orders sent to Israel to improve the visibility of your products to local customers.”
 
The decision to commence local operations follows the retail giant’s brief experimentation with free shipping of Amazon goods exceeding $75 to Israel during August and September 2018.
 
Establishing FBM operations will constitute Amazon’s first direct retail operations in Israel, the company has been active in the country since 2015 when it acquired Annapurna Labs for $350 million.
 
In October 2017, Amazon announced the establishment of two research and development hubs in Haifa and Tel Aviv, and plans to recruit approximately 100 engineers. In January 2019, Israeli cloud computing start-up CloudEndure was acquired by Amazon Web Services (AWS) for an estimated $200m.-$250m.
 
“This is indeed Amazon’s first foothold [in Israel], as we have seen in other markets around the world to test market viability,” said a representative of DealTas, a Boston-based shipping company that sends products from the United States to Israeli buyers.
 
“However, it is not about opening Amazon warehouses and direct sales in Israel. Usually, this stage will be a matter of several years, during which Amazon will evaluate local regulations for the establishment of an operations and logistics system based on the size of the market.”
 
In 2018 Amazon’s annual net sales increased by 31% to $232.9 billion, with revenue from product sales reaching almost $142b.
The retail giant employs almost 650,000 full-time and part-time employees worldwide, in addition to independent contractors and temporary personnel.

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