Then again, what’s bad about free shipping and no tax? It’s not like its driving Israel into the sea amid a bloodbath that the Arabs have threatened since the 1940s.
By JONATHAN FELDSTEINMike George, VP Alexa, Echo and Appstore for Amazon, speaks during the LG press conference at CES in Las Vegas(photo credit: REUTERS)
Amazon might succeed doing something in mere months that Israel’s Arab neighbors have not done in decades: conquer the entire country. Free shipping and no taxes are their weapons. Unlike decades of war and terrorism to which Israel has been subjected, and which most Israelis do military service to defend the country against, in this case it’s the same Israelis who are opening the door to this takeover.Then again, what’s bad about free shipping and no tax? It’s not like its driving Israel into the sea amid a bloodbath that the Arabs have threatened since the 1940s. Heck, even Israel’s tax authorities are part of it.The confluence of opportunities may be too good to be true. Or is it? Amazon is offering free shipping on orders over $49, which is not hard to do given the vast quantity and quality of products that they are known for. Unlike the old days when packages being shipped to Israel, even birthday and wedding gifts, had to have a customs form and yet still could have taxes assessed, today the tax authorities are waiving tax on orders under $75. No tax in Israel is no little thing. Virtually every good or service has a 17% VAT (value-added tax) added. Saving that alone on such mundane products as coffee beans, garbage bags, diapers, contact lens solutions, granola bars and more will add up quickly.So Israelis are lining up virtually to find the sweet spot between $49 and $75. If we could order everything that way, we probably would. However, while I am not an economist, there are things that don’t add up.In not charging tax, Israel loses tax revenues on a growing volume of basic consumer items sold in grocery stores, malls and mom-and-pop markets that are still prevalent. If that happens, look to Israel to consider reversing the no-tax deal. It is possible that any jobs which might be added as Amazon tests the waters to open in Israel will be lost in businesses that are forced to close or lay off staff.It’s understood that Amazon is just luring us in with free shipping for now to test the market and see what we want, and to get us hooked on the ease of their model. When free shipping ends, will Amazon fade into the graveyard of American imports that didn’t make it, like Blockbuster Video and Borders Books?Then again, most people don’t ask “Is it good for me?” or “What will be the consequence?” or “How much will this really cost me?” when they are getting addicted to any substance or habit.An overriding question is whether it is really easier. Of course, shopping online is easier than going to a mall or store and finding parking, or needing a five- or 10-shekel coin to use a grocery cart. Israel has a unique challenge compared to the US, where Amazon packages are not delivered to one’s front door directly, but to the post office. Post offices in Israel are the unique place where you can buy stamps and toys and phone plans. You can send a package while paying your car registration or a parking ticket. There’s very little you can’t do in a post office.As lines extend out the door in smaller branches, someone will ask if this is worth it. Post offices are challenged to keep up with the volume, and if that continues, they may find themselves in a situation where the answer is no. Service will drop. Customers will become more frustrated. Boxes will pile up in spaces that were intended for letters. To keep up just with the volume, some may have to hire extra staff, an expense not calculated into the Amazon invasion.Returns are also complicated and expensive. My wife ordered the wrong phone case by mistake. Amazon is happy to take it back. Score a point for customer service. But in order to return it, we were told we had to bring it to Airport City, an hour away. Just the cost of gas (which Amazon does not sell for less) makes it not worthwhile.Another American import is Black Friday, which used to be American Week. Stores would import American products as specials to get people in the door for things they couldn’t get elsewhere. Now it’s all-American, all the time. That’s certainly a good thing for Israel in that not only is Amazon not boycotting Israel, but they are bringing in products from countless companies that now access the Israeli market.Time will tell what this does for taxes, competition, convenience and more. Now I think I’ll make a sandwich with my new Skippy Creamy Natural Peanut Butter and Smucker’s Concord Grape Jelly that I bought at the store.
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