Amazon v Walmart: The Israel connection

Walmart Photo: Reuters

The US firms have been quietly stepping up their innovative technology development in Israel, in their battle for global retail domination.

Competition between Walmart and Amazon, the world's two largest retail chains, focuses on their effort to attract as many consumers as possible. A small country like Israel is not an attractive target in this context. Neither company has retail business in Israel, despite Amazon's recently renewed measures towards beginning operations in the country and a personal invitation by Prime Minister Benjamin Netanyahu to a senior Walmart executive to begin operations in Israel.

On the other hand, the need to be attractive, diversified, efficient, and accessible in order to attract more customers requires innovation and technologies from these two companies and it appears that Israel is an important target for them in achieving these goals. Both companies have a presence in technology in Israel, whether directly or through various representatives.

Amazon has research and development operations in Haifa, Tel Aviv, and Herzliya with hundreds of employees in Israel. Other than development activity for its cloud services, the company operates a local branch of Lab126, its research and development department, whose activity is kept mostly under the radar and which develops electronics products and AI capabilities. The team in Israel takes part in the development of products such as Amazon's Echo smart loudspeaker.

Up until 2017, most of Amazon's activity in Israel was based on its development center set up with the acquisition of Israeli startup Annapurna Labs. In the past year, Amazon has rented 25,000 square meters of office space in the Sarona compound in Tel Aviv and 12,000 square meters in MATAM - Scientific Industry Center Haifa. The two sites can jointly accommodate a total of 600 employees. Amazon began to expand its staff in Israel even before the offices were completed, turning the company overnight into an important competitor in the Israel high-tech labor market.

Walmart is taking a different tack; the company is making great efforts to find innovation from outside, including in Israel. Most of its activity in innovation is being kept secret, but sources inform "Globes" that Walmart is involved in a number of innovation platforms in Israel. One is Unilever's Earthbound Technologies incubator, which also serves as Walmart's official innovation center in Israel. Walmart is also involved as a partner in Coca Cola's The Bridge program and in the Team8 cyber group, while keeping this involvement under the radar. It was also reported today that the VP information security at Walmart Labs, Walmart's technology department, had joined the YL Ventures fund in Israel as an advisor.

Walmart has had informal activity in Israel for the past nine years. It regularly considers potential cooperation and investment instruments with Israeli companies. Sources familiar with the company say that it is cooperating with many startups, but usually refrains from publicizing this. One of these companies is Yoni Bloch's Eko interactive video platform, as reported in "Globes" - Walmart is cooperating with this company as part of the development of its own video platform.

Another aspect is development of products in cooperation with local food tech incubators, such as Strauss's incubator, and the use of technologies to improve retail websites, such as the technology of Israeli company Twiggle, which provides Walmart with advanced search services. In addition, as reported in "Globes," a delegation of Walmart executives visited Israel in April and met with cyber startups. The delegation was hosted by strategic consultant Ohad Finkelstein. A Walmart delegation also visited Israel in June for the Cyber Week event.

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Walmart Photo: Reuters
Walmart Photo: Reuters
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