I don't think it will work based on local files. The way I understand it, feeds is made to work off CSV data, with files that are already on the server.
It will take a bit of playing around on your part, but your best bet is to upload a single product/node with an image. Find the path to that image. Once you find the folder where your image is being stored, upload your images to that folder.
Then give the direct path to the image on your server in your CSV file, in the image section. The path will probably look something like this, depending on the how you configured the image field. This example is from a Drupal Commerce site:
example.com/sites/default/files/styles/uc_product_big/public/image-you-want-to-use.jpg
If your server runs some sort of post processing (image-resizing, cropping, scaling), and then saves in multiple folders, I'm afraid you're out of luck with this method.