Mexico Poised for Ecommerce?

With Mexico’s reputation for unrelenting poverty and crime, it is tough to think about the country as a fantastic place to work. However, with a population of 122.3 million and a middle course of 47.9 million — 39.2 percent of the population — based on El Instituto Nacional de Estadística y Geografía (National Institute of Statistics and Geography), Mexico could be a hospitable market, particularly for an ecommerce business that doesn’t need to be physically present.

The Stats

The third largest Latin American ecommerce marketplace after Brazil and Argentina, Mexico is expected to see increased sales of 150 percent between 2013 and 2018, from $2.2 billion to $5.5 billion, according to a Forrester Research study,”Latin America Online Retail Forecast 2013 to 2018.” The report forecasts that the amount of Mexican online buyers will increase 114 percent — from 8.4 million in 2013 to 18.0 million in 2018.

The report forecasts that the amount of Mexican online buyers will increase 114 percent — from 8.4 million in 2013 to 18.0 million in 2018.

Research firm eMarketer had a more optimistic evaluation, pegging the value of online services or products offered out the travel class at $3 billion in 2013. However eMarketer sees earnings reaching just $5.1 billion in Mexico in 2017. Travel — in the kind of bus and plane tickets — instead of physical goods, comprise nearly all Internet sales now, about 36 percent, according to eMarketer. Intangibles are usually the first things consumers feel comfortable buying in burgeoning ecommerce markets.

Young customers usually drive ecommerce in developing nations and Mexico’s population has a mean age of 28. But in 2012, just 47 million Mexican citizens were Internet users based on Asociación Mexicana de Internet A.C. (Mexican Association of the Web ).

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Wealthier Mexicans have a taste for luxury goods and total sales of designer clothes and apparel reached $685 million in 2012, according to research company Euromonitor. Luxurious accessories gained $294.3 million in earnings. While a lot of the purchasing occurs in brick-and-mortar stores in huge cities, internet shopping is gaining an audience. The three largest cities in Mexico — Mexico City, Guadalajara, Monterrey — account for more than half of online sales.

Mobile penetration in Mexico is high at 86.7 percent and the preferred mobile operating system is Android with 62 percent market share. Mexican smartphone users buy three times more than users with different devices typically, based on communications solution provider Ericsson.

Opportunities for U.S. Ecommerce Merchants

Contrary to China and India — visit “Ecommerce in India Takes Off; Possible for U.S. Sellers” — Mexico has few homegrown internet shopping websites. Large American retail chains with a brick-and-mortar presence have seen a chance to leverage their own visibility. Walmart was the first to go online, offering a localized ecommerce choice early in 2013. Home Depot and then Lowe’s followed with their own localized websites later in the year.

Walmart offers same-day delivery to its Mexican customers, a strategy which has enabled the company to dominate ecommerce in Mexico. Ninety-two percentage of Mexican online physical goods purchases are from Walmart or its regional subsidiary, Superama, based on International Business Times. In contrast to the United States, where its clients are largely working class, in Mexico Walmart appeals largely to a wealthier market, families with incomes greater than $3,000 per month. Walmart also benefited from the fact that while Amazon has a presence in Mexico, it sells just Kindles and ebooks, not groceries. Furthermore, local supermarkets don’t offer online sales.

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In Mexico, Walmart appeals largely to a wealthier market, comparatively.

Local Mexican sites concentrate on small niche markets. As an example, Growlers is a website for ordering national and imported beers which are delivered to the client’s door. Petsy.mx sells pet food and pet care products.

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Challenges to Mexican Ecommerce

  • a big proportion of Mexico’s population doesn’t have bank accounts.
  • Mexico has very low credit card penetration. Debit cards are more popular but don’t accommodate foreign currency transfers.
  • An inconsistent distribution system discourages some people from shopping online although the large cites have fewer issues.
  • A localized Spanish site is essential.
  • A primitive fiscal system and the absence of modern technology in the payment sector in Mexico poses an impediment for merchants. Basic features like reconciliation and chargeback notifications haven’t been fully developed, according to allpago, a payment gateway provider. Not all credit cards may process foreign currencies. The Mexican government is continually tracking the payment system to detect money-laundering schemes.

Money Economy

The most popular payment methods are cash and cash on delivery, followed by credit cards. Cash payments are done through convenience stores. The buyer selects the convenience store payment system on the internet, fills out the checkout page, and prints a coupon containing a barcode. The client goes to the store, presents the coupon, and pays cash. Oxxo is a convenience store chain with over 11,000 shops throughout the country and it’s the cash payment pioneer. PayPal is just beginning to gain momentum in the Mexican marketplace.

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Tips for Entering Mexican Ecommerce Market

  • Should you set a localized website but will be shipping products from america, consider partnering with a cross-border logistics supplier. Some, like Estafeta, offer warehousing services.
  • Many market consumer markets like the 1 Petsy.mx, the pet care retailer, is targeting, are underserved in Mexico. If your goods match this kind of necessity, jump in now and receive first-mover benefit.
  • If your market is more broad-based, you might want to wait a year or so before getting into the marketplace. The Mexican government is trying to make the payment structure friendlier to online merchants and logistics are being enhanced too.

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