Lately, every time talk of Latin American ecommerce arises, Mexico hogs all the attention. The exuberant growth of ecommerce in the nation in recent years is the topic on everyones’ tongue. Today, Mexico is the second largest ecommerce market in LATAM, after Brazil. Zia Wigder, a senior executive at Forrester Research, expressed that while the Brazilian ecommerce market is well established, “Mexico is an earlier stage market.” Businesses seeking to expand to this new territory need to ask, will this growth be a trend that continues? According to Forrester Research, yes. By 2018, Mexico will be home to 80 million internet users, 21.1 million of whom will be e-consumers. And by 2019, ecommerce sales are expected to surpass $5.6 billion. The same year, Brazil is forecasted to cross $40 billion.
As of 2013, 50 percent of Mexican ecommerce purchases are conducted on foreign websites, predominantly American. International forerunners, like Walmart and Amazon, have already targeted the market south of the border and successfully opened their doors online. Until recently, Amazon only offered Kindle devices and ebooks in Mexico; now it also offers a variety of physical goods. Due to a lack of strong competition on an international level, Walmart has managed to monopolize this market. According to International Business Times, 92 percent of physical goods purchased online are from either Walmart or its local subsidiary, Superama. Unlike in the U.S., Walmart appeals to a wealthier clientele in Mexico than the working class due to services like same day delivery. David Bernardo, a Mexico-city based e-commerce consultant, noted that the ecommerce market in Mexico is “less developed than in other countries.” Hence, “this is exactly the time when it’s exploding.”
What are some challenges a foreign company will face if they are interested in a piece of the Mexican ecommerce pie?
Nearly two thirds of Mexicans don’t have bank accounts.
Cash transactions dominate the field in Mexican economy. Local e-merchants have the upper hand because they offer alternative payments methods such as OXXO.
A convenience store similar to 7-Eleven, it has more than 11,000 locations. A website offering OXXO payment method will send customers an invoice after checkout. The invoice can then be paid with cash at a local OXXO store to complete the transaction.
Most debit cards don’t allow foreign currency transfers.
Few Mexicans have credit cards, especially international ones. While debit cards are more popular, they rarely accommodate international transactions.
With such limitations, how can you convert the Mexican market to become e-consumers? By offering local payment methods via EBANX, a leader in LATAM payment solutions. With EBANX, any offshore business can offer alternative payment methods and compete with local ecommerce merchants. EBANX is also partnered with all major banks in Mexico so customers can choose to pay with their local debit or credit card.
Mexico has a 30 percent higher GDP per capita than than Brazil, the largest ecommerce market in LATAM. The 11th most populous country in the world, Mexico is well on its way to becoming a key player globally as its ecommerce market matures. With the tides turning in the Mexican consumers’ favor, now is the time for international e-retailers to make a move to Mexico and stay current.
Want to know more about our solutions? Get in touch!
