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The Times of E-commerce Have Arrived in Mexico

Is it profitable to set up an online store in the Mexican market?

Amazon's arrival in Mexico has marked a before and after in the country's e-commerce ecosystem. It is true that there were already various options to acquire and sell services and products on the Internet - such as MercadoLibre, a pioneer in the region with 19 years of history, or Segunda Mano, which receives its income by connecting individuals.

However, the arrival of one of the most profitable and valuable companies in the world only meant one thing: Mexico is a viable and fertile option when it comes to developing e-commerce businesses. And this is no small thing, because it is expected that the Mexican version of the e-commerce platform led by Jeff Bezos, will reach above a 11 billion dollar profit in 2018 and 13,200 in 2019, according to data from emarketer.com.

However, it is important to highlight that there are reasons why the development of electronic commerce in Mexico has not kept pace with other Latin American countries such as Brazil (which has Netshoes listed on the New York Stock Exchange) or Argentina (originator of the Latin American giant MercadoLibre). The two main ones:

• Low rate of banking in Mexico. Cash in Mexico continues to rule, and the high cost of credit supported by a growing past due loan portfolio has resulted in a low penetration of credit cards, which has undoubtedly slowed the adoption of e-commerce.

• Poor quality shipping logistics. This affects the purchase decision significantly, the confidence in the Mexican buyer that your product will arrive in time and form to your home is really low and even today represents one of the biggest objections among the public.

Taking these factors into account...

 "How is it possible then, for Mexico to be a viable and fertile option to develop digital business?"

To paraphrase Guillermo Del Toro, we would say: "Because we're Mexicans."

In local culture, adaptation to change is internalized in the phrase "yes, we can", as long as we want to. It is not surprising that the Mexican market has found unique mechanisms to solve these factors and be able to develop (perhaps at a lower speed but in a consistent manner) the digital ecosystem required for the proliferation of e-commerce businesses.

Some of the particular characteristics that today favor the incursion of your company to sell online in the Mexican market, are really particular. Check them out:

  • A large number of payment methods. Due to the low level of bank penetration, alternative payment methods that have made it easier for consumers to purchase products online to increase their confidence. PayPal, bank transfers, and methods such as MercadoPago by Mercado Libre, cash deposits in convenience stores, etc., have created a unique digital environment so people are not afraid to venture to buy online.
  • The territorial extension and the quality of the carriers. Mexico has a huge amount of territory with good infrastructure for shipping and transporting products across the width and length of the country. A poor postal system has favored the development of a multiplicity of parcel companies such as UPS, DHL, FedEx and Estafeta that can meet the needs of any e-commerce business.
  • The arrival of Amazon. A substantial difference that Amazon offers today in Mexico are its logistics processes (picking, packing, and shipping) of extraordinary quality; sellers can send their products to Amazon stores and let it take care of all shipping logistics.
  • Social networks. Mexico is in the top 5 of the largest number of social media users in the world. Which transforms the digital environment into a breeding ground for the positioning of brands and products with digital marketing campaigns.
  • Mexican profitability. In the Mexican market the costs are lower than those of many other latitudes, even within the region; therefore the break-even point of the e-commerce business can be achieved with lower billing levels and in a shorter time.

There is no doubt that, Mexico is its prime for your company to decide to invest in e-commerce. And although we are still far from living the apocalypse retail that is experienced in the United States, the investments that department stores such as WalMart, Coppel, El Palacio de Hierro and Soriana are making to generate powerful websites to take their businesses to the online market is clear evidence about the veracity of our argument.

At Mijo! Brands a team of professionals can help you create your e-commerce strategy, design and enable online stores on your website and apps, generate organic and paid social media campaigns to position your products and even operate your e-commerce platform with interdisciplinary team of professionals.Contact us today.

David Soffer is Jr. Digital Strategist and e-commerce Executive at Mijo! Brands, a leading creative digital marketing agency with presence in Mexico City, Guadalajara and Puerto Vallarta. David is a graduate of the Bachelor of Communication Sciences at the Technological University of Mexico UNITEC, complemented by courses in editorial design, photography and digital marketing. David has a vocation of service focused on the client and knowledge of human nature, a vision developed along his path via diverse companies with different cultures and degrees of attention. A loyal lover, who only engages in affairs with literature or through the lens of a camera that in his free time refines him as an independent photographer.