The Future of E-Commerce in Mexico

Diana MaureExports, General, Ocean FreightLeave a Comment

Ecommerce in Mexico

The Mexican middle class has more spending power than before. This is mainly due to the fast-growing Mexican economy. Setbacks such as the earthquake in September and hurricane in August pose difficulties for the Mexican economy. However, Mexico has managed to keep the impact of the calamities on its economy as minimal as possible.

The country provides good opportunities for businesses that are looking to increase their presence not only in the country but also worldwide. Additionally, there has been a promising increase in mobile and internet users. A large number of internet users reside in urbanized regions leading to an increase in e-commerce. It is anticipated to increase nearly 20% by the year 2020. This has opened up new channels for e-commerce in Mexico.

The Mexican Economy and Sales

The Mexican economy is more dependent on its exports than its imports. It ranks 12th worldwide as largest exporter. Interestingly, a majority of its exports are to the US. Trading has seen a huge increase in the country since the North American Free Trade Agreement (NAFTA) was signed in 1994. Over 90% of the trade in Mexico is by the free trade contracts signed with more than 40 countries. China, Japan, Guatemala, the European Union, El Salvador, and Honduras are also major trading partners with Mexico.

In exports and manufacturing, Mexico alone equals the trade done by all the Latin American countries. In fact, foreign trade makes up a big percentage of the economy in Mexico. Manufactured products remain the leading export in Mexico. Other goods exported include silver, cotton, coffee, fruits, and vegetables.

In its economic forecast, OECD predicts that the growth is as per the presumed level of 2%. This growth is in spite of uncertainties over trading environment, restrictive monetary conditions, and financial partnerships. High inflation and slower credit expansion growth can, however, affect the purchasing power of individuals.

Where Are Mexicans Shopping and What Are They Buying?

Mexico has limiting monetary conditions. In such a situation, e-commerce, which is relatively new to the region, has the potential to increase growth. Market experts predict that the revenue generated from e-commerce will grow nearly a quarter by the end of the decade.

At present, only 2% of the retail sales being done annually represent online shopping. Thus, the industry remains largely untapped, providing a big opportunity for traders. The present number of 37.9 million shoppers online is expected to increase to 55.3 million by the year 2020.

Another reason for this growth prediction in e-commerce is evolving consumer behavior. There has been an increase in the consuming power among Mexicans over the past decade. However, the busy work style has left them pressed for time. With conveniences such as saving time and finding better deals online, many brick and mortar shops will have new challenges to face.

Customer service is becoming the main deciding factor for shopping now. Consumers today are more educated and seek a better rapport with their brand or business. Mexican consumers remain loyal to their brands. However, the global downturn of 2008 has changed this trend considerably. More and more consumers are turning towards low-cost brands and developing loyalty to them. Consumers who opted for the low-cost brands have stated that these brands outdid their expectations. They are more than happy to continue with the new economical brands.

Having a variety of options can definitely test consumer loyalty. Throwing in e-commerce options, especially from major retailers, can definitely make a dent in local sales.

The Challenges E-Commerce Faces In Mexico

While e-commerce is all set to experience a big boom in Mexico, there are several hurdles. Lack of good infrastructure is an important factor. But, this is only one of the several factors that challenge the industry now, which include the following:

Shopping experience
Most Mexican retail sites lack features such as product search. They do not have cross-selling capabilities. The product range often falls short in descriptions about the product and the product pictures. This makes it hard for users to make decisions about the sale.

Online support via chat, email, and phone is also an area that has to be improved. Mexico is made of a mostly middle-class and young population. Hence, these features help in improving customer confidence.

Delivery is an area that needs improvement. The time taken usually ranges from 10 to 15 days with very few offering a 5-day delivery period. This is perhaps the most challenging aspect and one that can be dealt with effectively. By using the right carriers, such retailers can improve their services. This will help boost profits.

Mexican retailers have seen a higher improvement when it comes to payment methods. They have introduced various modes of payment. These include debit, credit, money orders taken from convenience stores and bank accounts, and cash on delivery options. 0% interest on monthly installments is also offered by many retailers in Mexico.

Expectations For 2018

For retailers looking to enter the e-commerce field in Mexico, it is important to focus on the location of warehouses and logistics. They can offer shorter delivery times and the prices will be better, which is important for customer retention.

Smartphones are becoming more and more affordable in Mexico. This has made mobile shopping pick up speed. E-commerce retailers who are looking to make greater returns on their investment can benefit from mobile shopping too. They need to increase customer confidence by making the necessary improvements in online shopping. This will ensure they stay on top of the shopping list of customers for many more years.

Currently, there is uncertainty present over the continuation of NAFTA after Trump came into office. It would serve well for businesses to build a strong and loyal customer base. This can be ensured by understanding customer behavior and adapting methods that make customers loyal to the brand. Hassle-free and multiple payment options, better website navigation, prompt customer support, and fast delivery are vital components for online success.

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Diana Maure
Recently promoted to Sales Manager, Diana started in 2004 as the Foreign to Foreign Manager for ShipLilly. Her unique background has allowed her to help improve the supply chain of many international clients and provide customized logistical solutions throughout the years.

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