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Mexico's E-Commerce Market Emerges As Dynamic New Growth Sector

01 June, 2015

A recent Forbes.com article discussed Mexico’s e-commerce market,naming it one of the “most dynamic growth sectors in the country’s economy.” Proof of this lies in the fact that major corporations like Wal-Mart,Best Buy,Amazon and Palacio de Hierro have all been investing heavily in e-commerce in Mexico lately,with Wal-Mart taking the early lead over the last few years.

Other companies making a dent in Mexico’s growing e-commerce sector include the retailer Liverpool,tourism company Despegar and airlines like Aeromexico and Interjet,which have been registering high online sales levels,leaving Lowe’s,Home Depot,OfficeMax and a variety of local supermarkets scrambling to catch up and get a piece of the proverbial pie. In addition,Tommy Hilfiger just launched its e-commerce site in Mexico,while Mexican fashion retailers like Grupo Ilusion and Price shoes have been making serious strides at growing their e-commerce channels in recent years.

“Last year several companies surpassed the 100 million dollar sales barrier,” shared David Bernardo,founding partner of LITS ebusiness,a respected e-commerce consulting firm located in Mexico City. “I think the retail scene will change a lot in Mexico during the next few years. While E-commerce is not going to replace traditional retail,it will take a larger share of the market during the next couple of years and it will be a fundamental strategy of most retailers’ strategy.”

One of the most exciting things about Mexico’s e-commerce market is its enormous potential. Although the sector is still in a very early stage,the market has an estimated 112 million users (and counting). Add to this the fact that physical access to some goods can be challenging in some parts of Mexico,and it’s easy to see why this potential exists.

Mexico also happens to have 30 percent more GDP per capita and conditions are much better for doing business here than they are in other Latin American nations,like Brazil. The numbers don’t lie; according to the World Bank’s East of Doing Business Index,available in its entirety as a free download,Mexico is ranked number 39,while Brazil comes in at 120,followed by Argentina at 124 and Bolivia at 157.

Over the next few years,we can expect to see an onslaught of large international corporations launching online operations in Mexico,and they will also take the time to educate consumers and encourage them to make more of their regular purchases online. In fact,Bernardo told Forbes he expects Mexico to be the first market where Amazon and Alibaba will compete directly against one another,and Ebay is reportedly also currently busy looking for a team in Mexico. 

“This will bring both attention and a lot of investment to the Mexican e-commerce market,” shared Bernardo. “I believe are about to see a tipping point in growth over the next 24 months.”

Other critical market sectors include mobile,because personal devices like smartphones and tablets offer Internet access to a greater segment of Mexico’s population,where smartphone penetration is the highest of any country in Latin America. As data costs continue to decrease,more and more consumers in Mexico are making purchases online and increasing their overall Internet usage,prompting analysts to predict that mobile will serve as the main driver of the nation's e-commerce revenue.

The bottom line? With better fiscal and labor laws,a much more open economy and close proximity to the United States,Mexico is a much more favorable destination for international investors than other emerging markets.