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Mexican E-Commerce on the Rise, But Still Hampered


Photo: Concanaco-servitur

By THÉRÈSE MARGOLIS    

After Brazil, Mexico is the second-largest e-commerce market in Latin America, expected to represent more than $8 billion in sales this year, according to Pedro Abad, CEO of Elogia México, a digital marketing agency.

“That figure is impressive, but it pales in comparison with the size of the U.S. e-commerce market, (which amounts to $453 billion in 2017), and China (at $1.1 trillion),” Abad said during a daylong conference in Mexico City on e-commerce organized by the Spanish online fashion outlet Privalia on Wednesday, Aug. 22.

“The e-commerce market in Mexico is growing at an exponential rate, but it is still relatively small, about half the size of Spain’s e-commerce market, and Spain has about a third of the population of Mexico.”

There are a lot of factors that come into play as to why Mexico’s online sales are not on par with those in other developed nations, and that issue was one of the central themes of the Privalia conference.

“To begin with, a lot of Mexicans don’t have access to credit cards or even debit cards,” said Aarón Castro, head of sales for Mercado Pago, an online payment service, who also spoke at the conference.

“In fact, 60 million Mexicans do not have a bank or a credit account, which means that they have problems paying for the items they want to buy on line.”

Notwithstanding, Castro said that, based on a recent study by the Mexican Association of Online Sales (AMVO), about 67 percent of Mexicans have made at least one online purchase in the last year.

Castro said that in order to accommodate Mexican consumers without credit, options such as cash prepayments plans via deposits at conveniences stores and banks have been developed through companies such as his.

Currently, about half of all online sales in Mexico are paid for through these direct deposit platforms, according to AMVO president Eric Pérez-Grovas.

Still, Pérez-Grovas said that many of the sale sites for online companies in Mexico have made these payments too complicated, which can be off-putting for consumers.

“If we want to exploit the Mexican e-commerce market to its fullest, we have to start by simplifying the purchasing experience for the consumer,” he said.

“Mexicans love smartphones, and the per capita number of Mexican consumers with smartphones is one of the highest in the world, so it is important to make sales available through cellphone purchases and easy-to-use apps. Companies have to adapt to the needs and lifestyles of their consumers.”

Mercado Pago’s Castro pointed out about 85 percent of unapproved internet purchases are the result of user error in filling out the online format.

“If a customer gets his purchase rejected, for whatever reason, he or she is less likely to use the site again in the future,” he said.

“That is why it is important for the site to clarify to the consumer why the purchase was not approved and help the consumer to remedy the error if it is a typo or some other mistake on his or her behalf.”

Another serious obstacle for Mexican e-commerce is the lack of cybersecurity and concerns about fraud.

“People are afraid of being ripped off, and there is a very real problem of internet security in Mexico, as well as in other countries,” said Castro.

“Companies need to make their sites safe and reassure their customers that their sensitive information is secure. For many Mexicans, buying on line in a relatively new experience, so they want to ease into the habit of doing their shopping on the internet.”

Alfredo Segura, managing director of the online grocery delivery service Corner Store, added that the key attractions of online shopping for millennials and other young Mexicans are convenience and time, and not necessarily price.

“It is important to make the on-line shopping experience pleasant and to have a direct and rapid response to customers’ concerns,” he said.

“We try to personalize our custom care and resolve problems for our consumers. We depend heavily on mouth-to-mouth recommendations and return customers, and, in order to maintain those, we have to make our clients feel that we are giving personalized service.”

Yet another issue that is slowing the growth of e-commerce in Mexico is logistics.

“It is important to get the product to the client as fast as possible because one of the biggest advantages of internet shopping for the consumer is rapid delivery,” said Antonio Arranz, CEO of DHL in Mexico.

“But logistics is not just about getting a package from Point A to Point B. It is has to do with supply, production and warehousing. It is an entire process from factory to the customer’s doorstep, and without a reliable logistics system you can lose customers.”

“E-commerce in Mexico is growing at an astounding rate of 30 to 40 percent a year,” said Castro.

“This is a great time to get into the e-commerce market, but there are potential pitfalls. Know the market, know your audience and be adaptable.”

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