Major US retail players such as Wal-Mart, Lowe’s and Home Depot have all recently invested in Mexican websites and many more brands are set to follow suit.
In fact ecommerce in Mexico has grown a staggering 400% over the last five years, with online shopping sales predicted to increase a further 150% by 2018 when compared to 2013.
But what exactly has changed? Why is Mexico now considered as a viable and lucrative opportunity for online retailers when previously it had been overlooked?
1. Increased internet usage = expanding ecommerce opportunities
One of the major factors which previously inhibited ecommerce growth in Mexico has been low internet adoption, but this is changing.
Internet penetration has grown a massive 2,000% since the year 2000 with 49.2% of the population now connected.
The percentage who own devices for internet browsing has also reached its highest level yet with 89% of people owning a PC or laptop, 81% owning a smartphone and 55% owning a tablet.
This rapid increase in internet access and usage has in turn resulted in more Mexican users shopping on the web and 75% of internet users now say that they buy online.
2. Growing popularity of credit cards
Another practical consideration that has previously affected online shopping sales in Mexico is the comparatively low adoption of credit cards.
This is now shifting with credit card usage on the rise, although debit cards still remain far more popular (25m credit cards compared with 98m debit cards in circulation as of 2012).
The growth of credit cards has been aided by the launch of several issuer and operator backed initiatives in recent years.
These have included an increase in the percentage of points-of-sale terminals that accept card payments in physical stores, along with increasingly sophisticated payment technology for online shoppers.
The result has been more reliable reconciliation and chargeback notifications as well as greater capability for processing foreign currencies.
This being said, many Mexican consumers still expect payment methods such as cash on delivery (COD), PayPal, bank transfer and e-wallets to be provided as an alternative to card payments.
3. Changing attitudes to buying online
Lack of experience and concerns over security have been major barriers for Mexican online shoppers but statistics show that consumers are becoming increasingly confident.
Online B2C ecommerce has expanded over 400% in the last five years and online sales are predicted to grow between 20% and 35% annually over the next three years to reach $5.5bn by 2018.
This being said, Mexican online purchasing behaviour still differs significantly from US and European counterparts.
Statistics reveal for example that, though people are happy to browse across all devices, most still favour actually completing their purchase through a desktop PC or laptop: 84% of all purchases are made using a traditional computer.
Smartphone and tablet conversions are expected to increase however as consumers become more familiar with using other devices for transactions.
4. US cultural influence means brand familiarity
The familiarity of western brands (and particularly US brands) for Mexican online shoppers makes them more attractive.
This is in part because consumers want to keep up to date with the latest trends when it comes to buying items such as fashion and technology, but equally because users who are less familiar with shopping online feel more comfortable ordering from well-established companies.
This, coupled with the fact there are comparatively few home-grown online shopping sites in Mexico, is good news for international retailers.
Gaining the attention and trust of Mexican shoppers can be greatly enhanced by your brand presence abroad making market penetration easier for those with an established presence in the US and elsewhere.
US influence also impacts on how Mexican users search for the products they buy. ‘Spanglish’, the blending of English and Spanish languages is a well-established cultural idiosyncrasy which transverses into search behaviour.
An interesting example can be seen in how Mexican users search for the fashion term ‘maxi-dress’: The graph below shows how Mexican searches relating to English ‘maxi dress’ were overtaken in volume by searches for the ‘Spanglish’ term ‘maxi vestidos’, which uses the Spanish word for ‘dress’ instead.
5. The growth of social media
Mexico has the second largest number of social media account holders in Latin America behind Brazil, with over 50m active Facebook users.
On average, Mexicans now spend 3hrs 46mins on social platforms per day so social media has developed into a powerful marketing opportunity for online retailers to reach customers.
A study conducted by AMIPXI, the Mexican internet association, found that across all industries retail brands were the second most-followed after beverage brands on Facebook.
Twitter is still used by Mexicans primarily to follow celebrities, but as more Mexican consumers gain personal access to the internet through smartphone and tablet devices, inevitably other platforms aside from Facebook will grow in popularity for B2C communications.
So, while the Mexican ecommerce landscape has undoubtedly become a more attractive prospect in recent times, it is essential that e-retailers looking to enter the market remain sensitive to the cultural nuances which define it.
From being aware of consumer wariness to online credit card payments (and offering alternatives) to understanding how Mexican users actually search for the products they want to buy, effective localisation is key to success.
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