Coronavirus
e-commerce

E-commerce was a big winner in 2020; sales expected to be up over 30%

But safety concerns and logistical challenges are obstacles to future growth

The Mexican economy took a significant hit from the coronavirus pandemic and associated restrictions but one big winner in 2020 was e-commerce.

Helped in no small part by stay-at-home recommendations, online sales were projected to reach US $18.8 billion in 2020, according to a November report by German market and consumer data company Statista. The figure is almost 32% higher than e-commerce sales in Mexico in 2019, which totaled $14.26 billion.

According to Statista, spending on electronics and media was projected to be $5.88 billion in 2020, or almost a third of the total e-commerce expenditure.

The predicted outlay on fashion items purchased online was just under $4.52 billion, while $3.44 billion was expected to be spent on toys, hobbies and DIY products and $3 billion on furniture and appliances.

Just over $1.93 billion was projected to be spent online on food and personal care.

Statista also predicted that a total of 50.7 million Mexicans would make online purchases in 2020, an 8.8% increase compared to 2019. Market penetration was predicted to be 39.3% of the population, up from 36.5% last year.

A co-founder of Triciclo, a marketing agency that specializes in e-commerce, said that growth in the sector during the pandemic was equivalent to what was expected over a period of two years. Renata Raya said that some small and medium-sized businesses saw their overall sales increase by as much as 500%.

“Those that had a physical store were forced to enter the world of e-commerce,” she said. “… We also have clients that already sold online and … for them, the growth was very significant.”

Raya also said that nine out of 10 people who made an online purchase for the first time in 2020 shopped online again a short time later. She added that she expects e-commerce growth to continue in the short term.

Indeed, Statista forecasts that total online sales in Mexico will reach $21.2 billion this year, which would be a 12.8% increase over the 2020 projection. By 2025, e-commerce revenue will hit $24.6 billion and 77.9 million Mexicans will be shopping online, the company predicts.

The enterprise sales manager for Magento Commerce, an e-commerce website creation platform, agreed that online sales will continue to increase even when shopping in bricks and mortar stores no longer poses a threat to people’s health.

“While it’s true that a lot of people are tired of being at home, a lot of people have also noticed the convenience” of online shopping, Mario Juárez said.

Companies evaluated by Magento have seen their online sales increase by between 300% and 400%, he said.

Like Raya, Juárez said the pandemic has accelerated e-commerce growth in Mexico, charging that it has placed the sector in a position it would have otherwise reached in a decade.

But despite the growth in 2020, both company representatives believe that safety concerns and logistical challenges are among the constraints on the e-commerce sector.

Indeed, the Mexican Association of Online Sales found that 48% of people it surveyed believe that shopping online is unsafe. Another barrier for is that only 47% of Mexicans have a bank account, according to the latest financial inclusion survey conducted by the national statistics agency Inegi.

“There is still a very large [part of the] market” that doesn’t shop online, said Juárez, adding that the “main challenge” for the e-commerce sector is the low proportion of the population with access to bank services.

However, many companies have developed different payment methods for people without bank accounts, he added.

Among them: paying for online purchases at convenience stores such as OXXO, paying cash on delivery and using gift cards and e-vouchers.

Plus the new fintech banks, which only operate on line, have made opening a bank account simple and fast and they offer credit or debit cards.

Source: Forbes México (sp) 

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