e-commerce E-commerce sees double-digit growth.

E-commerce is seeing steady growth in MX

Faster shipping, more payment options help boost online sales to 260 billion pesos

Online sales in Mexico have increased significantly in the last five years as large retailers strengthen their e-commerce strategies, looking to cash in on the digital market and increase their overall sales.

According to the Mexican Association of Online Sales (AMVO), online sales of large retailers such as Walmart, Sanborns, Sears, Liverpool and Palacio de Hierro five years ago accounted on average for just 1% of total sales, but today the figure is closer to 20%.

AMVO president Erick Pérez said, “Increasingly, online shopping is becoming the most important part of a retailer’s business, something that wasn’t the case five years ago when I heard from some CEOs that their online store was the part of their business that sold the least. Now it’s the opposite.”

Incentives used by businesses to lure customers online include faster shipping times, a wider range of payment options, greater product choice, the chance to access online stores in bricks and mortar locations and verification of the availability of goods in real time.

Data from the Mexican Internet Association indicates that online sales in Mexico are now worth 260 billion pesos (almost US $14 billion) per year.

However, Mexico still lags behind countries such as Brazil where online sales are double those of Mexico and the United States, where such sales account for up to 20% of total sales in the retail sector.

“E-commerce has grown at double-digit rates in the last five years and everything indicates that this trend is going to continue,” Pérez said. “[But] being realistic, you have to say that e-commerce is still a small percentage of total retail sales in Mexico, around 1 to 2%.”

Large Mexican companies, for their part, seem intent on increasing that figure.

At a annual shareholders’ meeting, Phillip Behn, senior vice-president of e-commerce at Walmart México and Central America since 2016, outlined a range of digital improvements that the company made last year. He indicated that online platforms were improved, coverage and range of online grocery services were expanded and new delivery models were introduced.

“We modernized our digital platforms to improve the buying experience, expanded our online grocery operations to 38 cities, relaunched our online club and improved our digital content for our partners,” Behn said.

Still, the company announced that it wants to become even more digitally oriented in 2017 and will dedicate 10% of its 17-billion-peso investment budget towards growing online sales, which saw 27% growth in 2016.

Grupo Sanborns, owned by Mexico’s richest man, Carlos Slim, has signed a strategic alliance with América Móvil and Promotora Inbursa, both also owned by Slim, to invest in Claro Shop, an e-commerce platform of the same name.

“This strategic alliance will allow Claro Shop to optimize its digital platform and commercial strategy in order to provide its customers a unique experience across product range, buying, payment and delivery of the products Claro Shop offers,” the company said.

Department store chain Liverpool has also taken steps to improve its digital presence. Last year its website was updated to include tools which indicate availability of products at different stores and allow the tracking of orders and their scheduled delivery date.

Online sales grew by 61% last year.

Other major players in online shopping in Mexico are Amazon, Costco, Linio and Best Buy.

Rubén Ferreiro, CEO of VIKO, a company that specializes in e-commerce, believes one challenge Mexican companies face is getting customers to buy online locally. “Three out of every five online buyers made a purchase outside of Mexico in the past year,” he revealed. Greater variety and cheaper prices are cited as the main reasons.

According to experts, another challenge challenge companies face to achieve continued online growth is attracting customers over the age of 45. A lack of awareness of online shopping, limited product offerings and fear of being a victim of fraud all act as deterrents for this segment of the market.

According to statistics compiled by Inegi, the National Institute of Statistics and Geography, only 9% of people who buy online are between 45 and 55 and less than 5% are older than 55.

Analysts believe that communication is key to getting more people to buy online.

“Buying on the internet is completely safe and that’s what needs to be communicated to the consumer,” AMVO president Pérez said.

Source: El Financiero (sp)

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