E-Commerce Briefs – Issue 80

To develop e-commerce in Mexico penetration of internet access must be increased because at the present time only 51% of people in the country have access to the network. The total in this group is around 53 million. "The challenge is to bring the Internet to the other half of the population, the other 50%," according to Ivan Marchant. He is ComScore Vice President of Sales for Mexico and Central America and a member of the Mexican Internet Association (AMIPCI). He emphasized the point that the low internet penetration in the country is the biggest challenge facing businesses using electronic commerce because more than half of Mexicans are disconnected."

E-commerce is an opportunity for brands to bid their merchandise by other means, so that the number of consumers can be increased. In Mexico alone, e-commerce grew by 34% in 2014, and it totaled US$12.2 million in 2013. This compares with an annual growth rate, for the second consecutive year, indicating a slowdown when considering the 42% total reached in 2013 compared to 2012. This was a time when online sales totaled US$85,700 million. It is noted that in 2016 the trend will join more than 12.1 million digital shoppers in México. Projections by eMarketer show that Mexico ranks second in terms of countries with the highest percentage growth rate of online buyers with a 26.04% increase.

The adoption of technology and banking in Mexico are low compared to North America, Europe, Asia or Australia. However, Mexico has a production level of computer engineers and other engineering resources comparable to that of more developed economies. Electronic commerce is ceasing to be a form of little known trade and is becoming a method of sales increasingly common. The range of e-commerce growth in Latin America is the highest in the world, although this also has to do with having a smaller base. But it is safe to think that in 10 or 15 years we will be almost on par in amounts of transactions with regions that are now much more competitive."

Finally, the US giant Amazon launched its e-commerce site in Mexico. The entry of the company that accounts for nearly 20% of online sales in the United States, has the potential to revolutionize online shopping as it is known in the country. Amazon is known because it invests in giving good customer service, features dependable prompt deliveries and there are few steps when making a purchase. Also, the firm is willing to lose money on their operations in order to guarantee good service. Despite its 110 million inhabitants, Mexico is still a smaller market in the electronic business world. The entry of Amazon. Into this trade could very well revolutionize many aspects in the sector. For example, by improving electronic payments in a country less dependent on banking services, streamlining, delivery logistics and, in general, upgrading the quality of customer service. These factors can help trigger the growth of e-commerce in the country.

As the manager of PayPal alliances of Mexico tells it, there are indications that e-commerce is about to detonate in our country. In Mexico, he explains, only 1 in 10 Small and Medium-sized Enterprises (SMEs) have a website to sell available products or services. This is a small number when compared with other markets like the U.S. or Europe. However, according to Antonio Martinez, Manager of PayPal Alliances in Mexico, there are indications that e-commerce is about to detonate here. As experts say, this industry is growing 40% each year. This is related to the high penetration of mobile phones in Mexico. The number of cell phones in this context is comparable to that in more developed markets. "This data encourages us to believe that e-businesses in Mexico are entering a process of acceleration," says Mr. Martinez.

The business Director of MercadoLibre, Roberto Omar Galicia, said that the gymnasium for the MercadoLibre is e-commerce in México. He reminds us that 84% of e-commerce throughout Latin America is being created by three countries: Brazil, Mexico and Argentina. "This is very important,” according to Galicia, “and means that we are in this country at the right time to fully exploit the e-commerce." Galicia said that the MercadoLibre has become an "ecosystem" that includes a viable marketplace (virtual mall), but there are also other lines such as MercadoPago (Pay Market) and MercadoEnvíos (Delivery Market). These, for instance, facilitate the buying and selling experience making it easier and safer. He stressed that currently MercadoLibre is not only a platform for individual sellers and SMEs, but also for larger retailers in Mexico like Famsa, Elektra, Dormimundo, Devlyn, and + KOTA.

In order to increase the number of Mexicans who shop online, the e-commerce platform Linio and Scotiabank have launched is based on a co-branded credit card. Both companies believe that the launch of this plastic will help consumers to break barriers that now prevent them from buying on-líne. Linio seeks to approach new customers with the plastic card and encourages existing clients to acquire more diverse purchases and to go shopping for a wider variety of goods more frequently. The busiest categories for on-line shopping are travel and tickets. However, it is hoped that with the new card people will start to buy more fashion items, furniture, electronics and/or food.

Representatives of e-commerce in the country have expressed their interest in promoting regulatory improvements by fiscal, financial and consumer protection authorities. This is being done in order to reduce barriers to electronic commerce in the country. However, innovative business models, based on the latest technologies, which could push the growth of electronic commerce, still face strong resistance from traditional industries and governments. The most obvious example is the conflict of Uber and Cabify with traditional taxi drivers. "It should not be done with the systems like Uber and Cabify, but it is the other system--the traditional system that exists in Mexico--that must be deregulated," explained the Vice President of AMIPCI Mobility, Jesus de la Rosa.

GoDaddy is the U.S. Company that sells Internet domains and provides services for web development. The firm has launched a solution that allows a business to have a web presence and operate an online store. Rafael Fernandez MacGregor is GoDaddy Director for Latin America. He considered this entry as an aggregation of various possibilities for companies, particularly for micro, small and medium enterprises that have a digital presence and have begun to generate revenue through online channels. "We are starting in Mexico with an important stage for e-commerce,” points out MacGregor, “…and it is a great opportunity for SMEs. In addition, there is the increased connectivity and access to computer technologies and mobiles, coupled with the growing entrepreneurial activity in the country as well as younger generations carrying their daily life on the net. All these are clear signals that the GoDaddy digital presence will have a significant growth in the short term in Mexico.

Mauricio Braverman, Vice President of Visa Products, said that although e-commerce in Mexico has had an energetic growth, there is still some ground to cover. As an example, he said that in regard to the total transactions via credit card in Mexico, only 6% come from ecommerce, while in other countries the total exceeds 10% and sometimes reaches 25%. According to results obtained from the study of electronic Commerce in Mexico in 2015, which was done by the Mexican Internet Association (AMIPCI), 75% of Internet respondents made at least one purchase online. This means there is a universe of more than 40 million Mexicans already in e-commerce. Of these, 93% did so via a PC or laptop, 84% did so via smartphones, and 57% used tablets. This data was also provided by the AMIPCI.