Fashion, Facebook & Mobile are the Future of the Mexican eCommerce Market
Mexico is home to 122.3 million people and has a growing economy. Although GDP per capita is quite low, there’s a strong middle class emerging with more disposable income than the previous generations. 13% of households currently earn 2,800 USD per month. This is expected to reach 22% by 2018.
Mexico is home to 59.4 million internet users. This accounts for just under half of the population, leaving room for substantial growth. The number of Mexican internet users is equivalent to the entire population of the UK, and is over twice the Australian population. Most of these internet users live in urbanized areas, with an estimated 56.7 million young Mexicans also living in urbanized areas.
Mexican eCommerce User Penetration
Revenue generated by eCommerce in Mexico is expected to grow annually at a rate of 16.57%, reaching bUSD 17.6 by 2020. Online shopping currently represents 2% of the country’s roughly $203 billion in annual retail sales, representing a huge opportunity as Mexicans have only begun to adopt eCommerce. There are currently 37.9 million online shoppers in Mexico—a figure that is projected to reach 55.3 million by 2020.
Segmenting users into gender and age groups shows that, in line with global trends, younger users are the most likely to use eCommerce. Unusually, between the ages of 25-44 men are more likely to shop online than women. By 2020, men between the ages of 16 and 44 will have a 236 million USD market share, compared to women of the same age accounting for 199 million USD.
In 2016, personal electronics is the largest category, with a market spend of bUSD 2.9. Fashion will bypass personal electronics by 2020 and generate bUSD 4.9 of eCommerce revenue.
Where do Mexicans Shop from?
There is a high demand for foreign goods, with the US accounting for 48% of all Mexico’s imports. China, Japan, South Korea and Germany are also substantial import partners.
Logistics and Infrastructure
Mexico achieved an LPI score of 3.38 placing them 54th in the World Bank logistics rankings. This score is less than half a point behind Qatar (a world logistics leader).
Logistics and Infrastructure are undergoing intense modernization with a program launched to include: 133,000 kilometer network of highways, 76 international airports, 27,000 kilometers of railroad and 117 maritime ports (to include 68 container ports).
Mexico aims to rank in the top 20 percent of the World Economic Forum’s Infrastructure Competitiveness Index by 2030.
Preferred Online Payment Methods
Alternate payment methods are necessary with only 22.6 million credit cards spread across a population of 122.3 million. Debit cards are preferred with an average of 3.8 debit cards per household (similar to the UK – 3.4 per household). Cash on delivery and bank transfers are also popular in Mexico. Some local sites offer interest free monthly instalments.
Mobile is an increasing opportunity in the Mexican market with mobile penetration at 67.7% in 2015. A drop in the price of smartphones and their subsequent adoption by young people, has resulted in Mexicans increasingly engaging in mCommerce.
Although many Mexicans browse products on mobile, they’re more likely to make the final purchase on desktop. 70% of Mexican online shoppers purchase via desktop, while 25% purchase via mobile.
Retailers spend most of their advertising budget on TV. Recent years have seen Digital advertising catch up with Radio, and bypass more traditional forms of advertising like Newspapers and Magazines.
Display advertising is an effective way to spend digital budgets, with retailers seeing average click-through rates of 0.23%, more than double the US rate of 0.09%.
Those looking to leverage social media should invest in Facebook. B2C communications see Mexicans engaging with retail brands on Facebook, using Twitter for following celebrities and lifestyle content.
Mexico is home to 50 million active Facebook users. The average social media user spends 3 hours and 46 minutes on social platforms every day. Facebook is followed in popularity by Twitter, Tumblr, Pinterest and Google+.
Special Offers and Promotions for Mexican eCommerce
Mexico has a number of shopping events where retailers push special offers and promotions. For example, Hot Sale Event runs from May 29th to June 1st and encourages online shopping. Similar to Black Friday in the US – major eRetailers offer slashed prices and deals across electronics and clothing goods.
For more market insights, check out the eShopWorld series of blogs covering a range of emerging eCommerce markets.
*Insights derived from eShopWorld data, Statista, WorldBank, OECD and other industry sources.