When it comes to the fast growing world of eCommerce, Latin America is the new kid on the block and seems to be the ‘it’ place you should keep an eye on. Accounting for 42% of the region’s eCommerce sales, Brazil is paving the way forward, with Mexico not far behind.
Mexico has seen a massive boom in recent years and it looks like she’s not slowing down anytime soon.
With sales forecast in Latin America to reach a monumental $80 billion in sales by 2019, Mexico’s share is expected to be no less than $13.27 billion! The predicted growth is off the charts completely, with an estimated 151 million people in Latin America set to buy products and services online (an increase of 30 million from 2016).
So, what’s fueling this buying-habit shift and the sudden take-off that’s making Mexico one of the most attractive affiliate markets in Latin America?
With nearly 70 million online shoppers in Mexico, that figure is projected to balloon.
There’s been a 59% rise in internet users in two years alone (between 2015-2017) and the market doesn’t look like it’s slowing down anytime soon – a common pattern that the rest of Latin America is also following.
So, what is fueling this Latin American boom in eCommerce?
1) Internet usage growth – according to eMarketer, internet penetration grew from 53% in 2015 and is expected to reach 67.4% in 2019.
A growing population of young, urbanites in Mexico is one large contributing factor. Even though internet access only reaches half the country, there are still at least 57.6 million young, forward-thinking Mexicans comfortable shopping online.
2) Regulation Reforms – this is a biggie! Telecom’s regulatory reform saw a boost in competition in Mexico’s phone, TV and internet industries (approved in Mexico, late 2013) meant that consumers could finally gain access to the internet at lower prices.
This could be pinpointed as the cause of the initial eCommerce Latin America take-off.
3) Declining cost of smartphones – a growing population of young individuals has led to a growing number of smartphone buyers resulting in more engagement in the mobile commerce industry.
4) New retail entries – with the entry of eCommerce leaders into the market (think Amazon and eBay), mega-retailers such as Walmart wanting to stay in the loop are forced to broaden their shopping methods, leading to the opening of more eCommerce channels, positively influencing the market.
Reformed Online Payment Systems
With all this reform turning the internet and mobile technology sector right-side up, combined with the strong will of the booming young population to conveniently buy more goods and services online, there must be a reform when it comes to online payment methods.
The reality is that there are only 22.6 million credit cards spread across a population of 122.3 million, meaning alternative payment methods are a must to reach out to the credit-card-less population. Buyers are very wary of purchasing goods online – and with every right.
The country is slowly developing its payment infrastructure offering a variety of online payment methods. Now there is:
● PayPal – helping to avoid the high cost that comes with fraud.
● Oxxo Pay – a payment method that dominates the offline payment scene, allowing Mexicans to pay online in installments without interest.
● Cash payments at the door (upon delivery)
● Money orders from bank accounts and convenience stores – perfect for those without bank accounts
These options have all made online shopping far more accessible to the wider population contributing to the boom in eCommerce.
Latin America as a whole is not only buying more products online via computers/laptops but is also part of the mobile shopping movement.
One survey in 2016 found that 43% of mobile buyers in Latin America purchased products on their phone every month. This shift in buying habits is one for investors in the eCommerce industry to keep a close watch on. eCommerce sites need to make sure that their buying process is smooth sailing on mobile devices, to keep up with the times.
Mexico holds a huge potential for growth and the time has finally come to bring its eCommerce experience up to speed with international standards. Now it is one of, if not the most attractive eCommerce Latin America markets – all aboard.