Shopee enters the Mexican market opportunities and challenges coexist!
1 For cross-border e-commerce, Mexico is undoubtedly a good opportunity to enter the North American market. Mexico, as a door to the Latin American market, has already occupied a pivotal position in cross-border e-commerce.
According to Reuters news on February 23, Southeast Asian e-commerce platform Shopee has launched an app in Mexico a few days ago and officially entered the Mexican market. This matter has aroused a heated discussion across borders.
Affected by the epidemic, changes in the Mexican market are developing in a positive direction. Why is Mexico becoming one of the most potential markets for cross-border e-commerce?
■ First of all, from the perspective of population base and age structure, Mexico’s total population will reach 128 million in 2020, of which 58% are between 15 and 54 years old, and 7% are over 65 years old, which is similar to other developed countries. In comparison, Mexicans are much younger.
■ According to relevant surveys, Mexico has a large number of Internet users. Among Mexico’s nearly 130 million population, active Internet users have reached 88 million, accounting for 68% of Mexico’s total population, nearly 70%.
■ In addition to the huge number of Internet users, the penetration rate of using smart phones has reached 40.1%, which accounts for the highest proportion in Latin America. Young consumers prefer to buy goods on smart mobile devices.
Although the market situation is very good, the development of the Mexican e-commerce market also has certain limitations. In Mexico, “cash is king”.
First of all, from the perspective of consumption methods, the Mexican people are keen to use cash for consumption, and they like the feeling of being able to purchase physical goods on the spot. At the same time, the development of local e-commerce logistics services is relatively lagging. Affected by these factors, the current Mexico is relatively special. Market environment.
In 2015, the Amazon Mexico site was officially opened, but after only half a year of operation, it had to create vouchers offline in order to attract consumers to shop on it. Affected by various factors, Amazon, which is popular all over the world, almost collapsed in Mexico. Therefore, the opening of the Shopee Mexico site in 2021 can be described as both opportunities and challenges.
2 When it comes to the development of cross-border e-commerce, the development of “payment” and “logistics” must be inseparable from the analysis of the development of “payment” and “logistics”, because these two factors directly determine the long-term future of cross-border e-commerce. Let’s take a look at Mexico’s development from these two aspects.
Speaking of the Mexican electronic payment environment, as mentioned above, Mexicans generally prefer to pay in cash. Although there are alternative payment methods such as credit cards, debit cards, and online banking, 90% of consumer transactions are still conducted in cash. , And 75% of the consumption is paid in cash, which shows how much Mexicans trust cash.
Some people say: In Mexico, cash is actually a way of life, and it is very difficult to change the inherent way of life.
In addition, there are currently two problems in the development of electronic payment in Mexico. First, the expiration default interest rate of Mexican credit cards is very high. For credit card holders, there are often 50% annual interest payments overdue.
The second is the problem of inter-bank cash withdrawal for Mexican savings. Cross-bank cash withdrawal requires a handling fee of about 30–40 pesos regardless of the amount of cash, and cross-bank balance inquiries are also charged with 10 pesos handling fees. These problems are also restricting the development of local electronic payments.
In Mexico, electronic payments are currently dominated by local payment methods. More than half of online payments are made through credit and debit cards, followed by cash delivery, bank transfer and Paypal.
Affected by the epidemic and with the gradual growth of global e-commerce, Mexican consumers are slowly accepting and making online shopping. As can be seen from the data in the figure, Mexico’s mobile payment, e-commerce, and O2O markets are gradually exploding.
As a cross-border seller, logistics has always been a very big pain point. For domestic cross-border sellers, Mexico in Latin America is still very far away. The longer the distance, the more likely it is to have problems in the transportation of goods.
As Mexico continues to be favored by major institutions and companies in recent years, there are not a few goods exported from China to Mexico every year. Mexico is an important transit point in the Latin American market. Therefore, Mexico has very strict import customs clearance, inspection, taxation, and certification. This has discouraged many Chinese export sellers.
Many Chinese companies have stated that they have suffered losses due to pitfalls in certification and logistics. In addition, Mexico has 10% (border cities within 20 kilometers of the US-Mexico border) to 15% (other cities) value-added tax and 1.2% customs clearance.
Secondly, cross-border e-commerce companies need to consider the infrastructure of logistics terminals in Mexico, especially in remote areas. The corresponding infrastructure must be improved. If the scope of express delivery is not wide enough, the corresponding freight will be very high and the efficiency will be very low. .
Although Shopee may provide free delivery services to Mexican consumers, if the transportation efficiency problem cannot be solved, it will directly affect the sales of the sellers in the stores.
3 The demographic dividend and the younger demographic structure, as well as logistics and electronic payment are still to be developed. Presumably this is one of the reasons why Shopee chose Mexico as one of the platform sites. Overcoming challenges can open the door to the North American market for itself. Not for it!
Speaking of the development of the Mexican e-commerce market, in the early days, American e-commerce companies seized a large part of the market share in Mexico. However, as the market matures, some non-U.S. e-commerce companies have also begun to show their prowess, such as Mercado Libre de Mexico. It has surpassed Amazon to become the leader in the Mexican e-commerce market.
The Mexican e-commerce market is affected by consumer habits. The traditional department store type stores in the market are more popular with local residents. Therefore, local giants Wal-Mart, Mexican chain stores Livepool and Coppel are very big competitors for cross-border sellers.
For sellers who want to settle in the Shopee Mexico site, if the e-commerce market wants to gain a foothold at that time, in addition to localized operation measures and improved logistics for the Shopee platform, sellers must also be prepared accordingly. Overcoming difficulties and trying to occupy a space for himself in Mexico.