Mexico is uniquely positioned as the second largest ecommerce market in Latin America after Brazil and is projected as one of the fastest growing worldwide, which means it is a great opportunity for online businesses seeking to position themselves in this market.
In 2019, the Mexico economy grew 0.8%, reaching a GDP of US $1.2 trillion. Online buyer penetration is around 45%, meaning that of its 130 million inhabitants, close to 68 million are frequent online shoppers. These shoppers have an average age of 28 years, a young audience that is well versed in digital adoption. This group boasts a 40% penetration rate for mobile phones, leaving 52 million computers circulating in the market that serve as the as the main means of online shopping and purchases.
Web Users ( Millions)
Source: Statista
80% of the Mexican population live in cities, which is great news for the digital market – a market that in 2020 reached a volume of 80 million transactions and a total volume of US $10 billion. This was a growth of 20% from the previous year, and yet this only represents 2% of total retail sales, which means there is significant growth potential.
US & Mexico Ecommerce Sales
Source: Statista
On average, Mexican consumers spend an average of US $350 on online purchases each quarter, with the most purchases happening during the national shopping event called "El Buen Fin,” which is similar to the US event Black Friday in November. Additionally, Mexico’s "Hot Sale" hosted by AMVO -- the Mexican Association of Online Sales -- occurs in May each year and sees very high online sales. Like the US, Mother’s Day, Father’s Day, Christmas, and Cyber Monday are top sales events as well.
If you are interested in taking advantage of one of these shopping events, or just to break into the growing Mexican market, there are some important things to consider. Below is a list that will give you a well-rounded view of how the market functions and what you should look out for:
Packaging and delivery regulations are detailed in the Norma Oficial Mexicana (NOM) which are a series of official, compulsory standards and regulations for operations in Mexico. The most important of these standards are:
Source: Amazon
Concerning business tax, the tax authority is https://www.sat.gob.mx/home. The most important taxes to consider are:
Source: Amazon
It is important to consult with a customs and logistics agent to go over the full list of prohibited products for distribution in Mexico to avoid any problems in your distribution plans. Generally speaking, the prohibited products are as follows:
Tourism services are among the most purchased in Mexico (e.g. flights, hotels, and transportation) followed closely by electronics, fashion, and home furnishings. Below is a rundown of the average order value (AOV) of each of these top-selling industries:
Source: https://www.bizlatinhub.com/
To guarantee success on your website, it is important to study the most representative ecommerce site in the market currently. By researching their marketing and promotional strategies, you can better define your strategy. Among the largest ecommerce sites currently in Mexico are:
Choosing the right ecommerce platform will not only determine your ability to sell into Mexico but could be the determining factor in the success of your business. There are many options for both small business and enterprise organizations, so doing your research to find the right fit is very important. Here are some of the most popular platforms that we see selling well into the Mexico market:
Once your ecommerce platform has been chosen, your next step is to choose the company that will help you process the payments for your customer’s orders. A payment gateway is the purchasing enabler that allows users to make payments with credit, debit, and cash payment methods.
A payment gateway that knows the Mexico market is ideal if you are planning to sell into this country. A company like Paymentez will help you navigate the different preferred payment methods and provide you with local support for all your payment needs.
There are traditionally two main models of payment gateways:
Chargebacks are an important variable to monitor with any payment platform you choose. A chargeback is the payment amount that is returned to a debit or credit card after a customer disputes a transaction. The chargeback process can be initiated by either the merchant or the cardholder’s issuing bank, and usually means that a merchant will be responsible for the fees from a card issuer.
It is best to do a monthly review of your percentage of chargebacks applied in relation to sales, with the objective of not exceeding 2% as a recommended measure. If you have a higher chargeback rate, you might be looking at higher fees as well as the potential to be considered a high risk merchant which puts you at risk for having your account terminated.
Online fraud is a serious and growing business. Once you have your website and payment gateway chosen, it is time to think about how you will protect yourself from card not present fraud. Your payment gateway may have solutions in place that will help, but if you want to ensure that you are fully protected, you should look into outsourcing your fraud protection.
A comprehensive fraud solution will not only help you avoid chargebacks before they happen by screening each order for potentially risky or fraudulent behaviors, but it will also go beyond to ensure that your regular fraud software does not turn away good customers by declining orders that are actually legitimate (called “false declines”). These orders are harder to track, but studies have shown that up to 60% of your declined order rate could be good orders that a fraud software has flagged and declined based on rules that are not always on target.
Some of the rules that machine learning and AI systems look at for fraudulent activity are:
ClearSale not only has the local knowledge to walk you through the risks that merchants face in particular markets, but they have the largest in-house team of fraud analysts. They never decline a risky order without a manual review by a highly trained specialist, so that you can stop chargebacks before they happen and never turn away a good order again.
These are some of the most important steps that you should look to take before considering opening your ecommerce site in Mexico. There are many benefits to selling into this growing market, and with the right guidance along the way, you should see great success. Bienvenido a Mexico y Buenas Ventas !!!