E-commerce has found a bright spot in Mexico. Consumers are finding they can search for better deals and find more options online. In fact, Mexico accounts for 12% of the region’s e-commerce with estimates that figure will increase to 17% by 2020, growing at a CAGR of 25%. According to Business Insider, Mexico´s 2016 e-commerce sales are expected to hit $7.2 billion. Mexico is uniquely positioned to benefit from e-commerce due its proximity from major US retailers. Not to mention the growing base of young Mexican tech savy consumers makes Mexico´s e-commerce market highly attractive and lucrative.
So if you are in Mexico and you want to order online, where do you go? Well, the top e-commerce players in Mexico are Mercadolibre, Walmart, Linio, Liverpool, and Amazon. So which on do you choose. If we take a look at the monthly visitors its clear that shoppers are flocking to MercadoLibre first followed by Amazon a distant second.
Let´s take a quick look at the e-commerce players .
MercadoLibre is Latin Americas largest online marketplace because of its seller review system and vendor protection program. The company has integrated with its own payment gateway MercadoPago, which offers customers100% buyer protection. This combination paves the way for an attractive marketplace for both sides of the transaction. The number of MercadoLibre registered users has climbed to 160 million with a presence in 13 countries (Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Mexico, Ecuador, Peru, Panama, Portugal, Uruguay and Venezuela). As of December 2016, the e-commerce site is attracting 80 million visitors per month. Speculative investors saw this as a buying opportunity and poured into the stock, causing the stock to appreciate 13% in the last 30 days.
Amazon launched in Brazil in December of 2012 but still to this days only offers books and the Kindle for sale. However, the story in Mexico is very different. The e-commerce giant launched with 32 million products along with seller fullfillment services. Amazon now ranks in the top 10 of the Latin America 500 and a strong contender in the country´s $12 billion ecommerce market. Through the Launchpad program, startups can offer products have immediate access to a global customer base and avoid the investment of building out their own marketplace. Since the new year, Amazon stock is up 7% with the success of its Echo product and strong performance by AWS.
Walmart, the largest retailer in the world, announced in December plans to invest $1 billion in Mexico. The investment will provide logistics infrastructure which includes a distribution center and fulfillment facility to enhance e-commerce and retail business. Walmart has a good supply chain structure but with the aid of better logistics it can make them a dominant player for delivering common household ítems.
Linio is another e-commerce platform that is making a decisive move into Latin America. The company recently raised $55 million by private equity investors. The funds will be allocated towards logistics, improving technology, and increasing marketing efforts throughout Latin America. Linio is rapidly becoming a major e-commerce player with operations in Mexico, Colombia, Chile, Peru, Argentina, and Venezuela. The platform offers a diverse catalog of 6 million products with more than 27,000 sellers. Linio says it provides a localized customer service experience and has 7 online/offline payment options, pre- and post-purchase telephone assistance, fast delivery, free returns. With the help of its funding, Linio is in a unique position to compete head-to-head with MercadoLibre.
Liverpool is a national department store chain 90 stores strong. The retailer has been investing in its e-commerce platform the last few years. It is trying to position itself as the best option for buying on the internet. Liverpool is like the Macy´s of Mexico with ambitions to compete effectively with Walmart and Amazon. The department store is a specialty store that can attract loyal customers in the short-term. But in the long-term a big question mark remains, Liverpool is not a major threat but another buying option for certain brands.
Back in the U.S., Americans are still seeing many brick and mortar stores shut down because of fierce competition from the online giant Amazon. It can expected that something similar will occur in Mexico unless retailers can improve the value proposition online.
It´s obvious that the top 5 are betting big on e-commerce in Mexico and looking for growth opportunities domestically and abroad. It is still to early to declare who the winners are in Mexico but MercardoLibre has a huge advantage and Linio looks promising. With the sharp rise in the number of startups and venture capital investments, 2017 is sure to bring more competitors into the e-commerce space.