Mexico has surged to the top of global e-commerce growth, experiencing a 24.6% increase in online sales in 2023, according to the Mexican Association of Online Sales (AMVO).
This spike surpasses the growth rates of established e-commerce markets like the Philippines, Brazil and India, placing Mexico at the forefront of a wave of dynamic e-commerce players.
Booming market, booming users
The value of e-commerce sales in Mexico skyrocketed to 658.3 billion pesos (US $39 billion) in 2023, exceeding the previous record by a significant margin. This growth is fueled by a rapidly expanding user base, with over 69.5 million Mexicans — approximately 52% of the population — now embracing online shopping.
Smartphones are the preferred device for these digital shoppers, with 98% of them having used them for online purchases at least once.
What’s driving growth?
Major sales events here like Buen Fin and Hot Sale — both similar to Black Friday in the United States — and annual sales near Easter and Christmas have played a significant role. So have increasing internet penetration and widespread mobile phone adoption.
The growth trend is strongest in the southeast and central regions of Mexico, where the surge in e-commerce activity has exceeded 29% growth. At the state level, Tlaxcala, Chiapas and Hidalgo recorded the highest levels of growth.
AMVO noted that the greatest expansion of e-commerce retail was most notable in the second quarter of 2023, largely due to the Buen Fin, Hot Sale and December holiday period.
Consumer preferences and challenges
E-commerce shoppers’ favorite categories were fashion, prepared food, beauty and personal care, electronics and cell phones. These represented the highest volume of purchases, AMVO noted, while kitchen utensils and tools were popular among first-time online buyers.
Also popular are online payment options for electricity, water and internet bills, and using digital banking, online subscription services and telecommunications.
A combination of online and physical stores is preferred by 70% of users, especially in higher socioeconomic groups, highlighting the importance of omnichannel shopping experiences.
Building trust is also crucial, with good customer service and review options being important for 87% of buyers. Lack of information and transparency are the main reasons that potential customers log off without making a purchase.
Mercado Libre rides the wave
The Argentine e-commerce and financial services platform Mercado Libre reported profits of US $1.2 billion at the end of 2023, a growth of 156% over the previous year. For the fourth quarter of 2023, it reported sales of US $14.5 billion across its various operating markets in Latin America, a year-over-year (YoY) increase of 37.4%.
Mercado Libre noted that its number of unique active buyers reached almost 85 million in 2023, its biggest annual jump in users in three years. Regarding its Paypal-like digital payment service, Mercado Pago — also used in Mexico by many smaller brick-and-mortar businesses to handle debit and credit card transactions with their in-person customers — growth in 2023’s fourth quarter increased 33% YoY.
According to a Mercado Libre report late last year, Mexico remains a priority market, with about 357 million items sold during 2023’s third quarter, a 38% YoY rise and a 34% jump from the previous quarter.
Trouble ahead for e-commerce giants in Mexico?
Not all is going smoothly for e-commerce platforms, however.
In February, the Federal Economic Competition Commission (Cofece), Mexico’s antitrust regulation agency, reported having identified “possible barriers” to fair competition in the e-commerce market by Amazon and Mercado Libre. Together, the agency said, the two firms control more than 85% of transactions and sales.
In a preliminary investigation, Cofece noted that strong networks between users’ groups limit new entrants into the marketplace and pose a “practically insurmountable challenge for the expansion of the smaller players.”
“This market is very important since more and more consumers are using this option to acquire goods or services since the beginning of the COVID-19 pandemic” read Cofece’s preliminary findings in the government’s official gazette (DOF). Cofece recommended a program of corrective measures it wants the federal government to require from both companies within six months. One of those measures includes splitting customer rewards programs from streaming services.
Mercado Libre promised to “abide by the proceedings and applicable regulatory framework, including by cooperating with the relevant authorities, as it has always done.”
An Amazon representative echoed this statement, telling the magazine Expansión that the company would continue collaborating with Cofece.
Looking ahead, Mexico’s remarkable e-commerce sector growth is expected to continue, solidifying Mexico’s position as a key player in the global e-commerce landscape.
With reports from El Universal, Aristegui Noticias, Reuters and El Economista
Source: Mexico News Daily
