Mexico has risen to the top in global e-commerce growth, with online sales increasing by 24.6% in 2023, according to the Mexican Online Sales Association (AMVO).
This surge has outpaced the growth rates of established e-commerce markets such as the Philippines, Brazil and India, putting Mexico at the forefront of a wave of dynamic e-commerce players.
Booming market, booming users
Mexico's e-commerce sales soared to 658.3 billion pesos (US$39 billion) in 2023, significantly surpassing previous records. This growth is driven by a rapidly expanding user base, with more than 69.5 million Mexicans shopping online, approximately 52% of the population.
Smartphones are the preferred device for digital shoppers, with 98% of them having used their smartphones to make at least one online purchase.
What is driving growth?
The main sale events here are: Buen Fin and hot sale Both are similar to Black Friday in the United States, with annual sales near Easter and Christmas playing a key role. The Internet is becoming more popular, and so are mobile phones.
The growth trend is strongest in the southeastern and central regions of Mexico, where the surge in e-commerce activity exceeds the 29% growth rate. At the state level, Tlaxcala, Chiapas, and Hidalgo recorded the highest levels of growth.
AMVO noted that the largest expansion in e-commerce retail was most pronounced in the second quarter of 2023, mainly due to buenfin, hot sales and the December holiday period.
Consumer preferences and challenges
The categories preferred by e-commerce shoppers were fashion, prepared foods, beauty and personal care, electronics, and mobile phones. AMVO said these were the most purchased items, with kitchenware and tools being popular among first-time online buyers.
Online payment options for electricity, water and internet bills, digital banking, online subscription services and telecommunications are also popular.
The combination of online and brick-and-mortar stores is preferred by 70% of users, especially high socio-economic status groups, highlighting the importance of an omnichannel shopping experience.
Building trust is also important, and good customer service and review options are important to 87% of buyers. Lack of information and transparency is the main reason potential customers log off without making a purchase.
Mercado Libre rides the wave
Mercado Libre, the Argentine e-commerce and financial services platform, reported profits of USD 1.2 billion at the end of 2023, an increase of 156% year-on-year. For the fourth quarter of 2023, he reported sales across various business markets in Latin America of USD 14.5 billion, an increase of 37.4% year-on-year (YoY).
Mercado Libre noted that the number of unique active buyers will reach approximately 85 million in 2023, the largest increase in annual user numbers in three years. When it comes to digital payment services like Paypal, pago market — Also used in Mexico by many small brick-and-mortar stores to process debit and credit card transactions with in-person customers — Growth in the fourth quarter of 2023 was up 33% year over year.
According to a Mercado Libre report late last year, Mexico remains a priority market, with approximately 357 million items sold in the third quarter of 2023, an increase of 38% year-on-year and 3.4% quarter-on-quarter. % increase.
Tough road ahead for Mexico's e-commerce giant?
However, not all is well for the e-commerce platform.
Mexico's antitrust regulator, the Federal Economic Competition Commission (Cofese), reported in February that it had identified “potential barriers” to fair competition in the e-commerce market by Amazon and Mercado Libre. Together, the two companies control more than 85% of trade and sales, the agency said.
Kofes said in a preliminary study that strong networks among user groups limit new entry into the market, posing “virtually insurmountable challenges to the expansion of small players.”
“This market is of great importance as more and more consumers have turned to this option to obtain goods and services since the start of the COVID-19 pandemic,” Kofes told the Government Gazette. Preliminary findings are listed. Cofes recommended a corrective action program to the federal government requiring both companies to do so within six months. One solution is to separate customer rewards programs from streaming services.
Mercado Libre pledged to “continue to comply with legal procedures and the applicable regulatory framework, including cooperating with the relevant authorities, as always.”
Amazon representatives echoed this statement, telling Expansion magazine that the company will continue to work with Cofes.
Looking ahead, the impressive growth of Mexico's e-commerce sector 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
