Why this is important to Wisconsin businesses: With more consumers going online due to the pandemic, the marketing is growing rapidly in spite of Mexico's lagging rates of access to the internet and bank accounts.
E-commerce in Mexico has seen explosive growth during the past decade. According to the Mexican Internet Association, from 2010 to 2019 this sector registered a compound annualized growth rate of 36.5%, meaning it has grown 15-fold in just nine years, reaching nearly $600 billion MXN in 2019 from only $36.5 billion MXN in 2010.
Even better news for this industry: As the COVID 19 pandemic fueled online commerce, growth in 2020 reached an estimated 40% to 50% compared to 2019. Final figures have yet to be released, but according to the Mexican Association of Retailers (ANTAD), most products registered a growth between 15% and 60%, while groceries increased by 300%. It is estimated that during 2020, fully half of large and midsize businesses in Mexico experienced growth in their online activities. Industry experts also note that consumers who were previously reluctant to engage in e-commerce have become permanent clients, which will enhance future growth.
The pandemic, which has adversely affected so many industries, has had a positive effect for the e-commerce in Mexico and around the world, with companies offering online options that did not exist one year ago. Healthy and sustained growth is expected to continue for the foreseeable future, given the still-low penetration of e-commerce in Mexico compared to other more developed markets and the ongoing development of e-commerce infrastructure and logistics now that physical products such as groceries and fast food are more in demand than services.
Despite an excellent forecast for e-commerce in the years ahead, the industry faces major obstacles that could threaten its potential for expansion:
- Lack of internet access. According to the Mexican Internet Association, as of 2019, Mexico had a record number of people with internet access: 82.7 million. This represents only 63% of the population—far below the accessibility rate of the best-connected nations. Despite the continuing expansion of internet access in Mexico, it’s important to note that a significant portion of those with internet access connect from public spaces (schools, universities, public access points) that are not ideal for online transactions due to safety concerns.
- Lack of access to banking services. The same source reports that credit and debit cards are the preferred method of payment on online transactions, with other transaction systems such as bank deposits, payment on delivery, payment on site, prepaid cards, electronic purses and gift cards following as a close second. This is a problem since these methods require customers to have access to banking services, and only 47% of Mexico’s population has a bank account.
- Lack of confidence in e-commerce. A large portion of consumers engaging in e-commerce report a low level of confidence in both the banking system and the e-commerce transactions. Even though a full 84% of those who completed an online commerce transaction during 2019 reported being satisfied or very satisfied with the experience, and 91% expressed it was probable or highly probable they would repeat the experience, but 38% said they did not feel comfortable storing their personal information or banking information in e-commerce platforms.
E-commerce in Mexico has evolved to include people in older age brackets as well as lower income levels. While people under age 34 still make up the majority of internet users, those in the 45+ age bracket now account for over one-quarter of all consumers—up from 20% in 2011.