Mexico E-Commerce is Growing 25% Annually. Is it Time to Finally Get Serious?

The players

Mexico’s e-commerce market has excited both retail and tech companies alike, in spite of the fact that there have been several false starts over the years. Recently, Amazon.com launched its Prime delivery service in Mexico. Meanwhile, with $198 million initially earmarked for e-commerce and logistics, Wal-Mart increased its investment in the country by $863 million.

Not only are international retailers paying attention to the market, but homegrown e-commerce player Linio recently raised $55 million in funding. With this in mind, people may be questioning whether or not the time is finally right to take the plunge.

The data

A raft of new data suggests growing momentum for the Mexican e-commerce market, due to internet penetration, smartphone adoption, retail, e-commerce growth and demographics in Mexico all converging.

MexicoGraph

E-commerce and retail

The numbers tell us that Mexico’s e-commerce market is projected to grow at a 25% clip this year, pushing the estimated market value to around $7.58 billion (eMarketer). Retail mobile commerce sales is also estimated to grow significantly by 57.9% (2017), according to eMarketer. Similarly, the general retail market in Mexico is growing at a healthy 6.3% (2017), with the total retail market size projected to be around $447.69 billion. With all this growth, both immediate and future opportunities look excellent.

Demographics and disposable income

Even the country’s demographics are heading in the right direction. Mexico’s already large and youthful population will become even more populous, and even younger from 2020 to 2050. There are some strong indicators of improving consumer health, too, such as the 45% homeownership rate among millennials, and disposable income at $535.42/month according to numbeo.com (net pay, after taxes, including salaries and financing).

Mexico’s place in Latin America

Moreover, there are several unique features of the Mexican market when compared to the rest of Latin America. For instance, Mexico is the second most populous country in the region. With almost 70 million people online, it is the 9th largest by internet population. Compared to Brazil, the retail market is sized more or less similarly given the population, however, the Mexican e-commerce sector has not yet reached a Brazilian level of maturity. Getting into the Mexican market now can afford retailers the opportunity to benefit from the forthcoming growth.

Finally, as a member of both NAFTA and the Pacific Alliance, Mexico is in an even more advantageous position to grow, compared to other countries in the region that aren’t members. Because of these memberships, Mexico has access to large international markets like the U.S., as well as important local markets like Chile and Peru.

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