Will Mexico's Digital Commerce Space Keep Expanding Through 2025?
In the bustling world of online retail, Mexico has emerged as a powerhouse, boasting one of the fastest-growing e-commerce sectors globally. According to the Mexican Association of Online Sales (AMVO), the market expanded by an impressive 24.6% in 2023, reaching a staggering $44 billion in sales. To delve deeper into Mexico's burgeoning online retail landscape, I spoke to Jose Bachur, a seasoned Mexican internet entrepreneur and content creator.
Bachur shed light on the reasons behind Mexico's e-commerce growth, highlighting the impact of mobile device dominance and the ever-growing demand for digital services. Despite being one of the top fifteen markets for online sales worldwide, Mexico continues to grapple with challenges, such as weak home internet penetration in rural communities, high accountlessness rates, and logistical issues in delivering products to remote towns.
However, Mexico's digital user base has shown a steady increase, with nearly eight in ten residents enjoying internet access through smartphones. Bachur emphasized that as internet penetration grows and localized payment methods become more prevalent, e-commerce adoption will continue to climb, paving the way for a more extensive digital marketplace.
Foreign executives eyeing Mexico's e-commerce market must prioritize mobile internet access. Over two-thirds of online sales in the country are made via mobile platforms, with consumers using their cellphones to purchase everything from groceries to clothing. Electronics and food products will likely remain among the top categories for online sales in Mexico, with fashion and digital gadgets seeing substantial growth.
Major multinational companies like Amazon, Uber Eats, and Mercado Libre have a significant presence in Mexico, but local retailers like Palacio de Hierro, Liverpool, and Chedraui have also embraced e-commerce. Thousands of smaller Mexican companies have joined in, including Mexican cycling clothing maker Aphesis and bicycle manufacturer Chop Chop, each boasting an online sales platform.
Despite Mexico's economic growth expected to be just 1.2% in 2025, e-commerce is forecasted to continue expanding. Initiatives to increase internet access in rural areas, like Elon Musk's Starlink project worth $90 million, are likely to fuel further growth in online sales. A new 16% tax on foreign companies' online sales may present some challenges but is unlikely to halt e-commerce growth in Mexico. Overall, online sales in Mexico are projected to see double-digit annual growth between 2025 and 2030.
As urban markets mature, rural expansion may well emerge as the next frontier, offering a largely untapped consumer base. Bachur concluded that addressing challenges like cybersecurity threats, improving infrastructure, and developing digital literacy programs could enable the e-commerce sector in rural Mexico to flourish and contribute to the country's overall economic development.
E-commerce giants like Amazon have capitalized on Mexico's booming online sales market, contributing significantly to its $44 billion sales in 2023. Recognizing the potential of the mobile-dominated market, foreign executives are prioritizing mobile internet access to tap into the over two-thirds of online sales made via mobile platforms in Mexico.
