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  HOME | Mexico

Mexicans Overcome Tech-Cultural Barrier, Resulting in E-Commerce Boom

MEXICO CITY – Mexicans have overcome cultural and technological barriers such as lack of confidence in doing things online and lack of access to the Internet and that has created a favorable environment for the digital economy and a boom in e-commerce throughout the country, according to businessmen in the sector consulted by EFE.

Income from e-commerce in Mexico will reach more than $9 billion by the end of this year and about $12.5 billion by 2023, an annual increase of 8.4 percent, the Statista research firm estimates in its most recent report.

“At last, e-commerce in Mexico is waking up and having very high growth rates. In fact, on the world level, Mexico is the country with the largest growth in electronic commerce, the sector growing by 35 percent,” David Geisen, the general director of Mercado Libre Mexico, said Sunday in an interview with EFE.

Geisen, who is also the cofounder of the Mexican Online Sales Association (AMVO), said that this expansion is due to the fact that now four times as many Mexicans are digitally connected as was the case 10 years ago, with 83 million people having access to the Internet these days compared to 20 million a decade ago.

The entrepreneur said that, of the 18 countries in which Mexico Libre, an Argentine company, operates, Mexico is the one with the most growth. Just in the second quarter of 2019, for instance, the firm brought in $64.4 million in income, 267 percent more than during the same period last year.

As a sign of its optimism, the firm invested $300 million in Mexico this year.

Meanwhile, in 2017, it invested $100 million, resources that were devoted in large measure to finding logistical solutions and methods of financial inclusion, which is one of the country’s big challenges.

“There’s very little banking, in general, in Mexico. There are more than 54 million adults who don’t have access to credit or to a bank. So, alternative payments have had to be developed that include that portion of the population, without forcing them to have a bank account,” Geisen said.

Although he emphasized that Mexico is the second largest e-commerce market in the region after Brazil, he said that Mexico is facing challenges such as logistics complicated by traffic in the cities and corruption, as explained in the study titled “E-commerce in Latin America,” prepared by the firm DHL.

For those reasons – including lack of security – there “definitely” existed in Mexico a cultural barrier, said Juan Sotres, the cofounder of Triciclo, a firm that was created four years ago to advise both small and large companies on e-commerce.

“Before, the Internet was synonymous with fraud, and anything you would do on the Internet (you’d think) ‘they’re going to steal my data.’ But I think that that has been changing and the arrival of big players has also helped a lot,” said Sotres regarding companies such as Amazon, Mercado Libre and Rappi.

Sotres emphasized that Mexicans have “begun to lose their fear” about making online transactions, above all due to the appearance of applications that give them a secure payment mechanism and the growth in the 18-25 and 25-34 market segments.

He said that his company has helped develop 200 online stores, a figure that he attributed to the fact that “there are fewer and fewer obstacles” to businessmen and “technology has become democratized.”

Despite maintaining their optimism, both Sotres and Geisen view with caution the current debate about the fiscal package in the Mexican Congress, including potential adjustments in taxes that might be levied on online platforms.

“It’s not going to halt the growth, but perhaps it could decelerate it a bit, but there’s a lot of activity by everyone involved to see to it that that doesn’t occur,” said the Triciclo chief.

On that subject, Finance and Public Credit Secretary Arturo Herrera has said that no new taxes will be created but rather only a new mechanism to apply existing ones to the digital economy, which now represents more than 5 percent of Mexico’s GDP.

 

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