Online sales for FMCG is the fastest growing channel in Latin America. Despite it represents a small portion of total sales in the region, it has a growth rate 5 times bigger than traditional channels. Within this context, Mexico appears as one of the largest opportunities for development in the channel. This is both because it is the second largest market in the region and also its current eCommerce FMCG weight is well below more developed countries such as Argentina or Chile. In this article we explore in detail online FMCG market in México, where today an important battle between some of the main global and regional players is being held. The objective is to capture as much as they can of the growth that without a doubt this channel will have in the next few years.
México is the second market in importance in Latin America and the main one for the Spanish speaking community. With almost 130 million citizens and an economy that represents 25% of the region, it is a more than relevant market for any company that wishes to play strongly and win in LatAm.
Adding to the already mentioned facts, when specifically speaking about eCommerce FMCG México shows underdevelopment in online sales. Currently these represent less than 0.5% of total sales which is well below the 1% that countries such as Argentina or Chile show. However, we can also see in México that this channel is the fastest growing one: it increases 5 times faster than offline channels.
The strategic importance and the growth potential that México represents is what has brought many of the most important regional and global players to settle in the country and fight strongly for online sales leadership.
On the one hand, we have Walmart, retail leader in Mexico, who concentrates most of the unique users and sales for Brick & Clicks. With both of their platforms, Walmart.mx and Superama.mx, they are far from any of their competitors Chedraui or La Comer in this subchannel.
However, their mega rival is making huge bets and coming closely behind. The online giant Amazon has been able to defy Walmart’s leadership position in key FMCG categories such as Home or Beauty Care in a relatively short period of time. Plus, they do it with a superior level of productivity. Besides their know how and financial back, Amazon possesses another key element to challenge Walmart’s leadership: their user base that accounts for more than 14 million Mexicans which more than doubles the amount that all Brick&Clicks together sum up. Amazon also has four times the number of monthly visits.
To top it off, Amazon has signed an alliance with Oxxo which owns more than 16 thousand convenience stores along the Mexican territory. Through this joint effort, customers who buy on Amazon.com may pick up and pay their purchases in any Oxxo store, thus eliminating the eventual disadvantage that not having a physical store may have posed upon them and offering customers more payment methods and pickup experiences. As far as Amazon keeps expanding its current FMCG portfolio to even more relevant categories such as food (which they have already started to test in some places) the war between the two giants pledges to become even more intense.
Joining the race for online sales leadership in Mexico’s FMCG industry is a third player who is trying to position strongly in the market. It is Mercado Libre, the regional Market Place leader in eCommerce sales. The company has already declared that FMCG would be one of their main engines of growth in the next few years. Though they know they still have a long way to go in terms of the adjustments their current business model and value proposition need in order to win FMCG online shoppers, they are betting strongly on adjusting these aspects quickly so that they can compete at the same level with any of the players in the market. Mercado Libre knows that if they want to consolidate as market leaders in the region in FMCG, they must win the Mexican battle against Walmart and Amazon first. They already count with a huge base of loyal users that even surpass the number that Amazon has and also a digital ecosystem that has no competition in the region, including their own payment system.
Mexico also counts with the presence of the most important Last Milers of the region such as Rappi and Cornershop, who have very aggressive expansion plans. Like in any other market, their presence acts as important catalyzers for new shoppers to adopt eCommerce habits. These consumers are able to find in Last Milers platforms and apps an overall shopping experience that cannot be offered by traditional retailers.
Pure Players leadership in Key Performance Indicators
Mexico stands in second place when it comes to number of users, representing 18% of the region. We can also verify in the country the same concentration phenomenon that we see in other countries, where at the most 3 platforms account for more than 70% of users. Considering only Brick&Clicks, the two most important platforms, Walmart and Superama, concentrate more than half of the users and they belong to the same corporate group. Expanding the analysis to include Pure Players like Amazon and Mercado Libre, the equation is completely reverted since both of them represent 80% of Mexican users, leaving Walmart with just 10%. This is why these pure players represent such a huge threat for Brick&Clicks since as they improve their presence and performance within key FMCG categories, the number of users that they already have in their ecosystems will play in their favor.
In order to evaluate each platform’s performance, we consider variables such as average time per visit, frequency and number of pages visited. It the 3 of them, Mexico is slightly above the regional average. Mexican users visit each page almost twice a month and they spend there around 5 minutes. In each visit they access 5.6 pages.
Performance is relatively even among retails Brick&Clicks. However, just as in the case of number of users, when we include Amazon and Meli in the analysis all performance indicators improve significantly. This improvement is mainly led my Amazon, whose 14 million monthly users acces more than 9 pages per visit, two and a half times per month and spending around 8 minutes per visit.
Development level for capabilities
When they are compared with the rest of LATAM, Mexican platforms stand out because of their capabilities. Most of them support hero images and cross selling. Nonetheless, like in the rest of the region, there is still a great opportunity for the development of checkouts in the digital channel since no platform offers the option of a last-minute buy before finishing the purchase. In the payment area, Mexico is very developed since it offers a wide range of options: most of them allow Click & Collect (buy online, pick up at the store you choose), PayPal and retail’s card. Moreover, all Mexican platforms analyzed accept cash.
Mexico -along with Colombia- is one of the best countries in terms of the services it has. Almost every platform offers same day delivery and the average cost for it is 3.5 USD, 30% lower than in other Latin-American countries. The delivery proposal is very homogeneous for all retails of the country.
All in all
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