Online orders in Mexico need cash and the corner store
IN MEXICO, it turns out the key to online shopping is offline payments.
In a country where just about everyone prefers to pay cash, Amazon.com and Wal-Mart de Mexico are pushing a hybrid payment system to encourage more shoppers to go online. Amazon is letting people pay for goods ordered on its website at the corner convenience store, while Wal-Mart’s local unit and retail giant Grupo Elektra have set up kiosks at megastores that work much the same way.
Even MercadoLibre, Latin America’s biggest online marketplace, has gotten in on the trend.
Behind the shift is a population slow to set up formal banking accounts, with less than half of all adults in Mexico carrying around credit cards. While China and India have faced similar challenges, their workaround-allowing delivery people to accept cash paymentsisn’t an option in Mexico because of the nation’s sky-high rates of assaults and robberies.
Tapping into Mexico’s consumer base would be a boon for the world’s top internet merchants.
Retail in Mexico is a US$ 168 billion business, but the ecommerce market was valued at only US$ 17.6 billion last year, the Mexican Internet Association says. Consumers paid for half of those online purchases by dropping off cash in person.
“There’s not a single important retailer in Mexico that’s not investing heavily in e- commerce,” said Eric PerezGrovas, president of the Mexico online sales association known as AMVO.
“Companies that have been in Mexico forever have brand recognition and their physical stores allow customers to go in, make payments and collect packages.” Amazon, the latest entrant in the online- offline hybrid marketplace, launched its Amazon Cash programme last month, allowing customers to deposit money in an account with the online retailer at more than 6,000 convenience stores and pharmacies throughout Mexico and use the credit to make web-based purchases.
We continue working on additional payment mechanisms that will adjust to what our clients in Mexico need. Julio Gil, an Amazon spokesman
“We work hard so our clients have the best shopping experience possible,” said Julio Gil, an Amazon spokesman. “We continue working on additional payment mechanisms that will adjust to what our clients in Mexico need.”
Walmex, the local unit of WalMart, has installed about 2,000 kiosks throughout its stores that double not only as a point of payment but also a training station of sorts for older and less tech-savvy customers.
The company hopes shoppers using the kiosks today to shop online and then pay in cash will eventually do the same using their smartphones, according to Philip Behn, senior vice president of e- commerce at Walmex.
” The competitive landscape for Mexico’s e- commerce has intensified a great deal,” Behn said.
“Walmex has a very solid foundation not only to compete but to win on the long term. We’re very confident of our investment in this business.”
Elektra has also installed about 250 kiosks, and aims to have one in every store by 2018.
“It’s a process of evangelising,” said Juan Carlos Garcia, Elektra’s director of e- commerce. “Many customers have never shopped online.”
Elektra, known for giving credit to riskier segments of the population that traditional banks usually eschew, is getting ready to extend loans to ecommerce shoppers starting Dec 1.
“We’re pioneering online credit,” said Garcia. “It’s in our DNA to know how to loan, how to charge and how to adapt to our clients’ needs.”
Spearheading the trend is Oxxo, the ubiquitous convenience-store chain owned by beverage-maker Fomento Economico Mexico, or Femsa. Oxxo is working with MercadoLibre and Elektra, accepting payments at its almost 15,000 locations. Last year, it accounted for 35 per cent of such transactions in Mexico, the internet association says. — WPBloomberg