The post-pandemic Mexican online consumer behavior and how local companies can adapt to it

From the new consumer profile, to payment trends and much more! Discover what local Mexican companies need to thrive from 2022 onwards.

João Paulo Notini
February 08, 2022
15 min read
The post-pandemic Mexican online consumer behavior and how local companies can adapt to it

Mexico is the second largest e-commerce market in Latin America and one of the most important economies in the region. Even for local companies, however, it can be hard to understand what has been going on with the Mexican’s online consumer behavior since COVID-19 and the post-pandemic trends that they must follow.

From the current consumer profile and the most purchased categories of products/services, to payment trends. We are also bringing to you details of Mexico’s e-commerce potential, real case stories of how local enterprises are thriving in the current scenario and revealing what local businesses must focus on from 2022 onwards. 

Enjoy the read!

How have Mexicans been consuming online since the pandemic started?

First of all, to understand what has been going on with the demographic online shopper profile in Mexico: the 2021 AMVO study reported that they are mainly Mexicans between 25-34 years old, although in 2021 shoppers above 45 y/o have increased, compared to 2020. More so, women and consumers from medium and high classes have also grown their participation.

Before the pandemic, 47% of Mexicans were used to buying online. Now, however, digital commerce has come to stay and 74.3% are purchasing online, according to Forbes-Mexico. This “new normal” is expected to continue from now and, despite demographic shifts, here is a list with key general insights from the Mexican online shopper after COVID-19, based on a McKinsey survey:

  • The majority of the respondents were expecting to spend less after the pandemic
  • Mexicans are trying new shipping methods: 82% declared that they tried a new shipping method when the pandemic started which they still do regularly
  • Overall they didn’t change their online shopping preferences after the pandemic
  • Delivery services came to stay

The rise of e-commerce on mobile phones and home delivery:

Now, let’s understand how the high penetration of mobile phones and the home delivery services preference had everything to do with COVID-19 and the increasing importance of digital commerce. 

It seems obvious that a pandemic has forced us to spend more time at home and avoid public contact, right? Well, since the COVID-19 outbreak, Mexico has followed a trend that took place in most countries of Latin America, except for Chile and Costa Rica: there was a shift from desktop to mobile purchases on e-commerce.

The country is currently the fourth with the highest percentage of mobile share in Latin America and, since 2020, mobile (52%) surpassed desktops as per our Beyond Borders study. Last year its share on e-commerce reached 65%, which was 25% higher than 2020 and 35% higher than 2019. The trend is expected to continue in 2022 as digitization takes place in Mexicans daily lives. 

Alexandra Stamou, partner at Punto Kardinal, a Mexican market research agency, conceded an interview to our Beyond Borders study. She believes that smartphones are especially key for people from middle to low socioeconomic levels in the whole Latin America – which reinforces the idea that mobile is bringing new consumers to online shopping in the region. 

“These families tend to live in small spaces, having to share everything. Mobile gives them a sense of privacy and personalization. They sit against the wall with their phones, watch movies, buy online, and this is their private space.” She pointed out that this was a trend seen before the pandemic, but which has been accelerated since.

When referring to Mexicans, they are now preferring to shop online to avoid traffic, find better bargains or due to safety concerns. “Of course, in the beginning, protection against the coronavirus was the main driver, but there are other factors that also made sense to Latin Americans”, said Stamou. Avoiding, therefore, dangerous neighborhoods, for some people, or dodging traffic jams in a megalopolis such as São Paulo or Mexico City, are still moving consumers to online shopping.

The most purchased online shopping categories 

How about knowing what Mexicans are buying more? Take a look on the list below retrieved form AMVO 2021 survey with the most purchased product categories by Mexicans last year:

  1. Food Delivery (66%)
  2. Fashion (57%)
  3. Cosmetics (52%)
  4. Electronics (46%)
  5. Electrodomestics (43%)
  6. Consoles and Video-Games (41%)
  7. Pharmacy items, including medicines and self-care products (41%)
  8. Grocery items, including daily consumption products (40%)
  9. Office items (37%)
  10. Tools and equipments (35%)

AMVO and Netquest have also reported the main services Mexicans acquired through e-commerce in 2021: 

  1. Subscription services such as TV shows, movies and music (83%)
  2. Mobile phones (78%)
  3. Internet banking (78%)
  4. Public service payments such as water, electricity and phone receipts (75%)
  5. Cultural content (72%)
  6. Urban transportation (70%)
  7. Travel (67%)
  8. Events and shows (57%)
  9. Education (52%)
  10. Messenger services (52%)

It is noticeable that  there is a strong trend for online retail products (which we are going to explore later) and subscription services. Yet, knowing what Mexicans are buying online after the pandemic is not enough if we don’t know how they are paying for it, right? 

Mexicans are going for alternative payment methods

A few years before the pandemic cash preference hit 90% in Mexico but, after COVID-19, there is a rampant adoption of digital payments, with cash preference dropping to less than 50% in some scenarios (Beyond Borders Study). 

When we talk about e-commerce in Mexico, we can’t ignore the importance of cards. They represent 71% of all e-commerce payment volumes and, besides being a traditional method, another reason for their adoption is that Mexicans love to pay through installments. 

Now, what is even more interesting is that Mexico ranks fifth among 15 countries in the region in regards to alternative payment methods (APMs) adoption. APMs include digital wallets, some cash-based methods and other types of payments. They have grown in the whole region after COVID-19. Although cash is decreasing its use in Mexico, on e-commerce, cash-based methods account for 14%, followed by wallets with 10%. 

So, what has been driving this trend? We can definitely mention the most popular APMs that still have a lot of room to grow: OXXO. Differently from PIX, in Brazil – the popular cashless instant payment system that is used by more than 60% of all Brazilians – OXXO is a voucher-based payment method with 18,000 stores in the country that allows Mexicans to pay bills and online purchases in-store with cash.

This cash payment method represented around 20% of all online transactions in 2021. However, there are other alternative payment methods that deserve attention from this year onwards:

  • Mercado Pago: an e-wallet from MercadoLibre that is used by over  4 million lines and it is the largest billing platform in Mexico.
  • CoDi: a platform from Banco de Mexico that uses QR code and NFC to allow cashless transactions through mobile phones between users and businesses.
  • SPEI: a payment system also developed by Banco de Mexico that allows customers to perform electronic transfers in a matter of seconds. 

2022: another golden year for online Mexican businesses

Clearly,  digital commerce has gained a lot of room to grow in Mexico. Our Beyond Borders study showed that: as for the third quarter of 2021, Mexico had a USD 49.6 billion market with an annual growth of 32% in 2021.

Besides being the second largest e-commerce market of Latin America, AMI data points out that by 2024 it will reach a 24% growth, which means that there is indeed a huge potential for online businesses. Small and medium size local Mexican companies, especially in retail, for example, are expected to increase their digital sales by 100% in 2022 according to the AMVO 2021 study .

Source: Beyond Borders 2021-2022

You are now probably curious about how this scenario has been favoring local Mexican businesses and generating such high expectations for 2022. Don’t worry, stay with us because this is what we are explaining to you next. 

The power of local Mexican online retailers

Online retail has been growing fast in Latin America with a 40% growth rate and has always been the main e-commerce vertical in the region. When we look at Mexico, the story repeats. As you have seen previously, from the type of products that have been frequently purchased online after COVID-19, most of them can be classified as retail goods. Note that, from Mexico’s USD 49,6 billion e-commerce market, USD 32 billion belongs to online retail, which is also the largest vertical (data retrieved from our Beyond Border’s study).

It is very interesting to observe the impact of COVID-19 and the shift it generated on online retail penetration. As for 2019, before the pandemic, digital retail sales represented only 5% of the total retail sales in Mexico. Recently, it has more than doubled, representing 11% of the total total share.

Furthermore, when we compare the participation of domestic and international companies on Mexico’s online retail, we see how powerful local players are. From the total sales in the country, 91% comes from local businesses. 

This is a trend that happens in most developed countries in the region. On the other hand, underdeveloped countries such as Paraguay, Dominican Republic, and Ecuador and El Salvador, where local players aren’t strong enough to compete with global companies, the share of local businesses on online retail sales is less than a half. 

Source: Beyond Borders 2021-2022

Kavak and Bodega Aurrera: how two local Mexican players thrived after the pandemic

We can’t just show you numbers without exemplifying how local businesses have been on the top, right? Of course all companies faced challenges imposed by the pandemic, but along with the difficulties, opportunities have emerged. So, let’s have a look at the following case stories:

Kavak

At the end of 2020, Kavak became the first Mexican unicorn with a valuation of USD 1.15 billion. Nowadays it is worth more than USD 8 billion. So, how did this e-commerce of pre-owned cars succeed in Latin America and managed to achieve such a success?

In an interview conceded to ABC News, Alejandro Guerra (Kavak’s Regional Manager) said that the company had to reinvent itself: 

“Digitalization made the Mexican consumer hunger for the internet from their homes and to see alternatives of not going to public places due to the pandemic fear. During the pandemic we had to do things differently, so we started to perform inspections at our customers’ place so they didn’t need to go out of their houses to sell a vehicle. We have also also started home delivering our vehicles, so our clients only needed to move from our webpage to our app ” 

Kavak has also started to offer a 3 months guarantee where the client can, before it expires, return the vehicle without any costs and doesn’t need to explain the reason why. Another key reason pointed out by Guerra of how the company thrived after COVID-19 was their digital revolution, by heavily investing on their website, app and offering new payment conditions: the company created its own financial arm, called Kavak Capital. It finances up to 60% of the vehicles acquired by credit on their platform. 

Bodega Aurrera

If you live in Mexico, you have probably heard of Bodega Aurrera: a supermarket chain owned by Walmart and with a massive presence in mid-to-low neighborhoods. Be surprised or not, but the brand became the second fastest growing website in Latin America when considering the visitors as per the third semester of 2021. It managed to overcome powerful global players such as Amazon, AliExpress, Amazon and MercadoLibre.

Source: Beyond Borders 2021-2022

You might be wondering: how did they get so many visitors on their website? As we have shown at the beginning, supermarket goods have been among the top 10 categories that Mexicans purchased last year. Furthermore, Bodega Aurrera invested heavily on online shopping experience, focused on the new middle to high-income consumers that were looking for bargains on their website and have also focused on TikTok campaigns along with other social media channels.

“During the pandemic, Bodega started recruiting higher-class consumers through its online solution. You didn’t have to go to these neighborhoods anymore. You could just order your things online”, explained Alexandra Stamous, partner at the Mexican-based Punto Kardinal, ​​a market research agency.

At the end of the day, we can definitely say that Bodega Aurrera’s case is very similar to Kavak’s. Both companies had to reinvent themselves digitally in regards to their business model and focused on: bringing their consumers to digital channels; providing an outstanding online customer journey; and delivering their products or performing their services in a way that is more safe and comfortable to their shoppers.

What local enterprises must watch out from now on

If you have reached here you already know what are the new Mexican consumer habits, their payment preferences, which segments are on the rise and the importance of digital revolution for any local businesses after COVID-19. 

We are now revealing what local enterprises must focus on from 2022 onwards if they want to succeed in the new reality. So, pay attention and take these notes:

  • Omnichannel: the goal is to have the client at the center by integrating all online and offline sales channels and being 24/7 available. According to AMVO 2021, the majority of local businesses sell through several channels with e-commerce and social media representing up to 21% of the total revenue.
  • Geolocalization and messaging services: logistics in the after sales is key for a great customer experience. Mexicans want to get updates of when their products will be delivered or services will be performed. Therefore, companies need to invest in geolocalization services to track the customer’s orders and proper messaging services to connect with the client. 
  • Anti-fraud and safety measures: Signifyd’s 2021 survey with 268 decision makers from retail Mexican businesses showed that, for 82% of the respondents, safety was an issue that they were more concerned about than in 2020. In order to maintain the customer base and attract new shoppers, 34% of them said that they would need to focus on improving their anti-fraud protections for 2022. 
  • E-commerce platforms: it is becoming more and more crucial for online businesses to invest in a proper commerce platform. They allow anyone to create, grow and manage a professional website for online sales. Currently, some of the most popular platforms in Mexico are: Shopify, Magento, VTEX, Woocommerce, Bigcommerce, Wix and Shift4Shop (3Dcart).
  • Mobile availability: we have shown you how mobile became part of Mexican ‘s online shopping routine. As per reported by Signifyd’s study, 55% of the respondents said that more than 40% of their sales were coming from mobile in 2021. So, clearly, online  businesses must focus on apps and on optimizing their shoppers’ mobile phone experience. 
  • Alternative payment methods: the digital came to stay and so APMs did. Digital payment solutions, especially, have gained traction in Mexico as well as in the whole region. Thus, besides the current payment methods available, including traditional ones, all companies must also be aware of the trending APMs and the new alternatives that could potentially emerge. 
  • Live stream commerce: according to BullMetrix (a local marketing consultancy) this is a great strategy that is trending in Mexico. It enables a brand to mention their products or services and create a greater connection with their consumers anywhere and in real-time. 
  • Augmented Reality and User Experience: 47% of Signifyd survey’s respondents wanted to improve their consumer experience since they considered it key for their competitive strategy. Thus, there is now an increasing number of companies investing in Augmented Reality (AR) to allow the shopper to experience their products/services prior purchasing them. For BullMetrix, companies should also invest in UX through more responsive layouts and better storytelling.

Conclusion

COVID-19 has definitely changed the way Mexicans are shopping online and some changes came to stay in the post-pandemic scenario. Hopefully, if you are currently selling in Mexico or are willing to tap this market, you have retrieved some valuable information about the new reality and the key role of its digital revolution.

We could keep showing you numbers about the huge e-commerce potential in Mexico and dive deeper on what a Mexican business must watch out from this year and onwards. Remember that things are moving faster and faster, especially due to the borderless reality created by digital transformation. Mexico has a very digital savvy population which has been increasing after COVID-19 and due to mobile phones penetration. Thus, there is a strong need for local enterprises to keep following up the market and reinventing themselves when necessary and before it is too late. 

Have you enjoyed our content? We hope you are still eager to learn more! So, how about having a complete overview about what has been going on in Latin America as a whole? Take your knowledge to a greater level with an immersion on the region’s e-commerce and payments scenario through our free study: 2021-2022  Beyond Borders Study: How digital payments and e‑commerce are gaining traction in Latin America

João Paulo Notini
João Paulo Notini
Senior Content Marketing | Cross-Border operations at EBANX

Mexico - Payments & Market

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