Opportunities for the Netherlands in the sector E-Commerce in Mexico: Report Summary
The Embassy of the Kingdom of the Netherlands had released a report on the E-commerce sector in Mexico, which overall showed an optimistic outlook in terms of investment opportunities for Dutch companies that are interested in trading overseas through E-Commerce. The report provides a transparent view of challenges that Dutch companies may face, as well as a thorough analysis of the current position of the E-commerce sector in Mexico through SWOT analysis.
E-Commerce in the Netherlands
An overview of the strengths in Dutch E-commerce was provided, revealing that the country has the technological and service advancements to facilitate E-commerce in terms of payment services, ERP, CRM, API, warehousing and drop shipping. Weaknesses about the Dutch E-commerce sector to mention include the focus on European markets, the relatively high costs of products and services in the Netherlands, the potential language barrier, and the physical distance to Latin America. A potential threat may be the competition from other large E-commerce companies that have had international presence and experience.
E-Commerce in Mexico
A SWOT Analysis of E-commerce in Mexico revealed that Mexico is overall in a good position for the further adaption of E-commerce.
The most notable strengths of Mexico is it is the second-highest growing country in Latin America, the average age is young (28 years old in urban areas), Mexico has the highest percentage of mobile users in the world, the location of the country provides convenient logistic access, and there are currently 43 global trade agreements. It was reported that almost 50% of online consumers are from central Mexico, which could be highly influenced by the dense populations of the metropolitan cities of Mexico City and Guadalajara. Online consumption has increased by 40% since 2017, and this growth is expected to continue
Notable opportunities in Mexico are the influences of digitalization and improvements of online customer journeys as a result of COVID-19, having the United States as the main trade partner, and specialized assistance and workshops to increase digital knowledge.
There are of course weaknesses within the e-commerce sector in Mexico to consider, such as the slower advancements of digitalization (AI, API, ERP, SAP etc), a lower percentage of Mexican citizens with bank accounts, limited options for secure and inclusive online purchase methods, fewer governmental policies and regulations, and the risk of fraud with credit cards. In Mexico, 47% of the population has a bank account, and cash payments are preferred over card payments that are below $25. It is common for products to be purchased online and then delivered to a convenience store where the item is paid in cash, with Oxxo being the most used retailer. However, advancements in online transactions are expected to be made in Mexico, especially as a result of COVID-19 and the transition to online purchases and the increasing popularity of advertisements and sponsorships via social media.
Some threats within Mexico to consider are the possibilities of cargo theft, corruption of informal sectors, copying of brand names, and the online presence of other e-commerce brands with more international experience and recognition that may outshine Mexican companies. Dropshipping in Mexico may also be a challenge due to the delayed transition towards digitalization.
All things considered, Mexico shows promising opportunities for the E-commerce sector due to the growing middle-class, young age demographics, and advantageous physical positioning of the country. There are of course disadvantages and risks to bear in mind such as the slow process of digitalization. However, with the incorporation and influence of knowledge and experience from E-commerce in the Netherlands, this sector will continue to grow immensely and provide advantages for international businesses and the Mexican economy.
As recommended by Holland House Mexico during our presentation of the E-commerce event on April 14th held by the Embassy of the Kingdom of the Netherlands in Mexico and Netherlands Business Support Office (NBSO) Querétaro Mexico, it is advised for Dutch companies to ensure the correct platforms are chosen for products or services, all sellers have a registered company with a brand and logo that is a legal entity in line with the Mexican tax system, all necessary permits for products are obtained, logistics that covers the entire supply chain from the production centers/warehouses to delivering to the end consumer, and payment options are inclusive to all consumers.
All aforementioned information comes from the report published by the Embassy of the Kingdom of the Netherlands in Mexico. Click here to read the full report.