If your U.S. e-commerce business is considering a cross-border expansion, then America’s neighbors—Canada and Mexico—are the obvious choice. While a contentious political climate regarding the U.S. trade relationship with Mexico may generate some nervousness around risk-taking south of the border, Mexico remains a huge and potentially rewarding market for American e-commerce retailers to target.
Because of Mexico’s proximity to the U.S., its large population of potential customers, and its diversified market, Mexico should be a high-priority target for e-commerce sellers. Consider the following facts as you decide whether your business’s future involves selling in Mexico.
The first factor to consider about Mexico’s financial picture is that its national economy is impressive… and growing. The U.S. Department of Commerce (DOC) notes that Mexico is the No. 2 economic power in Latin America and No. 15 in the world. The estimated real GDP grew 2.1% in 2018, and the value of the country’s overall economy has reached $1.1 trillion.
In the World Bank’s Ease of Doing Business ratings, Mexico comes in 54th. While Mexico’s score of 72.09 is lower than that of the U.S., it compares favorably to other large countries such as Brazil (60.01 on the World Bank’s scale). The average for Latin American and Caribbean countries is lower still, at 58.97, meaning there are comparatively few barriers keeping your company from entering the Mexican market.
Mexico’s large economy is supported by a diverse array of industrial sectors. WorldAtlas’s latest overview of the country highlights the following:
- Automotive manufacturing
- Manufacturing for foreign companies (Maquiladora)
- Food production
- Oil and petroleum products
The economy in Mexico continues to evolve over time, and new capabilities are constantly emerging. For example, in recent years, manufacturing plants in the nation have moved past automotive production to add aerospace contracts. New developments, such as the rising popularity of drones and unmanned aircraft, may better establish these expanding manufacturing capabilities—stay tuned.
At present, you’ll find a tech-savvy, Internet-enabled, customer base in Mexico. The DOC notes that the latest figures from the Mexican Internet Association put the value of the e-commerce sector in Mexico at $16.2 billion. Online commerce penetration rates are highly promising with more than three-quarters of Mexican buyers making purchases online. Currently, the favorite product categories for Mexican e-commerce shoppers are clothes and accessories. Increasingly, buyers are making purchases via mobile devices, keeping Mexico in line with international trends.
With 60% of Mexican e-commerce shoppers purchasing across borders, the audience may be ready to sample your products right away. As for payment methods, Mexican consumers default to the same standards as buyers in the U.S., namely PayPal, debit cards, and credit cards. This similarity may help you adapt your sales portal for orders from Mexico. One thing to keep in mind is that domestic stores sometimes have pay-in-person agreements which enable consumers to pay for online purchases in cash.
Keep in mind, Mexico is the third-largest trading partner for the U.S (trailing only behind Canada and China) and represents the second-biggest market for American exports. Previously, Mexico was part of the North American Free Trade Agreement which significantly expedited imports. Since January of this year, negotiations to replace NAFTA have been ongoing and the although the successor pact, the United States-Mexico-Canada Agreement (USMCA), has yet to be signed there are still few restrictions to selling goods and services across the southern border. The USMCA was agreed upon by the three countries involved in November 2018; however the NAFTA remains in effect while the implementation process is ongoing.
Creating a connection with a partner organization in Mexico may be your easiest and most straightforward path to early e-commerce success. You should focus on creating a good impression when you take these meetings. Due to the relatively short travel distance between the U.S. and Mexico, there’s little to prevent you from making introductions in person, so remember the following etiquette advice from the DOC.
For example, dress carefully before setting off to a high-level meeting. Appearances can influence your prospective partners’ opinion of you, so default to formal clothes. The meal before your meeting may be almost as important as the hardball discussions—a great deal of business relationships in Mexico are forged during free-ranging conversation. While small talk at lunches and meetings may put you off your guard, don’t forget punctuality—business and government contacts expect you to be on time.
Have business cards on hand, and be ready to distribute them to any and all new contacts. It’s also important to determine when your potential business partners are simply being tactful by saying “yes” to a proposed idea. There’s a difference between simple politeness and actual agreement with a stratagem, and you’ll have to discover that line.
Partnering with DHL
In addition to striking up direct relationships with local companies, you can improve your efficacy in the Mexico market by partnering up with the logistics experts at DHL. Working with DHL is a great way to transform any element of your e-commerce posture to suit a particular market–from your website’s suitability for local consumers to your ability to offer expedited or affordable shipments to the Mexican states. Even within an established framework such as USMCA or NAFTA, there is room to upgrade your e-commerce capabilities by working with an experienced organization.
With a massive land border, close cultural connections, and a large populace ready to make online purchases, Mexico is a prized market for U.S. e-commerce companies. However, it’s not wise to assume that you can simply jump into this region without a well-designed and executed strategy. The many advantages inherent to business in Mexico are available for businesses that prepare well and focus on giving customers a high-quality experience. With DHL on your side, you can deliver that level of service.
Read our Mexico country guide to learn more.