US ranked first in AT Kearney’s E-Commerce Index but Mexico is one to watch

Move over China, the US now ranks first for e-commerce market opportunity, this according to AT Kearney’s latest Global Retail E-Commerce Index. The press release noted continued growth, an improving economy, and higher consumer confidence helped the US nudge out China for top ranking.

In Latin America, Mexico appears to have burst onto the global e-commerce scene debuting at 17th place. Meanwhile, Brazil and Argentina slipped because of logistics and transportation challenges in Brazil and government regulations in Argentina.

Not even ranked in 2013, Mexico is one to take note of in particular. According to AT Kearney, its young population and its close proximity to the US bode well for the future of e-commerce in the country. In fact, about half of Mexican online shoppers purchase from foreign websites. Solutions such as TNT and Redpack’s Redpost service. This allows Mexicans to shop at US online stores by way of obtaining a US address and then having goods delivered to Mexico. Goods are shipped through its shipping centre in Laredo, Texas, US. Retailers such as Amazon, Target and Newegg participate in this programme.

Wal-Mart is one of the big e-commerce players in Mexico and is also one of its largest supermarkets. In fact, Wal-Mart estimates it has a 92% market share in the home delivery of groceries in Mexico. As such, the company plans to further expand the number of stores offering grocery delivery. For many of its stores, online orders are sent from the existing public stores but Wal-Mart plans to also open additional “dark stores” exclusively to deliver web purchases. Most of the deliveries are made by freelance drivers, who supply their own motorbikes or cars and not surprising, delivery is strongest in Mexico City.

According to a 2014 Wall Street Journal article, collaboration on best practices is ongoing at Wal-Mart. The Mexican e-commerce team is advising Wal-Mart China on grocery delivery, believing that practices in Mexico should work well there as both countries have a low wage base, very dense urban areas and low banking-service penetration. The Wall Street Journal suggests that one practice that could be exported from Mexico is the use of portable credit-card terminals for deliveries so customers do not have to enter credit-card information online.

FedEx, UPS and DHL have all built out their domestic Mexican networks through the years and FedEx has made a couple of strategic acquisitions within the country to further expand its presence. All are capable of participating within this space but Mexico’s Estafeta is perhaps considered the leader, a status it looks likely to retain as it continues to roll out new services to take advantage of the growing Mexican e-commerce market.

For more information on Mexico and the e-commerce market please check out our latest reports Latin America Transport and Logistics 2015 and Global e-commerce Logistics 2015.