Bajadock: 2 day delivery throughout Mexico? I gotta see this. If you thought Uber was a disrupter in Mexico, Amazon could be gigantesco. Thx to reporter Juan for this alert.
MEXICO CITY– Amazon.com Inc. on Tuesday launched Amazon Prime in Mexico, raising its profile in a country where at least a half-dozen companies are competing for market share.
Mexico is the 13th country where Amazon is offering the premium membership service. For an annual fee of 449 pesos, or about $23, Mexican Prime members will have access to free, one-day delivery in four of Mexico’s largest cities — Mexico City, Guadalajara, Puebla and Querétaro — and free, two-day shipping in the rest of the country.
The move also makes millions of products from Amazon’s U.S. distribution centers available to Mexican shoppers with free shipping that will take about a week to reach them, with no minimum order price. Amazon Prime also includes free, streaming video service in Mexico similar to the one Amazon offers to Prime members in the U.S. and elsewhere.
Luis Correa, Amazon’s Mexico country head, said logistics have been a key focus since it set up here 20 months ago. Amazon operates two large fulfillment centers north of Mexico City and is planning to open a third in the country this year.
Amazon entered Mexico when online retailers are competing for market share. This week, Argentine e-retailer MercadoLibre Inc., Amazon’s biggest competitor in Mexico and often described as Latin America’s eBay.com, said it would invest more than $100 million in Mexico to expand free shipping, payment processing, purchase protection and a points-based rewards program.
Ignacio Caride, MercardoLibre’s Mexico country head, said his company has responded to Amazon’s expansion by offering free shipping options on roughly 80% of items listed starting this year. MercadoLibre ships about half a million items a month, and charges about $2.50 to the seller to cover about half of the cost to ship small items.
“We’re willing to lose money in Mexico in order to win the battle with Amazon,” Mr. Caride said.
While still the largest player in Mexico, MercadoLibre has been losing market share over the last six years. In 2011, the company accounted for 21.2% of all online sales in the country, according to Euromonitor, but that share had fallen to 9.5% by 2016.
Linio, the online retailer launched by German startup investor Rocket Internet SE, was the second-largest Mexican e-commerce site in 2016, with 5.8% market share, followed by Amazon and Wal-Mart Stores Inc., each with 5.5%, according to Euromonitor.
Some Mexican e-commerce sites are trying to find a toehold by offering alternative payment options. Amazon allows Mexican customers to make purchases using only debit or credit cards — a small but growing segment — or gift cards available at convenience stores. MercadoLibre in 2012 launched MercadoPago, a service that allows customers to pay for purchases in cash at Oxxo convenience stores.
Linio, which offers free shipping on all items to subscribers to a Prime-like service called Linio Plus, has focused on payment options.
“Our strategy is to spend as little as possible on logistics. The key is, where we see growth, is in payment methods for the Mexican consumer,” said Nicolás Ariza, director of operations for Linio in Mexico.
Free shipping is “a big convincing factor for shoppers,” said David Bernardo, a professor who studies e-commerce at the Tecnológico de Monterrey university. “Once it becomes the market standard, everyone is going to start doing it.”
Greg Greeley, Amazon’s vice president for Prime, said free shipping will likely result in losses for Amazon in Mexico for some time, and that the company is trying to minimize costs by fulfilling orders for the site’s most popular items, which include videogames and DVDs, from Mexican distribution centers.
Amazon’s overtures are directed at consumers like Elke Vaughan, a 34-year-old bank associate from Mexico City who says she sometimes spends $500 a month to buy cosmetics and clothes from Amazon.com, but has her purchases shipped to her grandmother in San Antonio and retrieves them on family visits.
“There’s a lot of stuff that they just don’t ship to Mexico,” Ms. Vaughan said. “Or if I have some luck and I find something they do ship, it’s usually too expensive to ship it here.”
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