A Mercado Libre distribution center in Tepotzotlán, in the State of Mexico.
The oxygen tank in Alfredo Fonseca's workshops is called electronic commerce.
This 34-year-old artisan created La Cosita Chula in 2015 to continue the family tradition.
He was doing well;
It produced in seven states of the country and its molcajetes, the Mexican mortars, were sold in department stores in large cities.
The pandemic hit and in February of last year sales bottomed out.
"They called us from tourist shops: 'What do you think the port has just closed for me, no foreigners are going to arrive," explains the entrepreneur.
They had to be released quickly on the Internet to survive: "If not, we would no longer exist."
With the pandemic and restrictions, electronic commerce in Mexico has advanced in one year what was planned for five.
Consumers fearful of contagion and businesses of all sizes have turned to him, from craft workshops like Fonseca to large supermarkets.
In 2020, the sector generated a historical figure of 316,000 million pesos, about 15,000 million dollars, with an annual growth of 81%, according to estimates by the Mexican Association of Online Sales (Amvo).
Despite the increase, the country's lag in internet access and high informality threaten to limit the expansion of
e-commerce
once the pandemic is over.
Before the crisis broke out, Mexico was far from its OECD counterparts and other Latin American heavyweights.
Only 13% of the population aged 16 to 74 had made an online purchase in the last 12 months, compared to an average of 57% in the OECD, according to data from this organization for 2018. Brazil, the other major Latin American economy, was approaching 30%.
Amvo CEO Pierre Blaise is not surprised by the recent jump.
“We have experienced significant growth for several years.
In 2019 Mexico led on a global scale with 35% per year.
There was a strong private investment from vendors to improve their platforms and logistics and have broader product catalogs ”, he explains.
Although Internet sales still represent only 9% of retail, Blaise says the country "is rapidly recovering from its backwardness."
Large platforms have become an essential showcase.
Aware of their power, the dispute between Amazon and Mercado Libre for leadership in the second largest Latin American economy can be measured in square meters.
The American multinational opened in 2020 two new distribution centers in Jalisco and Nuevo León, 12 delivery stations and a support building in the State of Mexico.
A total of 69,000 square meters, more than the surface of the Azteca Stadium.
Mercado Libre is not far behind: 80,000 square meters in a new distribution center in Jalisco and four planes to speed up deliveries.
In 2020 they added 4.7 million users, 59% more than the previous year, and their net income more than doubled to 575 million dollars.
Although still behind Brazil, Mexico already surpassed the company's motherland in the fourth quarter.
“It was rare that two years ago Argentina was bigger in electronic commerce.
There was something that was not right and little by little we are reaching more reasonable levels, ”says David Geisen, CEO of the Mexican parent company.
Fear of fraud and high informality: two obstacles to expansion
In a country where 99.8% of the registered establishments are small or medium-sized according to the National Institute of Statistics and Geography (Inegi),
e-commerce
poses an accessibility challenge.
“The number of SMEs selling online doubled in 2020, but there is a problem.
A lot has to do with the lack of knowledge, the distrust of postal services, ”says Blaise, from Amvo.
Geisen, on whose platform 70% are SMEs, agrees: "It is quite easy to register, but even so there is a great need to educate on how online sales work."
La Cosita Chula, for example, has received advice from Amazon to develop its online business.
“There was a lot of uncertainty.
There are online problems such as the products not being taken care of and they arrive broken ... “, points out Alfredo Fonseca.
The balance, however, is positive.
They bill 60% less than before the pandemic, but the benefits have grown 40% thanks to the savings of selling directly to the customer and not through a department store.
And they reach points that were previously off the radar: “There are very small towns that have bought our molcajetes.
As long as we can send it by parcel, we make the effort ”.
The digital transition has also emerged as a necessity in the Escandón market, a middle-class neighborhood in Mexico City, due to the lack of support from the Mexican government for businesses.
At the Esperanza flower shop, José Juan Olvera, 51, has stopped cutting stem scissors to focus on his cell phone.
Sitting on a metal chair and surrounded by vases, he edits photos of bouquets of roses and sunflowers to post on a website and on Facebook.
In a week he sells around 2,000 pesos that way, compared to 200 pesos at the market stall.
"You have to update," says the florist, and points to the stall: "It's not for sale here."
But the adaptation of traders is not everything.
Fear of fraud still persists among 80% of the population according to an Amvo survey, and there are significant limits to its growth.
Internet access has improved in recent years and already reaches 70% of the population, but it has gaps in rural areas, where less than half of its inhabitants are users, according to the latest data from Inegi.
The generation gap is deep with 35% of Internet users among those over 55 years old compared to 91% for young people between 18 and 24 years old.
High informality also restricts participation.
More than half of the Mexican population is employed in the informal sector and 53% do not have a bank account.
BBVA's chief economist, Carlos Serrano, believes that
e-commerce
is still "very elitist."
“To do this you have to be in broadband connections and Mexico is far from universal coverage and lacks banking.
Those with the highest educational level are those who make purchases online.
There is still a long way to go ”.
Some platforms such as Mercado Libre have devised ways to get around the lack of a bank account and allow their users to make transactions just by registering.
Regarding the return to normality as vaccination progresses, there is a consensus in the sector: it will grow but at a more modest rate than in 2020. “Growth is going to slow down, but I don't think it will be eliminated.
There is going to be a permanent increase, ”says Serrano.
Alfredo Fonseca is pending restrictions to return to stores, but the online channel is going to be maintained.
He is about to open two new workshops and, while waiting for the cruise ships to return, he needs to continue selling: "We have to find a way."
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