Amazon Attracts Cash-Paying Customers in Mexico

Hybrid systems allow unbanked and cash-only consumers to pay for their online purchases at convenience stores in Mexico.

December 04, 2017

NEW YORK – In Mexico, Bloomberg reports that the key to online shopping is offline payments, which is why the e-commerce giant allows people to pay for goods ordered on its website at convenience stores.

“In a nation where just about everyone prefers to pay cash, Inc. and Wal-Mart de Mexico SAB are pushing a hybrid payment system to encourage more shoppers to go online. Amazon is letting people pay for goods ordered on its website at the corner convenience store, while Wal-Mart’s local unit and retail giant Grupo Elektra SAB have set up kiosks at megastores that work much the same way. Even MercadoLibre Inc., Latin America’s biggest online marketplace, has gotten in on the trend,” writes Bloomberg.

The news source adds that shift stems from a population that’s slow to set up a bank account, along with less than half of the adults in Mexico having a credit card. China and India have faced similar challenges and allow delivery people to accept cash payments; however, that’s not an option in Mexico because of “sky-high rates” of assault and robberies.

Bloomberg says that retail in Mexico is a $168 billion business, but the e-commerce market was valued at just $17.6 billion in 2016, and more than half of those online purchases were made by consumers paying by cash in person. To tap into Mexico’s consumer market, Amazon launched its Amazon Cash program in November, an online-offline hybrid marketplace that allows customers to deposit money in an account with the online retailer at more than 6,000 convenience stores and pharmacies throughout Mexico, and use the credit to make online purchases, notes the news source.

“There’s not a single important retailer in Mexico that’s not investing heavily in e-commerce,” Eric Perez-Grovas, president of the Mexico online sales association, AMVO, told Bloomberg. “Companies that have been in Mexico forever have brand recognition and their physical stores allow customers to go in, make payments and collect packages.”

“The competitive landscape for Mexico's e-commerce has intensified a great deal,” Philip Behn, senior vice president of e-commerce at Walmex, told Bloomberg. Walmex, the local unit of Walmart, has about 2,000 kiosks throughout its stores that allow for online payments and serve as a training point for older or non-tech-savvy shoppers. Likewise, Elektra has about 250 kiosks in its stores. “It’s a process of evangelizing,” Juan Carlos Garcia, Elektra’s director of e-commerce, told the news source. “Many customers have never shopped online.”

OXXO is on the forefront of the trend to bring online payments into its convenience stores throughout Mexico, working with MercadoLibre and Elektra to accept payments at its nearly 15,000 locations. Last year, OXXO stores accounted for 35% of such transactions in Mexico.

And although people may be slow to switch from unbanked to banked in Mexico, they are embracing technology. Bloomberg writes that in 2016 almost two-thirds of the population had access to Internet, and 91% had smartphones.

“Retailers are constantly looking for ways to make their payments more flexible,” Euromonitor International said in a report, adding that online payment kiosks “represent a good strategy in terms of helping consumers feel more confident when buying products online.”