The growth of electronic commerce in Mexico will cool down, they estimate in the US

Revenue from retail e-commerce in Mexico will total 23.93 billion dollars in 2025, which represents an increase of only 13.3% compared to 2021, according to a projection released by the United States International Trade Commission (USITC).

This dynamism would be much lower compared to that reached in the period from 2017 to 2021, of 89.7%, being 21,120 million dollars in this last year.

So far, increased connectivity has fueled the growth of Mexico’s digital economy in recent years.

In particular, Covid-19 changed the consumption habits of Mexicans and accelerated the digitization of the country.

Data from the Mexican Association of Online Sales (AMVO) shows that Mexico’s e-commerce grew 27% during 2021, compared to the previous year.

In addition, according to the United States Department of Commerce, Mexico has been among the five countries with the highest growth of electronic commerce in the world during the last three years.

But the dynamism going forward is also overshadowed when compared to the projections published by the USITC for the United States, which would register an increase in its revenues from e-retail commerce of 73.2% from 2021 to 2025, while the rate of Canada’s corresponding growth is estimated at 68.5 percent.

According to the Mexican Internet Association, at the end of 2021 Mexico had 89.5 million Internet users, which represents 75.7% of the population over six years of age.

In Mexico, Internet users are highly concentrated, as 77% of urban populations have Internet access, compared to only 48% in rural populations.

It is estimated that 20 million people live in communities without broadband coverage, which excludes them from the digital ecosystem. 98% of Internet users in Mexico connect through a smartphone.

Broadly speaking, the digital economy focuses on the contribution to the economy generated by the use of information and communication technologies (ICT), through its own evolution or with the emergence of digital businesses (free email services and social networks) and the increasingly growing phenomenon of digital commerce (buying and selling online, which allows prices to be lowered and product catalogs to be expanded).

Progress in digitization

Some examples of the digital economy are: financial services (virtual currencies, collective financing, means of payment with a wide range of options); the new ways of contracting services that change the role of traditional providers for web-based providers; products delivered for free to consumers that are paid for by advertising revenue; and digital public goods that are free and funded solely by donations.

But security problems and a large informal sector represent obstacles for the digital ecosystem in Mexico.

The Mexican Internet Association estimates that only 22% of Internet users buy products online and only 17.6% carry out banking operations.

30% of Internet users in Mexico have online fraud concerns, and 28% are unwilling to share banking information online, according to data released by The Wilson Institute in its “Digital Commerce and Digital Economy Infographic 2022.”

In addition, 56% of the country’s population is engaged in informal economic activities according to the National Employment Survey of the National Institute of Statistics and Geography (Inegi).

roberto.morales@eleconomista.mx