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How E-Tailers Are Capitalizing on a Consumer Spending Surge in Mexico

Mexico might be primed for a boost in consumer spending, but the country’s cash-only masses mean e-commerce could struggle to benefit from the surge.

While a Boston Consulting Group report earlier this year projected that consumption by middle-class Mexican households (defined as those earning between $1,200 and $9,000 per month) will increase by 7 percent annually through 2018, a recent Wall Street Journal article revealed that a lack of credit cards and an aversion to paying for goods online doesn’t bode well for e-tailers hoping to capitalize on bigger wallets.

According to Euromonitor International, online shopping accounts for only 2 percent of Mexico’s $203 billion worth of annual retail sales (though that’s four times what it was five years ago) and despite the consulting firm’s prediction that this number will double by 2020, Mexican consumers are still wary of paying by plastic.

WSJ pointed out that only 22.6 million credit cards are in use by the country’s 119.5 million residents.

But rather than encouraging consumers to use credit or debit cards, e-tailers are getting creative with payment options in order to gain people’s trust.

Amazon, for example, accepts prepaid cards sold at Oxxo convenience stores and it also offers gift cards that can be bought for cash at the chain’s 13,000-plus locations.

Likewise, Latin American e-commerce titan Linio also allows for payment at Oxxo, accepting PayPal, cash-on-delivery and cash in addition to credit and debit cards.

“It breaches the gap of the lack of trust that the average Latin American has to shopping online,” Linio CEO Andrea Mjelde told WSJ, noting that shoppers usually switch to online payment after a couple of satisfactory cash-on-delivery experiences.

Online marketplace MercadoLibre, meanwhile, provides a PayPal-like option called MercadoPage that also allows for payment at Oxxo and other select Mexican retailers.

But brick-and-mortar still leads the way. Retail association Antad reported that same-store sales of Mexican retailers grew 6.5 percent last year.