On the evolution of e-commerce during the pandemic and prospects for sustainable growth
In what ways has e-commerce evolved during the pandemic?
GEISEN: As e-commerce was deemed an essential industry, operations continued uninterrupted under strict biosecurity protocols. E-commerce growth in Mexico greatly accelerated from April 2020 onwards, following the immediate social restrictions and economic consequences of the pandemic in February and March. During this period, transactions grew by triple digits, or above 100% year-on-year. At first, this was driven by sales of Covid-19-related items like protective gear and hygiene products, but from May onwards most other categories saw sustained growth in sales as well.
The combination of an influx of new customers and increased frequency of transactions helped to make operations more competitive. However, additional infrastructure investment is required to effectively support new consumer behaviours and expectations, which are expected to remain beyond the pandemic.
To what extent can online channels democratise commerce and payments for small and medium-sized enterprises (SMEs)?
GEISEN: Access to established logistics and fulfilment capabilities makes a big difference for SMEs, which seek to develop new sales channels and maintain the continuity of their operations with minimal investment. The pandemic put larger e-commerce firms in an ideal position to empower thousands of companies to diversify their sales and scale their businesses, providing the capabilities needed to face the twin challenges of economic shutdowns and social distancing.
SMEs already comprise the bulk of sellers in our marketplace, at around 70%, and the digitalisation of their businesses has been critical. In 2019 a survey by the Mexican Association of Online Sales found that three out of 10 SMEs were selling online; after the onset of the pandemic, this rose to six out of 10. Mercado Libre similarly asked 1000 active sellers on its platform about the relevance of online sales before and during the crisis: seven out of 10 reported that they generated most of their sales online throughout the pandemic.
To further boost online sales, capacity-building programmes such as webinars are being rolled out to help entrepreneurs better understand how to sell online, and this has been partly supported by many state governments. Infrastructure is another critical enabler for SMEs, which is why the warehousing and distribution footprint in Mexico has grown significantly, alongside heavy investment in logistics and last-mile capabilities.
On the financial technology front, direct payments to SMEs have become commonplace thanks to online platforms, apps and QR codes that allow businesses to charge or receive money directly, thereby helping to reduce physical contact. This has led to a surge in demand both for credit and for merchants to process payments. Platforms such as Mercado Pago, which encourage purchases by reducing payment barriers to shopping online, have been particularly important in facilitating this transition.
How can e-commerce balance growth and environmental sustainability?
GEISEN: It is essential for the e-commerce industry to commit to sustainable operations and reduce its carbon footprint. The industry can tackle these priorities on multiple fronts, such as adding electric vehicles (EVs) to their fleets, redesigning packaging materials or integrating renewable energy into warehousing. The widespread adoption of EVs, for instance, would greatly contribute to cheaper, more efficient and potentially more productive operations, as EVs are particularly well suited for distribution in geographically challenging areas. At the same time, e-commerce has the potential to reduce the carbon footprint of retail more broadly, as last-mile delivery trucks consolidate shipments in a more efficient way than individual consumers driving back and forth from retail shops.
Read More from OBG
