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News Article

VTEX: Plentiful Development Opportunities Lay in E-Commerce

By Cinthya Alaniz Salazar | Thu, 05/12/2022 - 15:34

As Mexico and Latin America’s e-commerce markets receive the push they need to take off, their exponential growth has created a demand for scalable solutions. Companies are now running against the clock to take advantage of digital solutions to capture and cement their market presence as the sector gets more crowded, said Alejandro Colín, Vice President of New Business, VTEX.

Time is becoming increasingly valuable and digitalization has brought out the benefits of e-commerce,” said Colín.

Mexico’s digital awakening has seeded a growth potential that is yet to be fully exploited. This is best exemplified by the sustained growth of its e-commerce market that, for the third year in a row, is among the top five countries with the largest observed growth. Mexico’s e-commerce market grew 27 percent in 2021, inflating its market value from MX$316 billion (US$15.6 billion) to MX$401 billion (US$19.8 billion), according to VTEX. Consumers’ decisive shift towards e-commerce has allowed startup e-commerce companies to soar, a market opportunity that has incited more actors to join the sector and attracted millions in investment.

More recently, adjacent industries have begun to explore this market space, giving way to entire new business avenues to be pursued. This includes supporting industries such as logistics and fintech. As the market is in its early infancy, Mexico has significantly more space to grow into, a characteristic that has not gone unnoticed.

Domestic e-commerce companies will be increasingly pressured to place technology at the core of their business strategy to remain profitable. Digital solutions will also be essential in addressing concerns related to payment security due to their role in expanding payment options, sharing information and optimizing logical processes. Fortifying payment security and expanding payment options go hand in hand, and will be key to attracting new consumers and maintaining consumer confidence.

Sharing information in real-time across physical locations is necessary to making business decisions related to logistics, which should be complemented with data analysis to identify new business opportunities, said Colín. This is a known pain point that many companies struggled to develop at pace with market demand. Overall, the companies that proactively optimize along these development opportunities will likely continue to enjoy compound growth.

At the moment, Mexico’s digital consumer market can be reduced to three main demographics including: intensive, recurring and occasional shoppers, according to VTEX. The first, intensive shoppers, are mostly millennials who grew up with the internet and have the purchasing power to recurrently buy online. Recurring shoppers are mainly represented by people over 45 years old and of middle class who lack the same purchasing power of their younger counterparts. Finally, occasional shoppers are mainly those over 65 years old, retired and with low economic flexibility.

Cinthya Alaniz Salazar Cinthya Alaniz Salazar Journalist & Industry Analyst