Image credits: Mexico Business News
/
News Article

Self-Storage to Meet Last Mile Deliveries in the E-Commerce Era

By Andrea Villar | Tue, 10/13/2020 - 05:00

Amid this uncertain global scenario, there is one industry that has grown by leaps and bounds: e-commerce. The increase in online purchases due to the pandemic, however, showed the segments that needed to be strengthened in the Mexican e-commerce market, with logistics being the main Achilles' heel for almost all businesses. As consumers demand next-day deliveries, companies have come to value logistics even more, becoming one of the key pieces that could drive the growth of the sector in Mexico.

Despite lockdowns, consumers are still looking for their favorite brands to consume their products. However, many have suffered bad shopping experiences due to delays. According to the 2018 Logistics Performance Index prepared by the World Bank, Mexico ranks third in logistics performance in Latin America. Worldwide, the country ranks 51st.

 
 

Shortening Distances: the New Goal

Nowadays, consumers are far more picky about what they expect from e-commerce as they have become used to services such as Amazon Prime, Uber or Rappi delivering services and products immediately at their door. Opening distribution centers for e-commerce companies is increasingly common in Mexico. As a result, companies of all sizes have opted for services such as those offered by U-Storage. “Our product is designed for any kind of company, regardless of its size. This ranges from the largest e-commerce player to the smallest distributor of a particular product. We are democratizing storage spaces to make them accessible to any customer. Naturally, large players will rent more space but both will enjoy the same service, the same amenities and transfer areas,” said Diego Ysita, CEO of U-Storage in an interview with Mexico Business News.

 
 

U-Storage has become an enabler of both new companies emerging from the pandemic and existing companies that had to evolve rapidly, providing flexible logistics for e-commerce players. The pandemic accelerated digitalization and e-commerce by five to 10 years, noted Ysita. “As a consequence, companies experienced a disruption in their sales processes. Our customers can find our nearest location and rent warehousing for a month to conduct their delivery process smoothly. Companies that underwent reductions, consolidation or bankruptcy also have seen in U-Storage a tool to adapt better to a new stage in their business cycles,” he added.

One of the businesses currently relying on U-Storage services is Dostavista, a startup that operates in 10 countries. It has been in Mexico for three years and considers itself as one of the two companies with the greatest reach and market share worldwide in express messaging services. “2021 will mark a difference in how companies in Mexico provide their offer to consumers. Companies that have modernized and generated disruptive changes in reaction to the challenges that we are seeing today in the consumption of products and services will become the strong players of tomorrow,” said Dostavista’s Country Manager Iñaqui de la Peña to MBN. “Today, the express market is quite competitive, but those who offer a service like ours, which is fast and accessible, have a large share of the market.”.

 
 

The logistics challenge companies face in this new normal has not been overcome and will grow in the coming years. Events such as the Hot Fashion, Hot Sale and Buen Fin will put businesses on trial in the coming months. The goal of Buen Fin 2020, to be held from Nov. 9 to Nov. 20, is to match last year's figures with 100,000 registered businesses and MX$118 billion (US$5.5 billion) in sales. 

During the Hot Sale 2020 edition, the largest online sales campaign in the country, 33 percent of buyers said they had to wait two to three days for their purchases, while only 13 percent reported a more-than-seven-days wait. In addition, six out of 10 shoppers received their purchases free of any shipping charge.

Companies continue to strengthen their logistics in a market that reached MX$491 billion (US$22.7 billion) in 2019. Eight out of 10 adult internet users in Mexico made some purchase online in the last year, according to figures from the Mx Internet Association. Will companies be up for the challenge?

Andrea Villar Andrea Villar Journalist and Industry Analyst

MORE BY THE AUTHOR