November 15, 2010
In recent years, there has been an increase in the number of US-based companies entering or planning to enter into the Mexican market. For example, Best Buy has rolled out an aggressive plan to invest $400 million to open 20 stores in Mexico over a three-year period. Lowe’s announced earlier this year that it spent roughly $40 million to open two stores in Monterrey, Mexico. And Target is setting its sights on expanding into Mexico, with goals to enter into the market no later than 2013.
Without question, there are many challenges with entering into a new market, such as understanding the country and cultural norms that influence shopping habits, determining how to transfer and modify successful strategies of a winning brand in one country to another, and understanding what the current size of the new market is as well as its growth potential. However, despite these hurdles, my colleague Tamara Barber and I contend that US-based retailers can use the factors that influenced the growth of the US Hispanic eCommerce market as a guide for developing effective growth strategies in Mexico.
In our Hispanic Technographics® and Latin American Technographics research, we found that while access to the Internet is relatively the same for US Hispanics and Mexicans, it is the online consumer’s overall experience with the Internet that plays a critical role in the development of an eCommerce audience. Therefore, when trying to carve a slice out of the Mexican eCommerce market, US-based retailers like Best Buy and Lowe’s need to create an online experience that will minimize the hesitations of Mexican online consumers.
What might those hesitations be for Mexican online consumers? When we looked at online US Hispanics in 2006, there were four main roadblocks to US Hispanic eCommerce adoption: 48% of online Hispanics did not want to give out personal financial information; 46% wanted to be able to see things before buying; 26% had heard about bad experiences purchasing online; and 23% did not have access to a credit or debit card. We found three years later that as US Hispanics’ online experience grew, these numbers decreased significantly to 22%, 39%, 11%, and 9% respectively.
Using this as a proxy for how eCommerce markets evolve, US-based retailers with a presence in Mexico need to quell these specific concerns. Tamara and I wrote about these solutions in Joe Kutchera’s just-published book Latino Link: Building Brands Online with Hispanic Communities and Content and we recommended the following strategies:
- Develop relationships with companies like VeriSign to demonstrate to consumers that their personal information is secure.
- Create interactive tools to help customers get a feel for the product.
- Make the purchase process smooth and efficient in conjunction with good customer service.
- Provide consumers with the flexibility of ordering products with various types of payment methods like PayPal or COD.
US-based retailers need to keep in mind other factors that will influence the rate at which online adoption grows in Mexico, a topic I wrote about in my report “An Introduction to Latin American Online Consumers.” These factors include improvements in infrastructure, availability of affordable devices and access plans, and education programs on the value of the Internet, but how well retailers embrace the online needs and offline retail behaviors of their consumers will be the lynchpin to their success. As experience tells us with US Hispanics, online consumers need to feel they have a secure, simple, and interactive experience in order to make online shopping more mainstream.