Amazon LogoDateline: Mexico City

Today Amazon.com officially opens its doors in Mexico. According to Bloomberg:

Amazon.com.mx is debuting with more product categories — electronics, housewares, sporting goods and more — than any other international rollout, the Seattle-based company said in a statement Tuesday.

“The expansion of Amazon.com.mx represents Amazon’s biggest international launch ever,” Juan Carlos García, manager of Amazon Mexico, said in the statement. “With convenient and secure payment options and fast delivery, our goal is to deliver a world-class shopping experience for customers in Mexico.”

Amazon will offer free shipping on purchases of 599 pesos, or about $38. Customers also have the option of having their goods delivered to hundreds of pickup locations across Mexico.

This should be good news for Gringo expats, if not for the entire Mexican shopping population. Not only do the pick-up points solve the problem of being home to receive deliveries, but it should be extremely price competitive. Unlike in the United States, Mexico’s retailing sector is mostly inefficient, and certainly less competitive than in the USA, which by many measures is over-stored. How do I know this? In my prior life as a securities analyst, I covered the US retailing sector in depth. Every single US retailer that had a Mexican operation earned significantly higher returns (abeit on a much smaller sales base) in Mexico than in the USA, including well-known, low-price operators such as Wal*Mart and Costco. This only happens when price competition is less fierce.

The interesting question, to which I have no definitive answer, is whether this will change Amazon’s US operation’s willingness to ship SOB. I have to imagine that such shipments will likely stop, given the possibility of tax leakage. Certainly amazon.com.mx will comply with all Mexican tax rules, including charging IVA, something the US business apparently isn’t doing on shipments SOB.

This should become a good shopping option for US expats. Typically when Amazon enters a new territory, it is willing to suffer substantial losses for an extended period in order to provide excellent service and selection. While Wal*Mart de México, one of Wal*Mart’s strongest segments, isn’t likely to be shaking in its guyabera, it’s clear that the competitive game has now been upped. And I’m quite sure that the Mexican consumer is going to win this battle.

Saludos desde Mexico City, where I’m working on additional posts about Gay Pride and my other adventures.


Post script:  Reader Jennifer Rose pointed out that one price comparison she made with the US site suggested that amazon.com.mx’s prices aren’t that compelling. And I too found what I thought to be a rather overpriced towel set (bath, hand, washcloth, $40 USD). And a quick perusal of other items suggested the prices weren’t all that compelling either.  Yet further perusal (sorry, this post is a bit of a work in progress) does show some very good prices on other items. Any commentary on the subject would be greatly appreciated. Note that I receive NO compensation from Amazon for this post or for anything else.

 

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