The fashion wave in Mexico seems to be gaining momentum rapidly. Being the second-largest economy in Latin America, Mexico has all the chances to become the biggest fashion retail hub in the region.
According to Statista, the fashion market in Mexico is expected to grow annually by 7.6%. But rapid revenue growth in the apparel market is only one of the many reasons why big overseas brands like SHEIN are rapidly expanding into Mexico.
As the second largest retail market in the LatAm region, Mexico has a lot to offer to overseas brands. Read on to learn:
– The top reasons why international fashion brands are eyeing this market.
– What does Mexican fashion landscape look like?
– 3 lessons you must learn from SHEIN to thrive in Mexico’s fashion industry.
The top reasons why international fashion brands are eyeing the market
Latin America is the world’s fourth largest retail market. The total retail sales in the region are estimated to reach $2.354 trillion by 2022.
Over the past few years, Mexico has been able to strengthen its retail positions. In 2018 the country brought 20.2% of all regional retail sales into the LatAm economy. What puts Mexico on the radars of key global retail players?
Mexico’s strategic location and its emerging market status have a lot to do with the country’s retail market growing by leaps and bounds.
Due to the fast-growing economy, Mexican middle class has more purchasing power than ever before. Credit card usage is on the rise as well, which positively affects the development of the ecommerce landscape in Mexico.
Retailers have also been drawn to Mexico by its relatively young consumption driven population. The median age here is 29.3 years, which is a key demographic to spur consuming.
However, what really positions the country as one of the most attractive markets for overseas fashion brands is its ecommerce boom. With its tech-savvy young population, increasing Internet penetration, and with all the government initiatives to increase the financial inclusion, Mexico is poised for an ecommerce retail boom.
Right now, the homeland of tequila and tacos accounts for 12.6% of LatAm ecommerce. However, by the year 2020, ecommerce sales in the country are expected to reach $17.6 billion.
Even though Mexican e-commerce market is still on the developing stage, the biggest names in the fashion retail industry like SHEIN, ALIBABA, Ted Barker, Karen Millen, Desigual, and others are taking a bet on it. Let’s look into a fashion retail landscape in Mexico.
Mexico’s fashion industry landscape
Historically, due to the poor shipping infrastructure, many overseas brands were hesitant about entering the Mexican fashion market.
For a long time, traditional “village shops”, pop-up kiosks and markets were dominating the retail in Mexico. It has all changed when big names like Amazon, Walmart, Costco, and SheIn entered the market.
Today, Mexican fashion market operates within a hybrid retail landscape: modern shopping malls share the street with pop-up markets, and local e-commerce retailers share online space with renowned names in fashion.
Retail in Mexico is booming. Today, it is the second largest market for shopping centers in the LatAm region. Approximately 200 new malls are expected to be built here by 2025.
The brick-and-mortar retail sector is mainly dominated by two nationwide department store chains – Liverpool and Coppel. These retail chains are among the top 250 largest retail companies in the world.
The biggest share of Mexican e-commerce market belongs to a two e-commerce behemoth: MercadoLibre and Amazon. Alibaba is also building its way into Mexican retail market by signing an agreement with the government about selling more national products on the platform.
What are Mexicans spend their money on? The leading spending category after groceries and home products is apparel and accessories. In 2019, the revenue in the apparel market is expected to amount to US$25,973m.
Entering the Mexican market became a focal point for many overseas brands. Desigual is a good example. This high-end European brand entered the Mexican market back in 2015, and in three years it grew to more than 100 points of sale all over the country.
There is a significant segment of the population in the middle and upper classes who’s willing to pay more for the products of established international brands.
However, there is also a large portion of the Mexican population who’s not ready to pay high-end prices for apparel. And this is where international brands like SheIn come into the picture.
How SHEIN conquered Mexico’s Fashion Industry
Fashion brand called SHEIN, an Asian wholesale platform that offers the most recent trends at unbeatable prices, has recently created a lot of buzz in the Mexican e-commerce world. We interviewed Alina Lin, the operation expert of global markets of SHEIN, and brought to you the main lessons the specialist has to teach about how to succeed and keep your business profitable in this market.
Use the power of social media and specifics local habits in benefit of your business
We are sure you’ve stumbled upon SHEIN’s targeted Facebook and Instagram ads offering apparel at the rock bottom prices. Much of their success is attributed to their social media marketing efforts using a geo-targeting strategy as a way to offer the right products to that audience.
The expert of SHEIN, Alina Lin, says that “there are more than 50 million active Facebook users in Mexico and their local fashion magazines are very influential. We leverage the power of online Facebook, Instagram and offline fashion magazines to know better of the Mexican customers. For example, Mexico City has a temperature of 10° to 24° all year round so we adapted its unique geographical climate to produce a special product line from an operational perspective”
A strong social media strategy and knowing the specific aspects of the local market that impacts directly in the purchase behavior. That was the perfect equation for SHEIN to take the first big step to conquer Mexico fashion market, standing shoulder-to-shoulder with local companies by offering the most relevant range of products for this audience.
Study the challenges of the market and get a plan to overcome then
When the question is what are the challenges of Latin American market, logistics always comes to mind and in fact, it is an aspect that deserves special attention.
For SHEIN, the challenge couldn’t be different. “Selling to Mexican consumers, the biggest challenge for e-commerce is the logistics.”, said Alina Lin.
Many of the Latin American consumers already know that delivery time for foreign purchases is longer than for national ones. However, because of local logistics aspects that are not directly related to international companies, the wait until the product arrives at the final destination can be a little longer than expected sometimes, something that affects the relationship between the ecommerce and the customer.
“We believe that convenience, logistics, and timeliness are the prerequisites to ensuring our business development”Alina Lin, expert from SHEIN.
But you must remember that logistics is a challenge, not an impossible mission. And there are ways to standing up to the competition and offering a better experience for your clients. That’s exactly what SHEIN did it.
“We cooperate with the best quality logistics providers, and offer the “delivery to the store” option to ensure our timely delivery, but we will also want to benefit customers as much as possible”, declared Lin.
Besides of having qualified logistics partners, SHEIN created another solution for those who want a faster way of picking up their products directly in a physical store. Here goes another important lesson to learn: every market will look challenger at some point, to not get used to the obvious solution and to put efforts to create better ones is one way out to overcome this.
Knowing not only what your public wants to buy, but how they want to pay for it
Leveraging local payment methods was another smart move that SHEIN did. One of the biggest barriers that businesses can still face when entering Mexico’s fashion industry, is the low credit card penetration rate in relation to other countries.
“Local payment method has reached 65% coverage in Mexico. By using local payments, we can easily connect with most of the local customers. It not only brings greater convenience to our customers for better user experience but also to us. It is our duty to offer a good experience”.Alina Lin, expert from SHEIN
For scale your results and not to limit your audience to a small group of Mexicans with an international credit card, local payment methods are the key, especially for markets like fashion in which the impulsive purchases represents a great part of the business.
“We launched the OXXO payment voucher business in the Mexican market as there are only 35% of adults with a bank savings accounts, and cash payment method dominates the market”, says Alina Lin about SHEIN’s choosing OXXO payments as the local payment method for Mexican consumers. Nearly 32% of all online transactions in Mexico are made through OXXO’s cash vouchers.
“Many Latin American customers are not used to saving money, so installments are a MUST-HAVE for them”.Alina Lin, expert from SHEIN
And OXXO isn’t the only turning point in this story, installments made also a huge difference for the fashion Mexican market. Culturally, Mexicans are used to used to pay their purchases in installments – regular payments over a set period of time. In fact, over 60% of e-commerce transactions in Latin America are currently done through this payment method.
Why it matters?
SHEIN is phenomenal at understanding cultural differences and using that knowledge to increase sales and, basically, this is what that makes their strategies so successful.
After conquering Mexico’s fashion industry, this Asian brand plans to enter Chile, Argentina, Colombia, and Peru. And if you aim to expand your business, you should keep an eye on it, because the time is now and there isn’t a better way to do it but learning from the bests.
Are you ready?