Amazon Inc. is an American multinational technology company, known as a leader in online retailing worldwide and the leading e-retailer in the United States. Although primarily active in the B2C (Business to Consumers) market, Amazon also enables third-party sellers to trade their products as well as providing technical infrastructure services (Amazon Web Services, AWS) to businesses. In 2015, the firm moved into the Mexican market, and it has since grown steadily.
We explore the value of selling your products through Amazon in Mexico and how it works.
Amazon leader of Mexico’s online retail market
In 2018, net sales amounted to over US$232 billion, up from US$177 billion in the previous year. Amazon is the world’s largest online retailer of books, clothing, electronics, music, and many other consumer products. The vast majority of Amazon’s revenues are generated through the sales of electronics and other products, followed by third-party seller services and AWS.
With a global net sale of US$802.8 million in 2018 (+1.59% compared to 2017), the company is following similar successful trends in Mexico. According to Worldpay in its 2018 report on e-commerce in Mexico, this sector recorded profits of US$18 billion with a projection of US$28 billion by 2022. With these figures, in 2019, Mexico is positioned as one of the countries with the highest records of online shopping activity in the region. It currently ranks third after Brazil and Argentina.
Use a unified Account
To sell on Amazon Mexico, you’ll need what’s called a North American Unified Account, which permits Amazon sellers to list your offers on multiple Amazon North American marketplaces (Amazon US, Canada, and Mexico).
It allows you to more easily:
- Share listing information and manage your inventory consistently across Amazon’s U.S., Canada, and Mexico marketplaces
- Keep track of orders on multiple North American sales channels in Manage Orders or with one combined Order Report
- Access tools and services to help you manage your business across the U.S., Canada, and Mexico marketplaces
- Pay a single monthly Professional selling plan subscription fee for your North America Unified Account
- Update account information through a consolidated user interface
- Get paid to your local bank in your local currency thanks to the Amazon Currency Converter for Sellers.
You may already have a Unified Account and not know it since some newer accounts are registered automatically. The quickest way to check this is to look at the ‘Language Switcher’ in the ‘Seller Central’ section; if there are options available for other countries, you’re already good to go. If not, applying is relatively easy.
For US citizens, applying for a Unified Account requires approval from Amazon Seller Support. If your current seller account is ACTIVE, this should not be a problem and can be handled in a short time. For individual sellers in Canada, the process is the same. Professional sellers in Canada automatically have access to Amazon.com.mx.
One note about brand registry: if you were approved for a North American Unified Account before you approved your brand in the brand registry, then your brands are automatically approved for Canada and Mexico. If not, you’ll have to resubmit for each new country you want approval in.
Manage your inventory properly
You need to make sure you’re managing your inventory correctly. This entails:
- Global stock-keeping units (SKUs). You’ll need to update marketplace-specific SKUs to global standards. In Seller Central, select the option for “Existing Offer” when you create a marketplace offer to give the product a global SKU.
- Enable Fulfillment by Merchant (FBM) listings. If you’re choosing the FBM route, go to the Build International Listing tool and select your source marketplace.
- Verify pricing and shipping costs. Amazon automatically adjusts your prices and shipping based on the country — including direct currency conversion. Modify them as needed, such as compensating for international shipping, return policies or taxes.
FBM runs into shipping complications and extra fees, so Fulfillment by Amazon (FBA) might be more effective if you anticipate many sales.
Differences between Fulfillment by Merchant (FBM) & Fulfillment by Amazon (FBA)
With FBM, the seller lists the product on Amazon and handles storage and
all aspects of order fulfillment. As a seller, you’ll set up an Amazon account. Create your product listings and store, pack, and ship the products as customers order them on Amazon. You’ll take responsibility for any late, missing, or damaged arrivals.
With FBA, the seller stores products in Amazon’s fulfillment centers where Amazon will pick, pack, and ship those products. As the seller, you’ll set up FBA in your Amazon account. Create your product listings, prepare your products, ship your products to Amazon, and let Amazon pick, pack and send your items as customers order your products.
Simply put, with FBM, you will have to manage all aspects of delivery on your own, and with the FBA you will have to let Amazon manage it for you. Review the full comparison study to understand the details of the differences and pros and cons between both these fulfillment options.
Amazon in Mexico
Amazon recently opened the doors of its third distribution center in Mexico, the largest in Latin America. With more than 100,000 square meters, the new center located in Tepotzotlán, Cedis, is Amazon’s third investment in the State of Mexico.
Recently, Amazon celebrated Prime Day 2019 worldwide. However, the case of Mexico was particular because, during the sale, the region broke the record of sales in the two days of the event (July 15 and 16). Customers purchased 175 million products, many of which were electronic goods such as the Nintendo Switch, the monitor HP 22w Borderless, Echo Dot, Echo Show 5, Fire TV Stick Basic Edition.
Generally speaking, the categories most consumed by prime users during the sale were books, beauty, clothing, footwear, electronics, and accessories.
The third center
Now, with its third center in Mexico the size of 18 soccer fields, total investment in Mexico is US$125 million across the two centers in Cuautitlán Izacalli and the new one in Tepotzotlán. Regarding Amazon’s investment, Colin said: “the investment denotes the potential that the Mexican market has and is willing to continue investing and make great differentials in its service because it has not yet reached the maturity of the market and because there are some steps to reach to be in the same position as in other markets.”
The third center will be the biggest in Latin America and generate at least 1500 jobs. Its construction took a total of nine months. Despite rumors of yet another center in Queretaro, this was not confirmed by Amazon. To date, Amazon’s footprint in Mexico has reported revenues in international trade for more than US$233 billion.
What does it mean for sellers?
If you take a step back, you can quickly notice the growing importance that the Mexican online market is gaining year after
year. This is demonstrated by Amazon, who by opening this new center clearly shows the prospects for success and its intention to capture this market.
The greater presence Amazon develops, the easier it will be for sellers to move products into and around Mexico through online commerce.
How BLH can help you in this process
Biz Latin Hub is a company established in 2014 to support local and foreign companies doing business in Latin America, offering a complete portfolio of back-office services; including bilingual legal, accounting, finance, taxation, recruitment, commercial representation, market-entry, and administration services.
Our group offers an extremely personalized service and fee levels that are competitively placed within the current international market. All services provided are in both English and Spanish. We are a market leader in aiding foreign and local companies and individuals establishing and developing themselves and their businesses in the region.
Our team of local and expatriate experts offers a range of legal and commercial back-office services that are customized to each of our clients’ needs. We can help you and support you in your project.
We will be happy to support your work or introduce you to our Customs Agent Partner. Contact us today via email at [email protected] for personalized support. We’re ready when you are.