Mexico is among the top ten markets in the world for cosmetics and personal care products. It’s also the second-largest market for beauty products in Latin America.
With the Mexican economy gaining strength and the middle class expanding, cosmetic purchases have continued to accelerate over the past 15 years. National newspaper El Financiero reports that the beauty sector in Mexico is expected to grow up to 4% annually over the next four years. This represents a huge opportunity for brands looking to sell beauty products into the country.
Since Mexico has free trade agreements with 46 countries, the Mexican consumer has been exposed to brands from the US, Europe, South America, and Asia and is very discerning. Brands have a lot of opportunities to differentiate and market themselves in this growing market, but it can be a challenge to set up an effective payments and logistics offering for those not familiar with the nuances of the region.
Below are some of the main ways brands can set themselves up for success in selling beauty products in Mexico:
Localized Checkout and Currency
Shoppers are far more likely to complete a purchase when they see prices in their local currency, with all relevant duties and taxes included so there are no surprises at checkout. The checkout itself should be in the shopper’s language, with address prompts in the appropriate format. Any friction points, such as irrelevant fields or unnecessary information, should be removed.
Local Payment Options
Nearly 50% of ecommerce transactions in Mexico are paid for via cash-based methods such as bank transfers and payments at convenience stores such as Oxxo. With more than 17,000 locations throughout Mexico, Oxxo has solved for two of the biggest problems with online shopping in the developing world: payments and pickup. Less than 40% of shoppers in Mexico have bank accounts, but anyone can shop hundreds of online merchants, take a voucher to an Oxxo location, and pay in cash. If the shopper lives in a remote or dangerous area, they can simply return to the Oxxo location to pick up their merchandise. Retailers who offer this method will see an increase in conversions at checkout.
How it works:
Other popular payment methods to offer: Visa, Mastercard, Apple Pay, Android Pay, PayPal Express
Domestic Bank/Card Acquiring
Providing localized payment solutions to shoppers is essential to increasing conversions and the percentage of successful transactions. A major component of this localized experience is domestic acquiring, which simply means processing a transaction through a local bank vs. one in another country. It has a major impact on transaction success, improving it by up to 50% due to a drastic increase in false positives for fraud detection. Domestic acquiring also reduces transaction processing costs, as retailers do not have to pay interchange fees. Perhaps most importantly, it also allows retailers to offer local card options and alternative payment methods such as invoice, online bank transfer, and local e-wallets.
Delivery
When shipping to Mexico, the customs process and last-mile delivery determine the price and speed of delivery for your customers. Navigating these areas is critical to providing a great customer experience and controlling costs.
Partnering with the right local carriers will help ensure that customers receive their packages safely and on time. Carriers often need to reach out to shoppers to collect ID information before delivering packages, which can cause significant delays if not done efficiently. Working with a carrier that needs to get customs clearance adds additional complexity, bringing a delivery time of under one week to three to four weeks.
While some cosmetics such as perfume, aerosols, nail varnishes, or any products containing alcohol are classified as hazardous goods, many cosmetics can be shipped internationally. However, it’s important to work closely with the carrier to make sure proper measures are taken for labeling and declaration. Additionally, some cosmetics are fragile: powders or foundations can break; creams can separate if not kept at the right temperature; etc., so it’s also important to make sure products are packaged and shipped with care.
In Mexico specifically, personal use cosmetic imports are allowed but it’s worth limiting products to ten or fewer in a single shipment as customs may suspect it to be for commercial use otherwise.
Returns and Refunds
A local returns center can improve refund times significantly, which builds shopper trust and encourages repeat purchases. The margins on cosmetics are some of the highest in retail, and returns are some of the lowest at a rate of around 1-2%, whereas the average return rate for ecommerce generally is closer to 20% on average.
