Mexican Oxxo Stores Cashing in on E-Commerce

The aisles of all Oxxo stores in Mexico are filled with convenience stores staples that include: cigarettes, beer, candy, potato chips and much, much more.

However, a closer look shows that the chain store is a huge player in Mexico’s e-commerce. The retailer has over 17,000 locations across Mexico and has overcome two of the biggest obstacles to successful online shopping in the developing world: payment and pickup.

Shoppers that lack a bank account, which in Mexico equals 60% of the overall population, are able to hand over cash at the local Oxxo to buy from more than one thousand merchants online.

Those living in remote or dangerous areas where delivery at home becomes complicated can go to the nearest Oxxo to pick up their merchandise.

Programs for pick up operate in close to 3,000 Oxxo stores, and plans are to expand that number. Oxxo is holding negotiations with more merchants to handle their packages as well, said a representative from the company.

Oxxo charges both the consumer and merchant on the majority of transactions. Analysts said that Oxxo has seized a lucrative opportunity to secure its spot in the supply chain of e-commerce in places where shopping online is not as seamless as in countries that are wealthier.

It is one of the few businesses anywhere in the world with enough leverage to battle Amazon’s founder billionaire Jeff Bezos. During a time when retailers with brick and mortar locations look upon e-commerce as a big threat, Oxxo is much different.

An internet association leader said Mexico is all about cash and that gives Oxxo a huge advantage.

That makes for great news for Fomento Economico Mexicano the parent company of Oxxo known locally as Femsa. Oxxo represents close to 35% of all revenue at Femsa and is the company’s biggest driver said one analyst in Mexico City.

Since the end of 2014, shares of Femsa have increased over 50%.

Oxxo is not content remaining the middleman and is working on its own e-commerce efforts. The company is going to test is own app for home delivery in 2019 and is contemplating an e-wallet which would allow the shopper to store balances for purchases online.

However, Oxxo has to make sure that its experiments in e-commerce do not undermine the core business it has of selling cigarettes, soda and beer.

No Comments

    Leave a reply