Booming eCommerce in Mexico: Challenges and Solutions for Logistics

It’s now or never to take the stage in Mexico’s large eCommerce market. Driven by technological penetration, increasing mobile penetration, and the pandemic disrupting traditional retail, online retail is booming – with a growth of 81% in 2021 alone.

Right up front is fast home delivery. About 60% of Mexicans have started shopping online because of the benefit of getting the items they want home-delivered, and another 57% simply want to save time.

Despite new market opportunities, changing consumer interests and shopping dynamics present companies with growing logistical challenges. Customers not only want their packages delivered to their doorsteps, but they also want to get them as quickly as possible, putting tremendous pressure on the entire supply chain.

Let’s learn more about today’s product delivery and what tools can help shops meet logistic challenges.

Why should you deliver products?

It’s no secret how popular Rappi or Mercado Libre Mexico have become in recent years. Jüsto, an online grocery market founded in 2019, is right now expanding across Latin America, fueled by investments of up to $65 million. 

Mimicking the frontrunners by entering the eCommerce business will bring your store new customers, higher sales, and push customer loyalty. Young people, in particular, are taking full advantage of the opportunities offered online by these brands, and their thirst for digital is insatiable. As younger generations grow into the new main consumers, demand for online deliveries will continue to rise in the future.

So the question these days is less and less about: should I bring my business online, but about how you do it. From storage to delivery, there are many things to consider to operate in a cost-efficient but customer-oriented manner.

Optimize your eCommerce product delivery

Those who deliver will quickly find that the challenges of warehousing, inventory, and delivery are different than when selling in a brick-and-mortar store. While it used to be the customer’s job to visit the store and browse the shelves, that task now falls to the store itself. 

The good news is that the industry is keen on optimizing online retail. Available technology solutions for eCommerce logistics start with order fulfillment and encompass everything from the sale of the product to the customer experience after delivery. Let’s go through the three main areas: inventory, warehouse management, and last-mile delivery.

#1) Inventory management

How many times have you tried to order an item and it was out of stock? How often have you bought that product from another store? In fact, poorly managed inventory is the most common reason for a non-satisfactory customer experience and customer churn. Approximately 39% of US customers ditch their entire shopping cart if their desired products are not available – and don’t expect these numbers to be any different in Mexico.

Now, too much inventory can also hurt your revenue. Storage costs increase, and depending on the product you sell, risks spoilage. MyCoffeeBox is an excellent example of a company solving that trade-off in inventory management. The shelf-life of roasted coffee is about 6-9 months – but the fresher the roast, the better the quality. As coffee lovers sign up for a subscription to pre-order their favorite roast by the month, the company can ensure to roast the beans only a few days ahead of the delivery date.

The key to always having the exact supply of products is smart inventory management. By accurately predicting demand – both in regular times and when demand changes seasonally – you can promptly manufacture or order your products for sale. 

Demand prediction requires considering:

  • Your business model
  • Business size 
  • What you sell (is it disposable?)
  • Your industry
  • Seasonality
  • Single events 

Only an up-to-date inventory system that provides an accurate estimate of stock levels will allow for short delivery times. Here’s a full list of inventory management metrics to analyze for an optimal inventory. Needless to say, a technical solution that automatically registers new orders at the Point of Sale (POS) is far ahead of manual calculation. That’s why it’s worth investing in a smart inventory system in the long run.

#2) Warehouse and in-store management 

The first question to ask yourself regarding the warehouse: Is it better to have one large warehouse where all the products are or several smaller warehouse locations to handle deliveries more quickly? This decision is influenced by the location of the customer base, where demand is greatest, storage costs, and how quickly a delivery should be made.

Not only do you need visibility on what’s best located where, but deliverers also need to know where to find your products quickly. That’s why the second area you need to optimize is the warehouse or, for a hybrid store model, your physical storefront. Depending on the size of your assortment, the location of products can significantly delay a quick and efficient delivery – especially if your delivery staff is not familiar with the store.

Warehouse management helps pickers or employees find products and recommend optimized routes. Today, logistics companies either identify the smartest location of fulfillment centers or warehouses or supply you with their network of distribution centers across large cities like Mexico City.

#3) Last-mile logistics

Let’s get down to the nitty-gritty: last-mile logistics. Handling the last mile – the delivery from the department store to the customer – is one of the most challenging tasks. US companies report that more than 50% of their total shipping costs are due to the last mile. The most common delivery management issues are traffic, last-minute employee shortfalls, and customers that don’t answer their doors. 

To enhance the estimated time of arrival and speed up delivery, you first need to batch orders and then set an optimal route. Today’s delivery technologies help bundle different orders and optimize routes based on several considerations: Customer priority, time slot, traffic, vehicle size (and so on). 

Lastly, it’s important to keep customers informed of their delivery status in real-time. You probably know this from UPS or FedEx: An SMS saying your package will arrive between 11 am and 1 pm. Keep in mind that the better the estimate, the happier the customer.

Get help for your delivery logistics

Coordinating delivery and shortening dispatching times are problems that innovative solutions for logistics can easily tackle.

At Cargamos, we specialize in taking the most challenging part of logistics off your hands: the last mile. Our well-designed network of fulfillment centers and distribution centers and state-of-the-art delivery technologies ensure that every delivery runs smoothly.

Hand over the last mile by leaving the delivery to Cargamos: Get in contact with us now!