Sources have confirmed that Amazon Mexico is planning to open a mega-warehouse close to Mexico City. The project, which still hasn’t been confirmed by Amazon chiefs, aims to increase the e-commerce giants presence in Mexico.
Amazon Mexico Increases Presence
Amazon’s presence in Mexico is still fairly new. The company opened up it’s Kindle e-book website to Mexico in 2013. It only expanded into retail sales in 2015. Despite the fact Amazon is still a novelty for many residing in Mexico, it’s fast surpassing other retail competitors such as Walmart Inc. In 2016, Amazon’s sales amounted to $253 million, which represents over a 50% increase on the previous year. These figures were released by market research firm Euromonitor International.
Expantion into it’s nearest neighbour seems like a logical next step for Amazon. However in reality, Mexico’s e-commerce only represents 3% of all retail sales in the country. In the United States, on the other hand, e-commerce sales represent 10% of all retail activity. But it seems Amazon is ready to take the risk in order to bolster itself against competitors such as China’s Alibaba Group Holdings.
Neil Saunders, managing director at the GlobalData Retail research firm, commented on Amazon’s stance on expanding into Mexico:
“Amazon is not afraid to plow into a new market in a very big way, take a big hit, but say, 10 years down the line, this is going to be big and profitable.”
Moreover, current NAFTA (North American Free Trade Agreement) could see huge benefits for the stateside retailer. However, this depends on the success of the United States persuading Mexico to raise their duty-free imports for online sales to $50.
Amazon Mexico New Warehouse
The new warehouse has yet to be confirmed by Amazon, and spokesperson Julio Gil has also declined to comment. He did, though comment on Amazon Mexico’s aim to expand the number of products it offers as well as improving the purchasing process and developing more efficient delivery services.
The news for the new warehouse has in fact come from real estate professionals in Mexico City. Apparently, the unit will be located in the Tepotzotlan municipality. This lies just 40km north of Mexico City. The construction plans are expected to be completed next year. The opening of such a unit would triple Amazon Mexico’s distribution space, allowing them to reach the 120 million potential customers in Mexico.
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