With many shoppers in Mexico wary of credit card fraud and relying mostly on cash, Amazon has launched a new cash payment service in the country.
According to a Reuters news report, the move will enable Amazon to expand its reach in Mexico and to compete with Walmart de Mexico, also known as Walmex, along with other retailers pushing Mexican consumers to shop online.
“It will intensify the competition of eCommerce in Mexico – not just for Amazon and Walmex, but [also] for other players,” said Luis Willard, an analyst at brokerage GBM.
Amazon debuted its Mexico-based site two years ago and is now the country’s third-largest online retailer. Even so, the company’s Mexico sales of $253 million last year were well behind the market leader, Argentina’s MercadoLibre, Inc., and only slightly above Walmex’s online revenues.
Fernando Ramirez, product manager for Amazon Mexico, said the cash service could attract “a population of new clients that would use this as their primary form of payment.”
Amazon has accepted cash on delivery in India since launching there in 2013, and introduced the service in the United States in April, followed by Britain in August.
In Mexico, shoppers can deposit between 100 pesos ($5.20) and 5,000 pesos per transaction at several convenience store chains throughout the country, including 7-Eleven, placing up to 10,000 pesos a day into Amazon accounts online.
Currently, the service is not offered at OXXO convenience stores, which compete with 7-Eleven in Mexico and accept cash for MercadoLibre shoppers. Ramirez said Amazon is looking to expand its network, but declined to comment on whether Oxxo would be included.
Amazon is also considering Mexico for its second North American location. The company said it had received 238 bids, including proposals from the states of Chihuahua, Hidalgo and Queretaro.