Borderlands: Latin American e-commerce SMBs have big cross-border opportunities

Latin American e-commerce SMBs have big cross-border opportunities

As consumers continue to buy more goods and services online, cross-border shippers of all sizes have a chance to reap the dividends of the ongoing e-commerce surge.

Some of the greatest opportunities for growth in the e-commerce cross-border marketplace are for small and midsize businesses (SMBs) operating in the U.S., Canada and Mexico, said Eduardo Lopez-Soriano, marketing vice president at UPS Capital, the financial services division of UPS.

“Before joining UPS Capital, I was with UPS in the Americas region [from 2010 to 2015], responsible for marketing in Latin America and the Caribbean, and e-commerce was already booming back then,” Lopez-Soriano told FreightWaves.

“There were some markets there that were really at the leading edge in Latin America, Mexico being one of them, Brazil is another, even Ecuador. I would say the growth goes both ways. When you ask Mexican e-commerce buyers where they are shopping, some are shopping locally, some shop in Latin America with Mercado Libre, a lot of them — the last number I heard was around 40% — were buying from merchants in the U.S.”

Mexico’s e-commerce market had sales of $20.8 billion in 2021, a 27% increase over 2020, according to the Mexican Online Sales Association (AMVO). 

Some of the top selling products in Mexico’s e-commerce industry last year include food delivery (72%), clothing (64%), electronics (55%), toys (51%), and beauty and personal care products (49%), according to AMVO.

Mexico’s e-commerce market is projected to grow to $60.8 billion by the end of the year, according to Americas Market Intelligence.

Mexico was second to Brazil, which had the largest e-commerce market in Latin America in 2021, totaling $33 billion, a 120% increase over 2020, according to the Brazilian Electronic Commerce Association. Other large e-commerce markets in Latin America include Argentina, Chile, Ecuador and Colombia.

While there are plenty of opportunities for SMBs across North and Latin America to grow their international customer base, cross-border shipments are often challenging for SMBs, due to higher shipping expenses, longer delivery windows and customs requirements.

Lopez-Soriano said customer expectations across Mexico and Latin America are the same as anywhere else in the world.

“They all want to have their product on time and they want to have [it undamaged],” Lopez-Soriano said. “I believe there’s a level of understanding in Mexico and other countries that timing is not easy to achieve when you’re buying across a border.”

For SMBs it’s important to have products insured, as well as a backup plan if they are shipping products across international borders, Lopez-Soriano said.

“If I’m a customer and I purchased from a U.S. website, and my product ended up being damaged, I’m going to call the merchant and I think the merchant is going to be a little more comfortable doing a reship or reimbursing the customer when they know they have insurance and they can submit a claim to a U.S. insurance agency and get paid for that shipment and that product,” Lopez-Soriano said. 

More SMBs are also turning to drop shipping to ensure the optimal customer experience, Lopez-Soriano said.

Drop shipping is a business model that allows entrepreneurs to start an online business and sell products to their buyers without ever actually stocking the items themselves. Drop shipping is an order fulfillment option that allows e-commerce businesses to outsource procuring, storing and shipping products to a third party — typically a supplier.

The aim is to achieve cost savings for all parties involved, as well as improve delivery times for consumers. Some of the larger drop shipping companies in the world are AliExpress, Alibaba, SaleHoo, Worldwide Brands and Doba. 

“It’s another way to get additional flexibility, to get the goods in transit by using drop shippers, which are a lot closer to the end customers, and because of the proximity you can do that with with a ground service, instead of going air, which is more expensive,” Lopez-Soriano said. “There’s also some risks that come with it, you need to make sure that you’re partnering with the right drop shipper, one that has the same standard of quality that you have.”

Arizona restricts trucks along portion of Interstate 10

Tractor-trailers traveling through Arizona are temporarily restricted from driving in the left lane on a portion of Interstate 10 outside of Phoenix.

The Arizona Department of Transportation (ADOT) said the right-lane restriction for truck traffic is intended to help reduce crashes, “along with the resulting delays and closures due to these incidents.”

“To promote safety on a 20-mile segment of Interstate 10 between Phoenix and the city of Casa Grande, ADOT is installing new signage that will restrict heavy vehicle truck traffic on this busy section of highway,” ADOT said in a release. “Based on data for the area where the signs are being posted, heavy vehicles were involved in about 20% of crashes and 15% of rear-end and sideswipe crashes.”

ADOT said the truck restrictions are an interim safety measure along the final two-lane stretch of I-10 between Phoenix and Tucson that has yet to be widened to three lanes in each direction. The signs notifying the restrictions will be up until the improvement project starts in 2023, ADOT said.

Port Houston utilizes 1st zero-emissions drayage truck

Port Houston recently welcomed its first-ever zero-emissions drayage truck in partnership with Sunburst Truck Lines and Nikola Corp.

The electric truck picked up a container from the Bayport Container Terminal before delivering it to its next destination. The vehicle was manufactured by Nikola in Coolidge, Arizona, and has a range of up to 350 miles, according to a release. 

In April, the port announced its goal to be carbon neutral by 2050. 

“This is one more step forward on the road to having zero emissions here in Houston and reaching our long-term sustainability goals,” Port Houston Executive Director Roger Guenther said in a statement.

Cargobase opens new office in Mexico

Logistics software provider Cargobase recently opened an office in Mexico City to better serve clients across North America, the company said in a release.

“Prior to the pandemic, we were already seeing companies across industries expand and move their manufacturing activities from the U.S. and Asia, to Mexico,” Wiebe Helder, founder and CEO at Cargobase, said in a statement. “During the pandemic, we noticed that more companies are setting up logistics operations and control towers in Mexico to serve the entire North American region.”

The office in Mexico City will have sales representatives who will primarily focus on the automotive and electronics manufacturers based across the country.

Singapore-based Cargobase is an enterprise software company offering a transport management system for contracted and non-contracted freight. The company was founded in 2013 and has offices in The Netherlands, India, Mexico and U.S. 

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