eCommerce handbook 2017

June, 2017
 2017 eCommerce handbook key takeaways

global eCommerce sales worth eCommerce growth 53% eShoppers eCommerce will account
U$1.9Tn in 2016 and at 24% CAGR globally by for 15% of total retail
will reach U$4Tn by 2020 through 2020 2020 sales by 2020

eCommerce in Mexico 19M eShoppers Travel accounts for 8% of eCommerce

is worth U$16Tn and is in Mexico, 54% of eCommerce in Latam is rejected
growing at 46% CAGR 73% aged 22-44 in Mexico by fraud (vs. 4.8% Europe)

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 1.6 Billion people worldwide purchased products online in 2016

Penetration

22%
39%
of Internet Mobile
user penetration commerce
Global
eCommerce

Total value

U$1,189
U$1.9Tn Average yearly
spend per person

1.6Bn
People purchasing
via eCommerce

2
Source: eMarketer, August 2016.
 Impressive eCommerce growth worldwide

Global eCommerce sales eCommerce sales, by region

(US$ Bn, 2010 – 2020F) (2016)

24%
CAGR Latam 2% 1% Middle East
& Africa

$4,058
Europe

$2,860 16%

$1,915

$768
$1,234 57%
$476 22%
North Asia
America Pacific

2010 2012 2014 2016 2018F 2020F

% of Total
Retail Sales 3.8% 4.4% 6.3% 8.7% 11.5% 14.6%

Digital buyer
penetration* 38.3% 42.3% 44.8% 47.3% 50.1% 52.6%

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Source: eMarketer, August 2016. Note: *as % of Total Internet users.
 US set to cross half a trillion USD in eCommerce sales by 2018

US eCommerce sales, by category US eCommerce sales

(2016, not including travel) (USD Bn, 2016)

Food &
Toys & beverage
hobbies
Health & 2%
personal care 4%
7%

$389Bn
Books, Other
music & video 8% 32%

14%
Auto & 11%
Auto-parts

8.2% CAGR 77%

16% 19% of Total 2008-2020F Digital buyer
Retail Sales penetration*
Apparel &
Computer & accessories
electronics

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Source: eMarketer, February 2017. Note: *as % of Total US Internet users.
B2B eCommerce is expected to reach U$1.1Tn by 2020 in the US

While purchasing products online, business executives are looking for:

88% 93% 92%

of executives want to view
purchase business want to see
product in action
products online peer reviews before purchase

Executives locate the business products and services they need through:
51% 47% 43% 41%
33% 33%
24%

Corporate Trade
Salespeople Conferences Distributors Word of Month Social Media
Websites Publications
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Source: Forrester, April 2015.
 eCommerce in Latam reached $37Bn USD in 2017

Latam eCommerce sales, share by country

(2016, % of total sales)

42%
Brazil

6%
Colombia

17%
Mexico
9%
Chile

12% 14%
Argentina ROLA

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6
Source: eMarketer, September 2016.
 Latin America reached 129M eShoppers, 37% penetration

Internet Smartphone
eShoppers GDP Population
Users Users

MM % of Int. users $USD Bn MM MM MM

Mexico 19 29% $1,144 127 65 53

Brazil 41 34% $1,775 208 120 64

Argentina 12 40% $583 43 30 16

Colombia 9 31% $292 48 29 19

ROLA 48 47% $1,254 164 103 47

Total Latam 129 37% $5,048 591 347 199

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Source: eMarketer, November 2016. The World Bank, 2016. eMarketer, August 2016. AMIPCI, “Estudio sobre los hábitos de los usuarios de Internet en México 2016”, 2016. eMarketer, September 2016. eMarketer, April 2016.
 The Mexican eCommerce industry is growing at 46% per year

Mexico eCommerce sales Mexico eCommerce sales by category

(USD Bn, 2009-2015) (USD Bn, 2009-2015)

46%
CAGR

$16.1

$12.1
$9.5 Not travel
46%
$6.5 54% Travel
$4.4
$2.9
$1.8
vs.

2009 2010 2011 2012 2013 2014 2015 73% in 2011

% of Total
- 0.1% 0.4% 0.5% 0.8% 1.0% 1.2%
Retail Sales
Travel includes leisure and unmanaged business travel
Digital buyer sales booked via any device.
- 16.4% 18.3% 23.0% 28.4% 31.3% 32.3%
penetration*

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Source: AMIPCI, “Estudio Comercio Electrónico en México 2016”, December 2016. Note: *as % of Total Mexican Internet users. eCommerce sales figures converted from MXN to USD using the yearly FX average.
 Mexicans are purchasing a wide variety of products, content & services

Online product purchase by category, not including travel

42% (2016, % of affirmative answers)

28%
24%
22%
20% 20%
18%
16% 16%
12% 12%
8%
4%

13 12 11 10 9 8 7 6 5 4 3 2 1
Apparel & Sports & Digital Jewelry & Video Travel Books & Office Event Music &
Computers Electronics Furniture
accessories wellness downloads watches games Equip. magazines supplies tickets movies

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9
Source: AMIPCI, “Estudio Comercio Electrónico en México 2016, December 2016.
 eCommerce transactions vary by device in Mexico

Rank Desktop Tablet Smartphone

Banking transactions eMagazines & eBooks Taxi

Airplane tickets Videos / Movies Music

Hotel reservations Entertainment tickets Food delivery

Groceries and
home appliances Music eMagazines & eBooks

Clothing Food delivery Entertainment tickets

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Source: IAB, “Estudio de Consumo de Medio y Dispositivos entre Internautas Mexicanos”, 8th edition, March 2016.
 Online is a core driver for online and offline commerce

Research online & purchase offline

(% of respondents)

Research online & purchase online Research online & purchase offline

45% 43% 43%

35% 36% 34%
28%
24% 24%
19% 21%
18%

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Source: Google’s Consumer Barometer, 2014-2015; A.T. Kearney analysis. Note: Numbers do not add up to 100 because results are derived from a variety of samples.
 Most eShoppers are 22 to 44 years old and seek price

Key demographic for the Mexican online shopper Devices used to go online
(Millions of people, % share) (percentage of respondents, 2016)

87%
urban Smartphones 77%

19M
Laptops 69%

Mexican online Desktop computers 50%

shoppers
73% Tablets 45%
aged 22-44

Smarts TVs 23%

19%
54%
Videogame consoles
46%
male female Other mobile devices 12%

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Source: AMIPCI, “12º Estudio sobre los Hábitos de los Usuarios de Internet en México 2016”. PWC Total Retail Survey (2016, ATKearney eCommerce Mexico 2016).
 PayPal is the prefered online payment method for Mexicans

Online & offline payment methods used by digital buyers Main influencer for buying online
(percentage of respondents, 2016) (% of respondents)

Online
PayPal 62%
Debit card 56%
16% 10%
Personal credit card 51% Other
Bank transfer 27%
Commercial credit card 17% 32%
Mercado Pago 16%
Prepaid card 16% 48%
Price
Gift card 14%
Referenced bank transfer 12%

58%
Offline Convenience
Oxxo 30% 36%
Bank deposit 22%
7-Eleven 10%
Pay on delivery 10% Mexico USA
Pharmacy 9%
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Source: AMIPCI, “Estudio Comercio Electrónico en México 2016, December 2016.
 There is a wide variety of eCommerce platforms
Top eCommerce gateways
Top eCommerce platforms (service provider that authorizes credit-card or direct
(cloud-based commerce platforms designed for small payments processing)
and medium-sized businesses)

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Source: SWS research, February 2017.
 Online fraud is still higher in Latam vs. the world

Top merchant categories affected by fraud

Chargeback index on (2016)
Rejected orders
invoiced order volume

Latam 1.4% 8.0% Other

Clothing
11% Airlines
USA & Canada - 2.8%
5%
General
Europe 0.8% 4.8% Retail
9%
46%
Mexico 1.9% 14.3%
Computer 13%
electronics
Brazil 1.5% 4.6%

16%
Argentina 0.8% 8.2%
Money
transfer

Colombia 1.9% 10.1%

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Source: CyberSource, 2016. RSA Security, 2016.
 Mexico has clear accelerators and barriers to be addressed

Accelerators Barriers

Wider banking Greater Suburb growth Lack of supply Lack of Cultural

and credit smartphone/data and high levels chain and back-end logistics preferences to
card adoption plan affordability of commuting development infrastructure pay in cash
vs.

Investment Cost of developing Lack of clear cost

by leading Business model Weakening eCommerce advantages for
multi-nationals innovation Mexican Peso platform online shopping

16
Source: A.T. Kearney, Kantar Retail Analysis.
 Tools needed to launch an eCommerce business in Mexico

Market Control + Online

Shop Gateways CRM Logistics
Places Visualization Promotion

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Source: SWS Research, April 2017.
 Mexico´s tech ecosystem has seen the rise of 100´s of startups

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Source: SWS Research, April 2017.
 Global tech eCommerce trends to follow in 2017

Cyber November Data-as-a-Service Shipping “Uber-ization” Unified Commerce

Consumers spent US$400 Bn Nov 16’ Retailers are working with data aggregators to Smaller stores, local drop-off points and same-day Instead of adding a digital storefront to the
(100Bn more than 15’), hence the compile data on products: pictures, descriptions, delivery. In 2017, many consumers will receive in-store infrastructure, merchants will
entire Christmas season will kick off price comparisons, specifications and comments. their first same-day delivery, whether at home, or instead integrate their stores (physical or
early November every year. at a drop-off point of their choosing. digital) into a centralized infrastructure.

Real-time customization Artificial Intelligence Predictive Analysis Disintermediation

Just as search results differ from one person
to the next, 2017 will see the emergence of
an online shopping experience that is unique
to each consumer.
2017 will be the year where consumers will
have their first interaction with Chatbots.
These will become as common as automated
phone systems, only much more interactive
and interesting.
By exploiting the amount of Big Data collected
through customer interactions and profiles,
merchants can use predictive analysis to better
understand purchasing habits, preferences, and,
even their next purchases.
Buyers want to interact directly with brands and
retailers are being cut out of the equation.
Automated processes and CRMs are used
more than ever to maintain relationships and to
simplify the ordering process.

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Source: Absolunet, “10 eCommerce trends for 2017”.
 8 tech events to attend in 2017

Immersive event bringing together IRCE brings together Design professionals from all over the
commerce and creativity to explore eCommerce industry leaders world gather for the premiere design
trends, opportunities and disruptions. from the largest online retailers. conference.
Montreal, Canada Chicago, IL San Francisco, CA
24-26 May 6-9 June 29 August

2017 Apr May Jun Jul Aug Sep Oct Nov Dec 2018

The definitive conference on Premier event for the eCommerce Premier event for the eCommerce
conversion rate optimization industry, with over 800 retailers and industry, with over 800 retailers and
since 2010. Programmatic marketing summit. 400 companies attending. 400 companies attending.
Las Vegas, NV Scottsdale, AZ Boston, MA London, UK
19-20 April 31st May 14 July 25-26 October

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Source: SWS Research, March 2017.
 Credits

SWS is a hands-on consulting firm specialized in disruptive and results-oriented strategy. Juan Saldívar Paula Velasco
Our client list includes global players and local industry leaders in search for solid future
positions that embrace the powerful benefits the connected world can offer.
Ari Davidoff
Focused on both the US Latino and Mexican markets, our strengths comprise proven
expertise in the telecom, media, marketing and digital space.

José Vázquez
info@sws.ms | sws.ms (Design)

Main Sources

Rise Capital is a global investment firm that focuses on making expansion-stage

investments in Internet businesses in Emerging Markets.

We back industry-leading businesses run by world-class entrepreneurs who attack large

addressable market opportunities. Leveraging our experience as Emerging Market Internet
operators and investors, we strategically guide these businesses to scale.

info@risecapital.com | risecapital.com
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