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How e-commerce growth will impact manufacturing in Mexico

HOW E-COMMERCE GROWTH WILL IMPACT MANUFACTURING IN MEXICO
23 Nov 2015

Mexico's economy is growing fast as a result of improved infrastructure in the country, better educational standards, liberalized trade and the manufacturing boom that has occurred in the country. One important product of Mexico's rapidly improving economy is the rise of e-commerce within its borders. According to Econsultancy, the country's e-commerce industry has grown 400 percent over the last five years, with online sales predicted to increase an additional 150 percent by 2018.

The role of e-commerce in supply chains
While e-commerce trends might seem like a subject more interesting to retailers and other companies working in business to consumer ventures, improved environments for online commerce actually have major advantages for manufacturers in Mexico.

Mexico's e-commerce industry has grown 400% over the last 5 years.Mexico's e-commerce industry is growing rapidly.

As the infrastructure and business environment welcome e-commerce at an increasing rate, manufacturers will be capable of tapping into this channel to improve supply chains. SupplyDemandChain Executive pointed out cloud technology and e-commerce capabilities make it easier for companies to connect, maintain and manage relationships with suppliers, distributors and manufacturers at every point of the process entirely online. To support this notion, SupplyDemandChain Executive outlines six important ways B2B e-commerce has the potential to simplify supply chains: 

1. Process automation: E-commerce empowers businesses to automate manual processes including order approvals, updating users on order status and sending order shipping and tracking information. Automation lowers costs, provides quicker delivery and improves inventory management.
2. Analytics: Since B2B e-commerce operates in a digital environment, manufacturers have access to analytics that determine customer behavior. This can be extremely beneficial to suppliers serving larger OEM manufacturers.
3. Customized orders: Online ordering platforms allow customers to customize their orders more easily and then send those orders directly to fulfillment, saving time and money.
4. Inventory management: If a manufacturer were to place a purchase from a supplier online, that supplier's inventory would be updated immediately through the order management platform and then notify manufacturers, distributors and suppliers.
5. Reduced wait times: Since e-commerce platforms are always accessible, manufacturers can replenish their supplies more quickly.
6. Error reduction: Online B2B e-commerce platforms help reduce errors that typically occur during ordering.

Jim Tompkins, CEO of Tompkins International, also sees the benefit of e-commerce growth for manufacturing and in Mexico specifically. According to Talking Logistics, Tompkins believes e-commerce technology will allow manufacturers in Mexico to implement new technologies and processes including e-payments, and further develop its logistics networks.

A nod to the middle class
Beyond B2B e-commerce, online shopping is a direct product of Mexico's growing middle class. According to Euromonitor International, the middle class is expected to grow by 3.8 million households by 2030. A thriving consumer environment in the country coupled with improved infrastructure means manufacturers in Mexico will have a larger market for their products within the country. While many companies, especially those within the auto industry, rely specifically on exports to the U.S. for their profits, there is still a large portion of business that is driven by those within Mexico. A healthy e-commerce environment will have massive benefits for manufacturing in Mexico.

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