Online retail giant Amazon has unveiled a service in Mexico where shoppers are able to pay in cash. Shoppers in the North American country tend to avoid credit cards owing to fear of fraud. Additionally most of them are paid in cash at the places they earn a living.
Amazon’s cash payment service could assist the e-commerce giant to grab market share from Walmart de Mexico, which also goes by the name Walmex. This comes as the two American firms as well as others are trying to lure more Mexicans to shop online rather than at the brick and mortar outlets which dominate the retail sector in the country. The move by Amazon to introduce cash payments is likely to heighten the competition.
“It will intensify the competition of e-commerce in Mexico, not just for Amazon and Walmex but for other players,” said a GBM analyst, Luis Willard.
In Mexico Amazon ranks third among the biggest online retailers according to Euromonitor International, a market research firm. The online retail giant has seen rapid growth in the North American country since it launched its e-commerce platform for Mexico two years ago. Last year Amazon recorded sales of approximately $253 million in Mexico. This was however well behind Argentinian online retailer MercadoLibre Inc, the market leader. Amazon also managed only slightly more online revenues than Walmex.
According to Amazon Mexico’s product manager, Fernando Ramirez, the aim of the cash service is to lure new customers as well as offer existing customers an alternative to debit and credit cards. Ramirez also added that some shoppers might turn to using cash as the primary method of payment.
Since it launched in India in 2013, Amazon has been accepting cash on delivery. However pre-paid cash is a new concept which the online retailer unveiled first in the U.S. earlier in the year before it was launched in Britain two months ago.
In Mexico customers of the largest online retailer in the world can now deposit into their online Amazon accounts cash amounts ranging between 100 and 5000 Mexican pesos in a single transaction. The deposits can be made at various convenience store chains located in Mexico such as 7-Eleven. Though customers of Amazon cannot make cash deposits at Oxxo, a rival to 7-Eleven in Mexico, customers of MercadoLibre can make cash deposits at Oxxo.
As Amazon searches for a city to put up its second headquarters some states in Mexico have also put in bids. These include Queretaro, Hidalgo and Chihuahua.