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Amazon to launch food and drink sales in Mexico

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08/30/2018 | 06:45pm EST
FILE PHOTO: The logo of Amazon is seen at the company logistics centre in Boves

MEXICO CITY (Reuters) - Amazon.com Inc will begin selling food and drinks online in Mexico, including snacks, sweets and wines, it said on Thursday, a move that could intensify its competition with Wal Mart de Mexico to claim shoppers in a nascent e-commerce market.

Online shopping represents a fraction of total retail sales in Mexico but has grown swiftly, putting Amazon and its rivals in a race to ramp up investments in logistics, technology and product offerings.

Amazon views food and drink sales as key to growth, eyeing routine purchases to stock pantries as a way to generate other types of sales, but has yet to dominate the category.

The new items on its Mexico site, which it launched in 2015, span coffees, teas, liquors, wines and beers, as well as cooking ingredients, non-perishable snacks and sweets.

"We're committed to offering our clients as many products as we can," Fernando Ramirez, Amazon Mexico's senior product manager, said in a statement.

The launch shows Amazon's intent to claim more of Mexicans' wallets, said Gene Munster, research head at Loup Ventures.

"Non-perishables are the first step to capturing food spending, and likely indicate Amazon's ambitions to increase its offering related to fresh food," he said.

In the United States, Amazon moved into online grocery sales through a $13.7 billion purchase of Whole Foods Market last year. It offers two-hour delivery and lets shoppers pick up Amazon products from Whole Foods stores.

Walmart, meanwhile, aims to deliver groceries to over 40 percent of U.S. households by year's end.

The company plans to accelerate its online grocery business in Mexico as well, Walmart International's Chief Executive Judith McKenna said earlier this year.

Soriana, La Comer and Chedraui are among Mexican grocers that also offer delivery services, along with online marketplace MercadoLibre.

Walmart's Mexico unit, Walmex, is counting on its 2,390 stores to help execute speedy deliveries.

Amazon may struggle to match the selection of traditional stores, said Jose Acosta, a former Walmex executive who is now CEO of digital payments application Pagamobil.

"Brick-and-mortar players have done a very good job of defining a very wide catalogue, and that's not something you develop so fast," he said.

Small warehouses stocked with snacks and drinks will be crucial for Amazon to deliver fast, said Alfredo Garcia, business development head at Mexican e-commerce delivery service Skydrop.

Convenience is also important.

"If you have a party ... what a drag if you go to Amazon to buy beer and potato chips, but you have to use another application to buy meat and tomatoes," Garcia said.

(Reporting by Daina Beth Solomon; additional reporting by Julia Love in Mexico City, Nandita Bose in New York and Jeffrey Dastin in San Francisco; editing by Susan Fenton and Sandra Maler)

By Daina Beth Solomon

Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM -0.24% 1887.46 Delayed Quote.2.39%
FEEDER CATTLE?FUTURES (GF) - CMG (ELECTRONIC)/C1 -0.02% 143.9 End-of-day quote.-0.96%
GRUPO COMERCIAL CHEDRAUI, S.A.B. DE C.V. -1.43% 26.27 End-of-day quote.-1.73%
LA COMER, S.A.B. DE C.V. 0.21% 24.02 End-of-day quote.2.48%
LIVE CATTLE (LE) - CMG (ELECTRONIC)/C1 0.04% 126.225 End-of-day quote.1.34%
MERCADOLIBRE, INC. 0.71% 663.15 Delayed Quote.15.95%
ORGANIZACIÓN SORIANA, S. A. B. DE C. V. 0.20% 24.47 End-of-day quote.-4.01%
WAL-MART DE MÉXICO, S.A.B. DE C.V. -2.67% 56.61 End-of-day quote.7.41%
WALMART INC. 0.44% 116.1 Delayed Quote.-2.73%
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