Mexican Retailers Struggle to Grow Online as Shein Hits Market
MEXICO CITY — With nearly 50 million people still living in poverty, Mexico has a vast number of lower- and middle-class consumers. That statistic has not been lost on Shein, the inexpensive Chinese online portal that is now attracting Mexicans with fashion selling for as little as 99 pesos, or $6.
The Chinese platform, which has also taken many other global markets by storm, has built a significant business in Mexico by targeting its large numbers of street sellers who make a living by trading merchandise in tianguis, or flea markets.
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“Shein is doing multilevel [marketing],” said top retail analyst Jorge Quiroga, who runs consultancy Retail Lab. “You can become partner and then have better prices to resell. Shein now has more than 1 million street sellers who also sell on WhatsApp and deliver their merchandise in popular spots such as subway stations.”
Shein’s arrival has given Mexico’s established retailers a run for their money, knocking El Puerto de Liverpool, once the fifth-biggest online clothing retailer, down to number six.
Indeed, the arrival of the Chinese giant — which has launched discount campaigns targeting Mexico’s lucrative plus-size market and deployed ads that involved Mexican designers for the country’s big Day of the Dead celebration — has upended the market, according to Quiroga.
“They have really hurt Liverpool,” which had been dominating online sales for several years amid big investments to improve customer service and hasten deliveries. With more than 120 stores, Liverpool is bolstering online promotions and providing easier credit through its store card as well as launching new omnichannel strategies to counter Shein. “But they are not as dynamic or fast,” Quiroga noted.
Meanwhile, Coppel, which specifically targets Mexico’s lower-income consumers, is also responding to Shein aggressively, mainly by introducing new financing options for those consumers who do not have a banking account. Wal-Mart de Mexico y Centroamerica, meanwhile, is deepening discounts through its Cashi shopping app.
Perhaps the only enterprise that can really tackle Shein is Cuidado Con El Perro (or Beware of the Dog), the country’s fastest growing fashion chain that also targets budget-conscious consumers, specifically Millennials and Gen Z shoppers.
Cuidadoconelperro.com has a wide selection of unisex merchandise. One of its latest capsule collections was inspired by Pokemon video game characters and offered jogging suits and T-shirts for $10 to $20. The brand’s merchandise has become so popular that street sellers have also began reselling it in Mexico’s tianguis, taking on Shein.
With more than 200 stores, Ciudado Con El Perro has successfully targeted the U.S. market (where it ships online) and Guatemala. Last December it acquired C&A’s ailing Mexican subsidiary for an undisclosed sum.
“Cuidado Con El Perro is basically telling Mexico’s apparel market that ‘I am going to finish with you.’ It’s a savage dog. When you go to malls, their stores are always full, much more than others,” said industry expert Miguel Angel Andreu.
Asked if anything could dent Shein’s rapid growth, he noted the firm has recently suffered from fraud scandals allegedly related to its payments system.
“Some people don’t trust Shein or Temu [the other fast-growing Chinese e-commerce player] because there are reports that they clone people’s cards,” Andreu, who runs apparel and retail consultancy Cedetex, said.
Some Mexicans have also reportedly expressed puzzlement and distrust over Shein’s so-called Lucky Flip Game that gives free merchandise credits or vouchers.
“People are confused about this game,” Andreu claimed. “Psychologically, it makes them unwilling to trust.”
Shein apart, Mexican consumers have become increasingly wary of online shopping amid growing credit card fraud and/or identity theft, a problem Quiroga blamed for stalling the market’s growth, which he expects will be flat at around 11 percent this year after gaining much more during the pandemic.
Further pressuring e-tailers, most Mexicans still prefer to buy apparel in brick-and-mortar stores.
“Many people say ‘I buy online and things don’t get to me,'” as some brands are still unable to deliver goods nationwide. And even if they want to buy, they may not have the funds to do so. “Forty million people are still unbanked in this country,” Quiroga noted.
On the logistics front, however, things have improved.
“Retailers are investing lots of money to improve the shopping journey with greater delivery responsiveness,” said a bank retail analyst, requesting anonymity. “In the past, people struggled to find a broad selection of items, sizes and styles. Now they can do so with just three to four clicks.”
Moreover, “brands can now deliver within 24 hours no matter what,” the analyst added. “Their website quality is also much better, regardless of whether you access via a PC or smartphone, and there is a certain level of professionalism that wasn’t there before the pandemic.”
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