Walmart, Soriana Explain Alternative Payment Strategies for Capturing the Growing E-commerce Grocery Market in Mexico
What: Grocery retailers Walmart and Soriana reveal how they’re capturing the e-commerce home delivery grocery market in Mexico with alternative digital payment strategies.
Why it matters: Fear of fraud stops many Mexico consumers from making online purchases with a credit card. Walmart and Soriana are on it with cash on delivery, branded digital cash cards, mobile phone loyalty programs, and PayPal options.
The race is on for the e-commerce grocery market in Mexico. Grocery and general merchandise retailer Walmart has taken the lead in Mexico, but its competitors, including Soriana, are racing to build their online-delivery businesses.
How customers pay for their online purchases could make all the difference.
High credit card commissions and fear of fraud pose a significant barrier to online sales in Mexico, where digital purchases make up only 3 percent of all consumer goods sales nationwide—way below the average seen in other countries, according to branding expert Vilma Vale-Brennan, deputy general manager of Vale Network in Mexico.
The new President of Mexico, Andres Manuel Lopez Obrador, has promised to get banks to lower credit card commissions, but grocery retailers like Walmart don’t have time to lose.
Walmart launches digital payment app
Last year, Walmart launched its own digital application that allows customers to pay for goods at stores with the Walmart digital application “Cashi.”
After downloading the app to their mobile phones, customers can recharge it with cash at any Walmart-owned store. It’s a fast and easy way to convert cash into a secure digital payment option that can be used for purchases at Walmart, Superama, Sam’s Club, and Bodega Aurrera stores.
Cashi can be used to pay electric bills and services including Netflix, Spotify, and Uber.
The idea here is to make purchasing with Walmart easier, and to give people more options.
But perhaps more importantly, Walmart tells Portada it expects to extend the Cashi digital payment system later this year to allow its online customers to use Cashi for online grocery purchases, according to Gabriela Buenrostro, assistant director of corporate communications. “The idea here is to make purchasing with Walmart easier, and to give people more options,” she said.
Walmart outpaces the online market with 4.5 million e-commerce shoppers in Mexico, followed by grocers Soriana at 1.1 million, according to a study by the American media measurement and analytics company Comscore as reported by Portada.
Cash, PayPal options offered
Walmart offers online customers the option to use PayPal, and Soriana added the PayPal payment option to its online shopping site this year.
Soriana also allows its online customers to pay cash to the home delivery person, or use their credit card on the delivery person’s portable card reader, Director of Electronic Commerce Rafael Castelltort told Portada.
Most of Soriana’s online grocery customers shop online using Soriana’s branded mobile application on their cell phones. A Soriana loyalty card program has more than 9,000 users, and to build loyalty even more, Soriana launched its own mobile phone service “Soriana Movil” in 2017, which earns users loyalty points that can be exchanged for free products, Castelltort said.
The trends are very clear. Mexicans prefer to use a mobile phone when visiting grocery stores’ online sites.
Soriana’s decision to launch its own mobile phone service in Mexico might appear tangential to an effort to build online purchases, it could be spot-on in terms of getting more online shoppers.
“The trends are very clear,” comScore’s Alejandra Ibarra, manager of comScore’s Latin America Services, told Portada. “Mexicans prefer to use a mobile phone when visiting grocery stores’ online sites.”
And as time goes by, mobile applications are becoming more and more important for grocery ecommerce market leaders like Soriana and Walmart.
Just last year, Walmart announced its acquisition of the online marketplace Cornershop. Users download the Cornershop application to make online purchases using their mobile phones at supermarkets, specialty food stores and pharmacies in Mexico and Chile, according to Forbes.
“The Cornershop acquisition by Walmart shows the focus that applications have for the company and the performance it must deliver to maintain its leadership,” Ibarra told Portada.