One of the first Mexican retailers to begin online sales is quickly falling behind with the arrival of new players, such as Amazon and it may be too late to catch up, according to Credit Suisse.
Liverpool, which made its first electronic commerce transaction in 1997, is spending only a fraction of the amount that Amazon, MercadoLibre and Wal-Mart de Mexico are injecting to strengthen their internet operations in Mexico.
In turn, their shares have fallen to a five-year low amid a focus on opening new physical stores at a record pace. Liverpool, which has its roots in a clothing store in Mexico City established in 1847, offers fewer products online than its peers and many of its items can only be purchased at branches.
Shipping is free , but it can take more than five days when there is a high demand, compared to just one day for some Amazon orders.
Perhaps the most important thing is that it does not accept cash payments for online purchases, which leaves out a large part of Mexicans, where less than half of adults have credit cards.
“Liverpool’s business model is largely threatened,” Credit Suisse analysts led by Antonio Gonzalez wrote in a note this week.
“Investors should no longer think of e-commerce in Mexico as a phenomenon that will affect stock prices in the distant future, the future of e-commerce is now.”
Although online purchases only account for about 3 percent of retail sales in Mexico, HSBC analysts predict they will grow substantially after Amazon introduced its Prime membership club in Mexico earlier this year.
A potential change in the North American Free Trade Agreement (NAFTA), which would allow Mexican consumers to buy more online from the United States and Canada without having to pay tariffs, could also generate more cross-border e-commerce.
Liverpool shares have fallen 17 percent this year, while Walmart Mexico shares have advanced 18 percent. Mexico’s benchmark stock index has risen 3.7 percent.
Alejandra Tovar, Liverpool spokeswoman, did not respond to the figure comments even though the company plans to open 11 more stores this year, expanding the area by 6 percent, according to its latest earnings report.
While giants such as MercadoLibre have 9.5 percent of the online shopping market, others such as Walmart Mexico have 6 percent. Liverpool, the most established of the Mexican companies, has captured only 1.7 percent of the online shopping market.