Episode Number:

22

April 28, 2025

About their Company: Capybaras

Capybaras is not your typical agency. Born from the direct experiences of Freddie and Adam, they specialize in providing a turnkey solution for eight-figure (and beyond) global brands looking to launch in Mexico, primarily on Amazon and soon expanding to Mercado Libre. They understand the intricacies of Latin American legislation, taxes, and the unique market dynamics, offering a streamlined approach to what can often seem like a complex endeavor. Their goal is simple: to help brands enter the Latin American market without the usual stress and hassle.

Key Insights: Unlocking the Mexican E-commerce Opportunity

Our conversation was packed with valuable insights for e-commerce sellers considering expansion into Mexico. Here are some of the key takeaways:

  • Early Mover Advantage: Remember the early days of Amazon in the US, with low cost-per-clicks and less competition? That’s the current landscape in Mexico. PPC costs can be one-fifth to one-tenth of what you’re seeing in the US, presenting a significant opportunity for efficient growth.
  • Diversification is Key: Top sellers are diversifying across multiple marketplaces to insulate their businesses. Mexico offers a powerful avenue for this, especially considering the limitations of North American Remote Fulfillment (NARF) for certain product categories like supplements and toys.
  • FBA Gives You a Head Start: While some sellers might dabble with Fulfillment by Merchant (FBM) in Mexico, leveraging Amazon FBA provides a significant competitive edge, allowing for faster shipping and Prime eligibility. Amazon is heavily investing in its Mexican infrastructure, with 13 fulfillment centers and billions of dollars earmarked for further growth.
  • The Buyer Base is Massive and Growing: Forget outdated notions of Amazon’s limited presence. Mexico boasts a staggering 64 million e-commerce shoppers monthly – more than the entire population of Canada! The pandemic accelerated online adoption, and this trend is here to stay.
  • Amazon vs. Mercado Libre: A Shifting Landscape: While Mercado Libre has historically held a larger market share in Latin America, Mexico is a unique case where Amazon is a strong contender, currently estimated at a 40% market share compared to Mercado Libre’s 60%. Importantly, Amazon Mexico experienced significant growth (around 50% in 2020) and continues to expand rapidly.
  • Remote Fulfillment Limitations: While Amazon’s remote fulfillment allows for selling in Mexico without a physical presence, it often results in lower visibility on the first page, longer shipping times, and additional fees, significantly impacting sales compared to having local FBA inventory. Brands see an average of a 5x increase in sales when switching to physical FBA in Mexico.
  • “Mexifying” Your Listings is Crucial: Just like “Japanifying” listings for the Japanese market, adapting your product listings to resonate with the Mexican audience is essential. This goes beyond simple translation and includes culturally relevant image editing and branding nuances. Surprisingly, many current listings in Mexico don’t even have Spanish translations on the images, highlighting a significant opportunity for improvement.
  • Similar Product Demand: What sells well in the US generally sees similar demand in Mexico. US products are often viewed as aspirational. However, be mindful of potential trade regulations and the need for specific import permissions for categories like supplements and consumables.
  • Expect Significant Growth: While currently smaller than the Canadian market for most US sellers (typically 5-8% of US sales), Mexico is the fastest-growing Amazon marketplace, with year-over-year growth of 20-25% since 2020. This presents a prime opportunity to ride a significant growth wave.
  • Global Reviews are a Bonus: Selling successfully in Mexico contributes to your global review and rating count, benefiting your presence in the US and Canada, especially with the integration of Brazil into the North American Seller Central.
  • Lower Competition and Easier Market Entry: Compared to the saturated US market, Mexico offers less competition and a more straightforward entry, without the immediate need for complex multi-channel traffic strategies.
  • Emerging Opportunities with TikTok Shop Mexico: The recent launch of TikTok Shop in Mexico adds another exciting avenue for brands to reach consumers, leveraging video content with Spanish subtitles and audio.
  • Strategic Logistics and Partnerships: Getting started involves setting up a local entity (RFC), obtaining import permissions, and establishing logistics. Capybaras partners with certified Amazon accounting and law firms to streamline the entity setup and monthly tax filings, often without the need for you to even set foot in Mexico. They also assist with logistics, labeling, and culturally relevant listing optimization.
  • Beyond Amazon: The Mercado Libre Opportunity: Once your products are in Mexico, expanding to Mercado Libre is a natural next step, potentially adding another 6-8% in sales with similar FBA-like fulfillment options.
  • Cultural Nuances in Customer Behavior: While Amazon shoppers in Mexico tend to be more transactional, Mercado Libre users often ask more questions before purchasing but have lower return rates, reflecting a cultural difference rooted in past challenges with returns.
  • Future Potential: Integrated Logistics: While currently requiring separate warehousing for different platforms like Amazon, Mercado Libre, and TikTok Shop, the increasing interconnectedness of e-commerce platforms suggests a potential future with more integrated logistics solutions, simplifying multi-channel management.

The Services and Software Discussed

Throughout the conversation, the primary service discussed was the comprehensive, turnkey solution offered by Capybaras (capybaras.agency). Their services include:

  • Market analysis and opportunity assessment for Mexico.
  • Introduction to vetted Amazon partner accounting and law firms for entity setup and tax compliance.
  • Assistance with import logistics and labeling.
  • Full Amazon account setup and management, including Spanish translations, optimized listings, and PPC management.
  • Guidance on culturally relevant rebranding and image editing.
  • Facilitating expansion to Mercado Libre.
  • Potential connections to B2B opportunities with major Mexican retailers.

While specific software wasn’t the focus, the importance of understanding local market data, competitor analysis, and effective PPC management within the Amazon Mexico platform was highlighted.

Conclusion: Is Mexico the Missing Piece of Your Growth Strategy?

The message from Freddie and Adam is clear: Mexico and the broader Latin American market represent a significant and rapidly growing opportunity for e-commerce brands. With lower competition, a burgeoning online consumer base, and the potential for substantial growth, now is the time to consider expanding your horizons. While navigating a new market requires expertise, partners like Capybaras can provide the guidance and support needed to make a successful entry. Don’t leave this untapped potential on the table!

How to Contact the Guests

Ready to explore the possibilities in Mexico? You can connect with Freddie and Adam through the following channels:

Don’t hesitate to reach out to them for a free market audit and to see if your brand is a good fit for the exciting Mexican e-commerce landscape.