Discover the challenges and opportunities that have arisen for Mexican businesses during the Covid-19 pandemic.
During the confinement implemented to decrease the Covid-19 contagion, the outlook for Mexican businesses was somewhat gray and uncertain. However, we soon realized that there would also be advantages and new opportunities for growth that in a normal situation would not have arisen.
No matter the type or size of business, from corner stores to large supermarkets, gyms, hotels, bars, clothing stores, electronics stores, banks and so on; the pandemic has transformed them all.
Here are some of the changes that Mexican businesses have had to face in order to survive and grow in this crisis.
Imperative need to rethink the business model
In the face of the crisis, social distancing and the new normality, all Mexican businesses that want to survive will find themselves in the imperative need to rethink their business models, that is, they must reimagine and transform the way they generate their profits.
This change is especially necessary among those offering services in crowded and closed places such as restaurants, movie theaters, theaters, gyms and hotels, since they are the ones who will be affected the longest.
Entrepreneurs have to think first about how to recover their sources of income, and then think about what is the essence of the service they offer and how they can transform it to stay in the market.
For example, for many inns and restaurants the solution was to sign up for home delivery platforms such as Uber Eats, Rappi or Sin Delantal; for their part, theater producers opted to offer online shows, while some movie theaters offered drive-in shows.
The rise of online businesses
The Mexican Association of Online Sales (AMVO) affirms that 5 out of 10 companies with online sales are doubling their growth, so far as the contingency is concerned and 2 out of 10 register a 300% increase in sales volume.
Indeed, the crisis caused by the Covid-19 accelerated Mexico’s transition to eCommerce. For businesses that already offered their services online, the change meant significant growth and a strengthening of this form of commerce.
However, the real challenge is for Mexican companies that did not have an Internet presence or did not offer their services at a distance, because they need to develop new strategies that will help them in the digital transition. This means an important investment in record time, changing their marketing strategy and the way they reach their customers.
Challenges of eCommerce
Despite the advantages of being online, not everything is hunky-dory, since the acceleration of trade through the Internet involves certain challenges, which if not overcome can mark a significant decline in business.
Here we list some of the challenges that must be overcome:
Payment methods are an important part of commercial exchange. There is no turning back no, businesses must guarantee the security of buyers to generate trust and remove prejudice about it; fortunately, there are already several tools that people trust, such as Mercado Pago and PayPal.
For their part, the banks realized this need and rushed to improve their applications and offer special digital cards for online shopping, so that account holders would literally have all their bank services in their hands. This generates greater trust to make transactions for both businesses and customers.
Delivery is an important part of the logistics of providing online services. Delivering on time wins the customer’s trust, no matter if the product is cheaper than the competition or the shopping experience is simple, if the product does not arrive on the agreed days, the customer will probably not buy it again. Many businesses have chosen to implement their own messaging service or upload their products to platforms such as Rappi.
Amazon and MercadoLibre are still excellent platforms if you are a craftsman or you make the products you sell, because they help you in this part of the logistics and show your products to more customers.
Automation in different steps of the production chains will be necessary for companies that cannot afford to stop their production by sending their employees to a quarantine. For several years we have seen how algorithms, drones and robots can replace labor and surely after this crisis many companies will choose to use them in the face of the possibility of new waves of outbreaks that force new confinements.
Uncertainty in the future is one of the most important problems in transforming a conventional business into an eCommerce because the current boom in this form of trading does not guarantee that it will continue in the future. The process can be very costly and owners may end up giving up if they do not see a clear future for online commerce.
The new normal, communication and home office
An important part of all businesses is communication between employees and those involved in the business chain. Whether the business is online or offline, employees need to communicate with each other to get the job done.
The confinement and obligation to work from home makes this essential part of business a little more difficult, even today, that social distancing measures have been relaxed, part of the new normality is still remote work.
Fortunately, before the confinement, there were already several platforms on the market that allowed for virtual meetings and video conferences, such as Zoom, Meet and the classic Skype, and some even offered their paid plans for free.
However, this change brought new challenges for employees, especially for those less familiar with these applications, and for those in charge of the technology area of each company, since they had to implement the necessary tools to achieve remote communication.
Without a doubt, in this new normality it will be necessary for many businesses to maintain a hybrid work scheme, that is to say, work in the office and at home, since it has been proven that it can represent a significant reduction in expenses.
However, it must be considered that these work models can affect the work environment, since it is more difficult for employees to develop a bond with the company and cohesion among their peers.
Of course, the work areas, that is to say the physical spaces, will also be affected, since it will be necessary to maintain a safe distance between workers, or at least put physical barriers between them, so several companies will have the need to remodel the work spaces.
Hygiene measures are an expense that businesses have to consider, either for their facilities and employees; or for their customers. Different local governments in Mexico are allowing the reopening of offices and businesses only if they meet strict safety measures, so it will be necessary to invest in periodic sanitization of the facilities, alcohol gel, thermometers at strategic points; even, if the budget allows it, Covid-19 tests for employees, which will guarantee a virus-free establishment.
Small conventional businesses
Despite the rapid transformation of several businesses and the technological facilities to do so, in Mexico there are still small businesses, especially local ones, which for different reasons cannot make the transition so necessary to survive this crisis. We are referring to the famous corner stores, fondas, taquerÃas, and many other businesses that are part of Mexico’s commercial diversity.
Luckily, thanks to social networks, small businesses have advertised and promoted home delivery by hiring couriers. Even consumers themselves promote campaigns in favor of local consumption, for example on Facebook there are several groups that advertise the neighborhood businesses.
This type of solution gives hope to these small businesses to survive the pandemic, a good example is the Click Abasto application where the tenants of the Central de Abastos offer their products and deliver them to customers’ homes.
Although the new coronavirus has put Mexican businesses in a tough position, the technological advance has allowed them to survive this new challenge. Without a doubt, the key to success is to transform, to reform the business models and above all to understand that the consumption habits of their customers have changed.
Tell us in our social networks if you have bought more online during the quarantine, or if you have a business, what aspects of it you have changed?
