How U.S. D2C Brands Can Enter the Mexican Market

In recent years, e-commerce has become a global phenomenon, allowing companies to expand their reach beyond national borders and access new markets.

Direct-to-consumer sales through e-commerce channels are valued at over $6.3 trillion in 2023, with an annual growth rate of 10.4%.

However, expanding internationally also presents unique challenges, including navigating complex regulations, customs, and taxes. For U.S. and global direct-to-consumer e-commerce brands looking to expand in Mexico, using an Importer of Record (IOR) and a Merchant of Record (MOR) can be a game changer, helping to launch the brand quickly and with lower shipping costs.

REQUIREMENTS FOR IMPORTING TO MEXICO

Importing and selling in Mexico is not without challenges. The country has strict regulations regarding the import of goods, including restrictions on certain products and specific permit and certification requirements.

This necessarily involves:

• Obtaining a tax identification number, known as Registro Federal de Contribuyentes (RFC).
• Registering your company with Mexico's National Customs Agency (ANAM).
• Creating a local entity in Mexico.
• Obtaining permits and certifications for cosmetic and food products through Mexican regulatory agencies such as COFEPRIS or specialized providers such as Freyr Solutions.

Failure to comply with these regulations can result in costly fines and penalties, including the seizure of imported goods through customs.

Mexico also has complex tax laws, including Value Added Tax (IVA) and customs duties, which vary depending on the type of product and its country of origin. Using an IOR and MOR can be an effective strategy for global direct-to-consumer brands looking to expand in Mexico.

What Are IOR and MOR?

An IOR is an external service provider that acts as the legally registered importer of your products.

Benefits of using an IOR:

• Foreign e-commerce brands can rely on the expertise of these service providers.
• They ensure compliance with local regulations and tax laws in Mexico, including obtaining permits, managing customs, and paying taxes.

On the other hand, MORs offer a similar service but focused on product sales. An MOR acts as the registered merchant in sales transactions in a foreign market.

This includes:

• Collecting payments.
• Processing refunds.
• Complying with local tax laws.

In Mexico, the MOR is responsible for collecting and remitting IVA and other taxes to the government.

Without these services, a brand would have to face permits, licenses, customs, and taxes on its own, which can delay a launch by 12 to 18 months and affect profitability.

3 Advantages of Working with an IOR and MOR for Your Business

Compliance with local regulations: IOR and MOR ensure your company complies with tax and regulatory laws, managing customs, permits, and certifications.

Time and cost savings: Delegating to these providers avoids long and costly processes, accelerating the launch and reducing costs.

Experience and knowledge: IORs and MORs have the expertise needed to guide your company, reducing risks and increasing the likelihood of a successful expansion.

Cubbo as an Expansion Partner

Cubbo, through its IOR and MOR services, which form the core of its International Expansion team, has helped global e-commerce brands overcome logistical and regulatory barriers to enter the Mexican market, allowing them to focus on what they do best: selling their products.

With Cubbo, the launch can be done in 30 to 60 days, depending on the type of product and regulatory requirements. In addition, thanks to its agreements with local carriers, brands can reduce shipping costs and improve the accessibility of their products to the end consumer.

In summary, using an IOR and MOR is an ideal strategy for D2C brands looking to grow in Mexico. Once inside the country, Cubbo's fulfillment services handle all order management within Mexico.

If you are a global D2C brand interested in expanding to Mexico, it is key to work with a reliable and experienced partner. Cubbo combines deep market knowledge, established relationships with carriers, and flexible solutions that help your brand grow and consolidate in Mexico over the long term.