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Expansion LatAm

How US-based D2C brands can break into Mexico market

It’s no secret that Latin America’s ecommerce sector is in the early stages of becoming a hypergrowth market. After being the second-fastest growing ecommerce market in 2020 (with 30.6% growth vs, 2019), the Latin American ecommerce market grew 37% year over year in 2021. With yearly growth estimated to be 30% until 2025 due to more buyers coming online and existing buyers shopping online more often, there is still an untapped opportunity for U.S. D2C brands to break into the market and acquire consumers in the early days of this booming market.

While expanding into the entire continent might seem like a complex task to accomplish from the start, the Mexican market stands out as the perfect entry point. Besides the market experiencing strong growth at 27% year over year in 2021 and being well positioned to continue this trend in the coming years, Mexican ecommerce businesses are seeing a lower cost of acquisition (CAC) in the region due to a cheaper cost-per-click (CPC). This, paired with the fact that fulfillment players like Cubbo are delivering 93% of orders same-day in Mexico City and 80% in less than 24 hours nationwide to all 128 million Mexican consumers, makes it a no-brainer to consider entering the market. Once in Mexico, it’s much easier to expand into other high-growth ecommerce markets in the region like Brazil and Colombia.

The Challenge

You’re now sold on getting your brand into the Mexican market and are now wondering what your team will have to do to make this happen. You’re asking the right question: this pain point is real. We’ve come across companies that after months of research, their first few containers still get stuck at the port for weeks, or even months, because something (as little as one line on a document) was overlooked. When some of our customers commit to expanding into Mexico, they spend months trying to figure out how to do it, finding freight forwarding partners and customs brokers, understanding the importer of record process, finding in-country transport, and talking to multiple lawyers/accountants to gain comfort in the process. There are several relationships that need to be managed and tons of logistics to solve.

The bottom line: new players entering the market will encounter a lot of friction. 

6 Steps to Complete to Successfully Import into Mexico

In an effort to bring some clarity to you and your team, here are six steps to complete in order to successfully import into Mexico, today. (You can tell where this is going – we definitely have some ideas for how it will look in the not-so-distant future.)

1. Hire a customs broker.

The right partner will help facilitate the process through their expertise in the process. Your customs broker will be responsible for filing the importation documents; the main one being the “Pedimento de importación.”

In addition, they will be responsible for reviewing accompanying documents: 

  • Proper classification of items using the Harmonized Tarrif Code System;
  • Commercial Invoice (in Spanish) – place, and date of issue, name and address of the final destination, detailed commercial description, name and address of the seller;
  • Verification of adherence to non-tariff restrictions and regulations;
  • Certificate of origin;
  • Identification information – serial number, part numbers, brand information, etc.;
  • Bill of lading
  • Documents demonstrating compliance with Mexican product safety and performance regulations;
  • Certificate of weight and volume;
  • Verification of bond granted.

2. Hire a local lawyer to create an entity in Mexico that is legally eligible to make an import.

  • Create a company.
  • Register to have a tax id.
  • Create a bank account for your company.
  • Register your company in the Official Register of Importers. This is a very important step.

3. Establish the entity that will be the Importer of Record -– the IOR is a person or company with business activity in Mexico who is liable and responsible for complying with customs regulations and for paying any duty or tax in the importation process.

  • Register to be the IOR yourself (takes some time).
  • Hire a company to handle this for you (more on this later!).

4. Find a freight forwarding partner to get your shipment across the border.

  • Your customs broker can typically recommend a solid partner.

5. Find a logistics partner to receive your shipment once inside of Mexico to deliver it to your fulfillment center.

6. Partner with a fulfillment provider that can offer your customers reliable, fast, and affordable in-country shipping.

  • Cubbo’s delivery time is 93% same-day in Mexico City, and 80% in less than 24 hours nationwide (these two metrics always increase our US brand’s monthly orders in Mexico).
  • Our total cost to serve (storage + handling + delivery) is $7.

As you can tell, the goal of expanding into Latin America doesn't come without its challenges. After helping many US brands through their expansion into Mexico, we have seen these challenges firsthand and are experts in the process.

How Cubbo Can Help

TLDR: This is how Cubbo can help your team solve the full stack:

  1. We can provide vetted intros to customs brokers in Mexico, freight forwarders, logistics partners, and local lawyers;
  2. We are eligible to be your importer of record (more on this below);
  3. We can be your in-country fulfillment partner.

While we are making a tremendous impact in fulfillment through our tech-powered platform, where customers have full visibility of the operation in real-time (without having to travel or needing a local team), we’re looking beyond that to help U.S. D2C brands expand their presence in Mexico. 

We’re excited to be launching a service to the public that will make expanding into Mexico as easy as a few conversations and forms to fill out: Cubbo is now representing partners as their importer of record through our Mexican entity. As described in step 3, this means we are responsible and liable for making sure the documents in step 1 are completed correctly to avoid any delays or fees.

In addition to being your fulfillment partner once in Mexico (and Colombia and Brazil), Cubbo will now make it just as easy for our partners to launch in Mexico with less friction and in a fraction of the time (months, not years). This will save your team months of research and will reduce the risk of any roadblocks while going through customs in Mexico.

To get started today, please request access by filling out this short form. To begin with, we’re limiting this offering and access to vetted intros to only 10 partners -- and are expecting these spots to fill fast!

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