With more Mexican consumers using the Internet and smartphone costs dropping, the time has come to bring the online shopping experience up to international standards. Retailers that succeed could see enormous sales. In this presentation, we summarize the key highlights of our paper, which (1) Debunk the myth that Mexico’s E-Commerce growth is limited due to poor logistics/internet infrastructure and low credit card penetration, and (2) Identify the real challenges for E-Commerce in Mexico and present some of the opportunities for retailers in Mexico.

1. 2016: The Tipping Point for Retail
eCommerce in Mexico
January, 2016
Industry report

2. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 2
Content
■This presentation summarizes the
report which A.T. Kearney recently
launched, which:
– Unveils 2016 as the tipping
point for Retail eCommerce in
Mexico
– Debunk the myth that Mexico’s
eCommerce growth is limited
due to poor logistics/internet
infrastructure and low credit card
penetration
– Identify the real challenges for
eCommerce in Mexico and
present the key opportunities
for retailers in Mexico
2016: Tipping point for Retail eCommerce in Mexico

3. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 3
B2C eCommerce in Mexico is expected to grow at a 26%
annual rate, both in retail and services
B2C eCommerce in Mexico, 2013 - 2019
(USD Billions)
1. Compound Annual Growth Rate
Source: A.T. Kearney, eMarketer 2015
6.5
8.5
11.6
14.5
17.7
21.0
26.3
3.0
4.6
5.9
7.5
9.4
11.5
14.5
27.1
2016F
22.0
2015F
17.5
2014
13.1
2013
9.5
+26%
2018F
32.5
2019F
40.8
2017F
Services & Other
Retail
+26%
+26%
% CAGR1
2016: Tipping point for Retail eCommerce in Mexico

4. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 4
Whatsoever, this B2C eCommerce growth will include a
combination of different purchase journeys
IllustrativeRetail purchase journeys, as of today
1. Call Center
Source: A.T. Kearney paper “A tipping point for Retail eCommerce in Mexico”, 2016
Value
Creation
Value
Capture
C
Store Store
StoreOnline & CC1
Online & CC1
Online & CC1
(Store as
secondary option)
Only Store
Research Off-line
Purchase Off-line
ROPO
Research Online
Purchase Off-line
Click to Collect
Research Online
Purchase Online
Store Online & CC1
Online & CC1 Online & CC1
Show rooming
Research Off-line
Purchase Online
Digital / CC only
Research Online
Purchase Online
Discover
Purchase
& Pay
Receive &
Activate
Explore &
Decide
A
B
D
E
Online &
Call Center
Store
2016: Tipping point for Retail eCommerce in Mexico

5. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 5
Last year, half of Mexican Retail consumers already included
iterations online in their purchase journeys
Internet users purchase behavior, 2015
(Most common purchase journey used1)
1. Numbers don’t add up to 100 as users might answer several categories
Source: The Consumer Barometer, 2015
C
Only Store
Research Off-line
Purchase Off-line
ROPO
Research Online
Purchase Off-line
Show rooming
Research Off-line
Purchase Online
Core Digital
Research Online
Purchase Online
A B DE
13%
9%
17%
14%
8%
7%
43%
36%
18%
19%
34%
21%
45%
43%
28%
24%
24%
35%
Japan
United
Kingdom
USA 40%
30%
25%
46%
Mexico 48%
South
Korea
Brazil
32%
2016: Tipping point for Retail eCommerce in Mexico

6. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 6
Online expenditure, by market
Online expenditure per Digital Buyer
(USD Thousands)
Digital Buyers
(% of Internet Users)
Mexico online expenditure is still low, when compared with
other international markets
82%
88%
United
Kingdom
88%
81%
Mexico
38%
Japan
31%
ArgentinaUnited
States
32%
73%
47%
76%
40%
Brazil
74% 75%
48%
South
Korea
20152014
$0.5
$0.8$0.8
$1.3
$1.6
$2.7
$3.1
$0.6
$0.9$0.9
$1.4
$1.7
$3.0
$3.4
ArgentinaBrazilMexicoSouth
Korea
United
States
JapanUnited
Kingdom
Source: AMIPCI, eMarketer
2016: Tipping point for Retail eCommerce in Mexico

7. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 7
Our study debunks the 3 most accepted myths that Mexico
eCommerce growth will be limited, unveiling a huge opportunity
• There are global online payment solutions present in
Mexico covering a wide range of alternative payment
solutions (such as cash and prepaid cards) in 14,000+
PoS2 along the urban and rural areas of the country
• Fixed broadband penetration is marginally lower than
Argentina (12.7%) and Brazil (12.8%) …
• … but widely compensated with the higher smartphone
penetration in Mexico (32%) than in Argentina (31%)
and Brazil (24%)
• Mexico’s Logistics Performance Index1 (3.1) is higher
than Brazil’s (2.9) and Argentina’s (3.0)
• Moreover, Argentina and Brazil are larger countries
with weaker delivery time promises (1.4x and 4.3x the
area of Mexico)
Most cited barriers for eCommerce in Mexico
Low access to payment
methods
“Mexican households have 0.8
credit cards on average, well below
Brazil (3.4) and Argentina (3.0)”
Weak internet access
“Fixed broadband has a low
penetration of just 11.5%” in Mexico”
Poor Logistic
infrastructure
“Logistics infrastructure is a barrier
for eCommerce retailers that need
to cover a large geographic area”
1. Logistics Performance Index (from World Bank, 2015) is based on scores on variables such as time to export documents, quality of port infrastructure, liner shipping
connectivity etc.
2. Point of Sale
Source: A.T. Kearney paper “A tipping point for Retail eCommerce in Mexico”, 2016
2016: Tipping point for Retail eCommerce in Mexico

8. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 8
1. Survey conducted (n= 1680) by Google Consumer Survey
2. Point of Sale
3. Open discussion. Not part of A.T. Kearney paper “A tipping point for Retail eCommerce in Mexico”, 2016
On the other hand, several key questions arise, on Corporate
Trust and Omnichannel strategies
Barriers for Online Purchase in Mexico, Nov 20151
11%
15%
22%
37%
47%
No good prices or discounts
Shipping is expensive or
not appropiate to my needs
Don’t feel comfortable
giving away credit card data
Can’t find what I’m looking
Don’t trust that
shipment will arrive
Open discussion
• Which pay on delivery methods might be more
efficient?
• How the delivery can be leveraged with current PoS2?
• Which alternative payment methods would be suitable
for first and subsequent iterations with clients? (cash
payment, coupons, prepaid cards, …)
• Which is the best combined assortment strategy on
the online and offline PoS2? (long tail vs high rotation)
• Which is the best combined pricing strategy on the
online and offline PoS2?
• Which is the best combined service level and post-
sales strategy on the online and offline PoS2?
Key questions3
2016: Tipping point for Retail eCommerce in Mexico
Corporate Brand & Trust
Omnichannel strategy

9. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 9
Today in Mexico, achieving global standards on Omnichannel
Customer Experience is a winning competitive advantage
A.T. Kearney score for online purchase, Mexico 2015 EoY1
1. Sample of low scoring features during the online purchasing process
2. A.T Kearney recommendation based on international best practices review
Source: A.T. Kearney paper “A tipping point for Retail eCommerce in Mexico”, 2016
61.9
33.0
23.8
50.0
57.1
66.7
57.0
42.9
42.9
14.3
14.3
52.4
42.9
42.9
38.1
57.1
Detailed Help and
recommended topics
Data required for registration
Store Pick up delivery option
Express delivery option
E-mail confirmation with
product description and deliver
Online chat availability
and answer promptness
Brand Assortment
Product pictures
Product assortment
Response time
Regular delivery time
Scheduled delivery option
Time for solution
(Reimbursement or change)
Easy to follow return process
Self tracking process
Detailed Return Policy
Minimum 85
points to become
globally
competitive2
Purchase Experience Delivery & RetentionWebsite Experience
2016: Tipping point for Retail eCommerce in Mexico

10. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 10
Therefore, based on the findings of our paper, we recommend
to tropicalize 3 key international Omnichannel strategies
1. A.T. Kearney proprietary methodology
Source: A.T. Kearney
Winning Omnichannel strategies for Mexican retailers
(A.T. Kearney selected global best practices analyzed)
Coherent
pricing &
assortment
strategy
Seamless
customer
experience
Alternative
payment
methods
• Adjusted online / store pricing and
assortment, consistent with (if relevant):
– Cross-migration strategy between channels
– Different price sensitivity of customers
– Different assortments (long tail & niche
products vs high rotation SKUs)
• Alternatives to the pure online payments
(e.g. credit card in the web):
– Cash payments in convenience stores
– Pay on delivery
– Pick up on store
• Excellence on integrated
user experience:
– Multi-device platform,
but mobile first
– Implementation of PCE1
(Pivotal customer
events) strategy
– Strong website
performance
2016: Tipping point for Retail eCommerce in Mexico

11. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 11
Leaders that have effectively integrated their channels have
realized three key benefits
Integrated Channel Engagement Benefits
1. Source: J.D. Power customer satisfaction ratings of select players – leaders achieve top quintile customer satisfaction; in addition, companies that implemented integrated multi-
channel distribution have realized top quintile improvement in customer satisfaction
2. 77% of consumers surveyed prefer bank offered P2P payments over PayPal (Source: Fiserv consumer survey)
3. increased channel migration to self service can reduce average over-the-counter costs by 68% (Source: Tower Group)
4. As cost of acquisition is significantly higher than cost of retention
Source: A.T. Kearney
• Top quintile improvement in customer
satisfaction1
• Up to 33% higher x-sales
• Multi-channel shoppers spend up to 4X
• Retention improvement of ~5% (which has a
multiplier impact on profitability)4
• Cost reductions on transactions of
up to ~70%
• Productivity improvements of up to 30%
Improved Consumer Engagement
• Consistent customer experience across
channels
• Improved customer satisfaction and loyalty
Higher Growth
• Higher share of wallet
• Higher retention and lifetime value
• New revenue sources2
Optimized Cost to Serve
• Optimized product to channel mapping
• Developed self direction capabilities3
• Smoother channel migrations
Demonstrated Results (Global Examples)
2016: Tipping point for Retail eCommerce in Mexico

12. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 12
From our point of view, Omnichannel requires a solid foundation
from strategy to organization, systems and supply chain
Source: A.T. Kearney
Omnichannel key strategic issues to be addressed
Our toolbox to succeed in Retail eCommerce in Mexico
• Defining digital value chain opportunities
• Reshaping business strategies with e-business
• Defining an Omni-Channel program objectives
• Defining the role of each channel
• Communicating a new message to the consumer
• Aligning the organization
• Defining products and services
• Establishing a unified pricing strategy
• Balancing service levels with cost and
customer lifetime value
• Keeping up with dramatic growth
• Developing an operating model
• Incenting the entire organization
Strategy
alignment
E-Business MarketingValue Proposition
alignment
PricingAssortment Service
Level
Organization Systems Supply Chain
Adapting
corporate
strategy
Execution
strategy
1 2 3
Online and offline channels can not be considered separately !!!

13. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 13Source: A.T. Kearney analysis
The 2015 Global Retail E-Commerce
Index™
A.T. Kearney 2015 Global Retail E-
Commerce Index ranks the top 30
countries in both developing and
developed markets for their online market
attractiveness.
Connected Consumers Are not
created equal: A Global
Perspective
This study looks at the
“connected consumers”
motivations, shopping behaviors,
and how they differ in developed
and developing countries.
Back to the Basics in
Omnichannel Retailing:
Delighting Your Customers
The Omnichannel Consumer
Preferences study is the
newest in our series of
breakthrough research in retail
innovation.
On Solid Ground: Brick-and-Mortar is
the Foundation of Omnichannel
Retailing
The report summarizes the findings of
the study, input from a variety of retailers
and property developers, and
A.T. Kearney retail sector analysis
Other A.T. Kearney studies
Retail & eCommerce (I of II)
Our Digital think tank and Omnichannel publications

14. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 14
E-Commerce - Next
Frontier in Global
Expansion
Online shopping is changing
how retailers develop their
global expansion strategies.
Our E-Commerce Index
reveals which emerging
markets hold most potential
for online growth.
Source: A.T. Kearney analysis
Beauty and the E-
Commerce Beast
The world of e-commerce
has long been the "beast"
that beauty retailers and
brands were trying to avoid.
But time has come to tame it
and stakes are high for those
that miss the opportunity
A Fresh Look at Online
Grocery
Online food retail again tops
the agendas of grocers as
more shoppers surf the Web
to buy fresh foods and
packaged products. The
leaders "deliver the goods"
using smart, customer-
friendly strategies.
China's E-Commerce
Market: The Logistics
Challenges
As China's growth continues,
conditions for e-commerce
are improving. But logistics
remains a major challenge
for e-commerce players. Will
logistics bring down the e-
commerce industry
Engaging Multichannel
Consumers
As more people interact with
more companies in more
channels—from websites and
mobile apps to in-store online
kiosks—chief information
officers (CIOs) are delivering
value from cross-channel
integration
Digital Marketing: Don't
Miss the Forest for the
Trees
Connecting with today's
customers requires a 360-
degree perspective. They
expect real and relevant
interactions, so online and
offline cannot be one-or-the-
other propositions
Other A.T. Kearney studies
Retail & eCommerce (II of II)
Our Digital think tank and Omnichannel publications

15. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 15
Other A.T. Kearney studies
Digital Business
Our Digital think tank and Omnichannel publications

16. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 16
Thank you for your interest!
Please refer me further questions to:
Jaume Sues
Principal
Jaume.Sues@ATKearney.com
A.T. Kearney, S.A. de C.V.
Av. Santa Fe 481, Piso 18
Santa Fe
05349, México, D.F.
+52 55 5089 9308 Direct

17. A.T. Kearney | 2016: The Tipping Point for Retail eCommerce in Mexico 17
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