How to Sell on Amazon Mexico: Getting Started

Saying your company “went south” may sound bad, but with Amazon’s recent investment in Mexico and Amazon.com.mx, going south might be a company’s most profitable course of action.

We've written about expanding into European markets, but you don’t need to cross an ocean to expand internationally. With the help of Amazon, it’s never been easier to open up shop with our neighbors to the south. But what does opening an Amazon account in Mexico entail? And is it worth it?

Today, I'll discuss how to expand into Mexico using Amazon services, and whether or not it’s right for your company. But first, let’s explore your two main options: shipping to Mexico from the U.S. versus shipping within Mexico.

Shipping From the US vs. Shipping from Mexico

Before setting up an account for Amazon Mexico, first determine whether or not you need to. You can always ship products to Mexico from the U.S. without renting storage space in Mexico or registering a new Amazon account.

If you already have a successful business on Amazon in the U.S., all you have to do is enable international shipping on your listings. Amazon.com receives a fair amount of shoppers from Mexico, so it could add a small bump in business if you’re prepared to ship internationally.

Amazon even helps you acquire Mexican shipping labels through Buy Shipping Services. It’s worth noting that Amazon recommends using FedEx, DHL, or UPS, not the USPS. For shipments to Mexico, the USPS uses the Correos de México/Servicio Postal Mexicano (SEPOMEX), which does not meet Amazon’s international shipping time requirements.

However, shipping to Mexico from an American account is only a half-measure. The number of Mexican shoppers is bigger on Amazon.com.mx than on Amazon.com, so if you’re targeting south-of-the-border markets aggressively, you’ll get more traction with an account on Amazon Mexico. There are a few reasons for this:

• Home country always wins. Amazon shoppers always prefer the marketplace of their own country, and Mexico is no exception. Shipping to Mexico from a U.S. account means most Amazon shoppers in Mexico won’t even see your product listings in the first place.
• Language barriers. In eCommerce, it’s vital to establish trust before a purchase. If you’re not using the shopper’s first language, they may be confused about your policies, how a product works, specifications, etc., and use the barrier as an excuse not to buy.
• Higher shipping fees & longer delivery. Shipping internationally incurs extra fees (either for you or the customer), not to mention it takes longer to deliver. For these reasons, many Mexican shoppers prefer to buy from Amazon.com.mx and avoid these hassles altogether.
• Shipment hazards. Some sellers report shipments getting lost or never arriving. There are also stories of scammers taking advantage of the border-crossing confusion.
• Shipping confirmations. Another drawback is that international shipments require a signature on delivery, adding another opportunity for something to go wrong.
• Returns. Returns from Mexican shipments are twice as risky because you have to go through all the obstacles of international shipping a second time, and perhaps a third, if you’re sending a replacement.

What this boils down to is that there are two different options for selling to Mexico, depending on your commitment. If you’re just looking for a minor expansion, perhaps a handful of extra orders, you don’t need to open an Amazon.com.mx account and can handle the Mexican gatekeepers when they arise. But if you’re strategically targeting Mexican markets, you should go all out and move some of your inventory to Mexico.

As with all shipping issues, you have to choose between Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). Read this guide on the pros and cons of each to see which is best for your business.

How to Open an Amazon Mexico Seller Account

To sell on Amazon Mexico, you need what’s called a North American Unified Account, which permits selling to both Mexico and Canada.

You may already have a Unified Account and not know it, since some newer accounts are registered automatically. The quickest way to check is to look at the Language Switcher in Seller Central; if there are options for other countries, you’re already good to go. If not, don’t worry, as applying is relatively easy.

For Americans, this requires approval from Amazon Seller Support. If your current seller account is healthy, this should not be a problem and can be handled in a short time. Simply request support here.

For individual sellers in Canada, the process is the same. Professional sellers in Canada automatically have access to Amazon.com.mx.

One note about brand registry: if you were approved for a North American Unified Account before you approved your brand in the brand registry, then your brands are automatically approved for Canada and Mexico. If not, you’ll have to resubmit for each new country you want approval in.

Last, you need to manage your inventory properly. This entails:

• Global SKUs. You’ll need to update marketplace-specific SKUs to global standards. In Seller Central, select the option for “Existing Offer” when you create a marketplace offer to give the product a global SKU.
• Enable FBM listings. If you’re choosing the FBM route, go to the Build International Listing tool and choose your source marketplace.
• Verify pricing and shipping costs. Amazon automatically adjusts your prices and shipping based on the country — including direct currency conversion. Modify them as needed, such as compensating for international shipping, return policies, or taxes.

FBM runs into shipping complications and extra fees, so FBA might be more effective if you anticipate a lot of sales.

How to Use FBA in Mexico

For many sellers, FBA Mexico is the preferable alternative to international shipping because it simplifies shipping and cuts down on both fees and delivery time. Also, returns can be sent to the Amazon warehouses in Mexico. From there, you can choose what to do with them, whether to return them to the States or leave them with your other Mexican inventory.

However, it is important to note that Amazon and Amazon fulfillment centers will not serve as the importer of record (IOR) for any FBA shipment to Mexico. As a nonresident, you will need to list the end customer as the IOR (where appropriate), engage a third party that is authorized to import into Mexico (this may require some legwork), or incorporate and register a local Mexican entity to act as the importer. In any of these cases, the importer must have an RFC (Registro Federal de Contribuyentes) ID. Since every business is different, sellers are advised to connect with a customs broker and/or legal adviser to find the most appropriate solution.

If you tried selling in Mexico a few years ago to lackluster results, things have changed and will continue to change in the future.

2020 Update: Tax reform legislation effective June 1, 2020, requires Amazon to remit Mexico Income Tax (ISR) on eligible seller accounts and orders. If your business stores inventory in Mexico and/or products you sell are shipped from and to an address in Mexico, your account may be subject to Mexico ISR.

Research and Test

As I mentioned in the previous article about selling to Europe, expanding into foreign markets isn’t always the best move; it all depends on how your products fit into the country’s market. Selling in Mexico may be a huge improvement for some companies, but for others it may flop (or even cost you money, depending on how you handle international shipping).

First and foremost, you want to conduct a little market research into whether or not your products will sell in Mexico. Since circumstances can vary a lot, Amazon's support page recommends that you consult with a legal adviser, customs broker, or both before getting started. After that, you may even want to do a test run with a few products before sending a large chunk of your inventory across the border. Good luck!

If all goes well and you plan to create a company in Mexico, make sure to do your research, particularly when it comes to taxes such as income tax and VAT.