Sourcing and Selling in Mexico ⎜ Algo Más ⎜ EP 137

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This is a podcast episode titled, Sourcing and Selling in Mexico ⎜ Algo Más ⎜ EP 137. The summary for this episode is: <p>Ryan Cramer of Crossover Commerce talks with Patricio Tellez of Algo Más about sourcing and selling in Mexico.</p><p>---</p><p>Crossover Commerce is Presented by PingPong Payments. PingPong transfers more than 150 million dollars a day for eCommerce sellers just like you. Helping over 1 million customers now, PingPong has processed over 90 BILLION dollars in cross-border payments. Save with a PingPong account <a href="https://usa.pingpongx.com/us/index?inviteCode=ccpodcast" rel="noopener noreferrer" target="_blank">today</a>! </p><p>---</p><p><strong>Stay connected with Crossover Commerce and PingPong Payments:</strong></p><p>✅ Crossover Commerce @ <a href="https://www.facebook.com/CrossoverCommerce" rel="noopener noreferrer" target="_blank">https://www.facebook.com/CrossoverCommerce</a></p><p>✅ YouTube @ <a href="https://www.youtube.com/c/PingPongPayments" rel="noopener noreferrer" target="_blank">https://www.youtube.com/c/PingPongPayments</a></p><p>✅ LinkedIn @ <a href="https://www.linkedin.com/company/pingpongglobal/" rel="noopener noreferrer" target="_blank">https://www.linkedin.com/company/pingpongglobal/</a></p>

Ryan Cramer: What's up everyone? Welcome to my corner of the internet. I'm your host, Ryan Cramer, and this is Crossover Commerce, presented by PingPong Payments, the leading global payments provider helping sellers keep more of their hard- earned money. Hey everyone, welcome back to another week of Crossover Commerce. My name is Ryan Cramer, and this is my corner of the internet as my amazing introduction said. We talk about the best and brightest minds in the Amazon and e- commerce space and we want to make sure that you, the listener, who are joining us for the first time or maybe for 137th episode, which is where we're at already. If you have questions or any thoughts on our topic matter, we want to make sure you get those answered today so of course this is... If you're watching this live or listening to this live, definitely give us a shout and let us know what questions you might have about our topic, which today will be about sourcing and selling in Mexico. Super fascinating topic because a lot of people are looking at the traditional model of selling on Amazon, but it might not be cost- effective, right? We might be looking at container costs going up four if not six times. We're talking about just time your goods are sitting on the water and they can't get into port. Well, that might not be happening in other countries or coming from other countries. For example, Mexico, which we'll be talking about today. We talked a little bit about that a couple episodes ago, but we're going to be diving into more about that with sellers who are experienced in selling from Mexico and selling in Mexico, but also just working with suppliers and manufacturers in Mexico. Our guest today is actually Patricio Tellez of Algo Mas. Patricio is actually an Amazon seller, investor and co- founder with them. He has been selling since 2014, so he's been around the block for a long time in the sense of selling on e- commerce, but selling specifically in multi- channels like in Mexico and has launched multi- million dollar e- commerce businesses. And today his expertise actually helps other sellers expand internationally, too, like in Mexico, which we'll be diving into today. So of course, want to go ahead and not dabble on any longer. Want to welcome to Crossover Commerce, Patricio, of Algo Mas. Patricio, welcome and thanks for coming to the show.

Patricio Tellez: Hey, Ryan. Thanks for inviting me.

Ryan Cramer: Yeah, no problem. So you've been around. You work with Algo Mas, which I almost want to say the company itself works somewhat under the radar but works in all these different venues, both in retail and online. What's kind of that story, if you will? Like who is Patricio if people are listening to this and watching this and they don't know who you are or where you come from? You're in Ohio, but you talk specifically about the international marketplaces.

Patricio Tellez: Yeah.

Ryan Cramer: So what's that story like of you and the business?

Patricio Tellez: So yeah, like you said, I'm actually originally from Mexico, so I grew up in Cancun by the beach. So everybody's like, when I tell them that I'm in Cleveland, you can ask why. How did I end up here? But yeah, I've been living in the U. S. for 10 years now and came here for a completely different reason, for a different business, and ended up selling stuff on the internet and found Amazon, right? Like so many other people, I got started with... I got started on it just as a side business trying to see what it was all about and ended up growing really fast and becoming our main thing. So we, me, well and with my wife, we've been doing this for a good while now and really getting started and growing our initial business got us into other opportunities in the Amazon space. We got started, like many other people, with arbitrage and then jumped to wholesale and then launched our own brands, and then we started helping with... Being from Mexico, my whole family's in Mexico, and companies and people started getting in touch with us wanting us to help them launch their products or get started on Amazon. So that's how we started our consulting business first for companies, and then we figured well, this thing that we found out really by accident, but has really changed our lives, is something that can help a lot of people. So we focused on our market, which is the Latino market, and helping companies launch in the U.S. from Mexico. So that's how we got started and it's really taken us really so far into places that we never thought of. So it's been quite right.

Ryan Cramer: Well, that's fascinating because a lot of people think about sellers in the United States expanding internationally, but you're taking it from a different perspective of a different country, which is actually not too far away clearly. A neighbor to our south. What's the percentage... I'm very curious, I don't have the statistics off the bat. What's the statistics of either Latin America or Mexico sellers selling into the United States? Do you know that by chance? Is there a breakdown or is it a majority or-

Patricio Tellez: I don't know the numbers, but there aren't many, really. And the thing is... And you have to imagine for any traditional business in Mexico, getting into the U. S. market... If you're not a medium, big- sized company, getting to the U. S. market and finding sales channels and connecting with buyers, the traditional route would be very expensive, right? Logistics. Just getting into a self- space here. So for companies in the U.S. and for people in general, they think of getting into the U. S. market as this huge task and you're going to need a huge investment and it's going... Which it used to be, right? So there aren't that many sellers. Of course there are, but I think the... So that's one of the things that we're trying to change and say, " Hey, there's a big opportunity here. There's a lot of value that you can offer being from Mexico. If you're a manufacturer, right? You can find a market willing to test products. Just being so close makes it really easy to get your products here." But I'm going to say one thing, just because being from outside the country, right? It's like a not so traditional approach that we took, right? We're from Mexico. We were here doing something nothing related to e- commerce, and I think getting into the Amazon space in particular, with this different vision that being from another country gives us, right? We know certain types of product, certain types of manufacturers. Immediately we thought of sourcing in Mexico, right? I'm from there. It's easy for us, or easier to find manufacturers there. So we didn't really follow the traditional route of going to Alibaba, finding suppliers, bringing your 40- foot containers... Right now with the logistics it's crazy, but even back then for us it was crazy for me to think of going to China and bringing products when I have 10 minutes from the southern border I have tons of factories that can manufacture products, right? So that gave us, I think, an advantage when thinking about certain products and the business model that we wanted to follow. Just it was an easier approach, I think, for us getting started. And to grow, it gave us a lot of opportunities.

Ryan Cramer: That mentality and that story is what makes e- commerce and just entrepreneurship very fascinating to me, and on the show I think getting the vantage point correct. You were coming at it from someone who grew up in this locale, but then you know why would I go to another country when I know for a fact that they can do it quicker, or they might be able to produce the same quality when I know it's more comfortable with me? And a lot of the same points a lot of sellers bring up is it's also very easy to work with Mexican sourcing suppliers because they're in very similar time zones, which I never thought about, instead of in the middle of the night you might be reaching out to people asleep or whatnot. But, I guess starting out from there, it wasn't a question in your mind, did that kind of shape the product that you wanted to sell as a third- party seller, or did it really effect you in any sort of way of capability or what product or service you might go into?

Patricio Tellez: So I'm going to say that when we started, let's say when we launched our first couple products, we did the same thing as everybody. Just looking at YouTube and seeing what was out there. We brought product from China, we've used Alibaba, same thing. And we faced the same problems that everybody that was in the first couple shipments when you don't know what you're doing. So after the second shipment came here, we're like this is just too hard, takes too long, just gets our moneys trapped for months there, all right? So we have Mexico that we know and we could be sourcing from. So when we started, I really had a product in mind just knowing the market, but that doesn't mean that you need to know Mexico, to know the manufacturing landscape to choose a product. You can almost go to Mexico and find any product you want. There's going to be a big difference to China, of course. Like Mexico doesn't have the industrial manufacturing capacity that China has. So there's going to be differences and you've got to know that entering into the Mexican market. But to me there were a lot more benefits, or advantages, to dealing with Mexico. Like you just said, most of Mexico is on Central time zone, so you're on the same time zone. The western part, Baja and Los Cabos, is in Pacific time zone, but all the rest is Central. So you're on the same time zone. Most managerial positions in Mexican companies, most people speak English. It's a necessity, right? So you'll be able to communicate. If they don't speak Spanish... If they don't speak great English, they'll definitely be able to write, so you can send them an email. So it's easier to communicate, you're in the same time zone. If you ever need to go and visit the factory or go, you can fly from Atlanta and it's a two hour and a half flight to Mexico City. Right? So it's very easy to communicate with them. And Mexico, many people forget, Mexico, it's an industrial economy. So we're probably the second trading partner with the U. S. because everything, not everything, many things get manufactured in Mexico, especially for bigger companies. So there is very qualified labor force in Mexico. There's a lot of manufacturing companies that are not at capacity, so they can accommodate new customers, and anybody coming from the U. S. is going to be received with open arms because for Mexican companies, especially right now, being able to get a client and be on the U. S. market is great for them. Right? So I think there is a lot more benefits to considering Mexico than there is not.

Ryan Cramer: Yeah, I think that a lot of sellers are becoming smarter. I'm not saying that... China's ecosystem, it's easier to go into it, I would think, because it's established. There is, before a lot of either lockdown or this back log of all these goods coming from one local. It's very tough to, as a seller, in my mind, I would think that you would need to look at that and see all those containers that are sitting in the water in the port, and not unloaded. And knowing that the one commodity that everyone has a level playing field is time. Now time, I think, is becoming the most valuable asset instead of... Of course, currency is going up for every container, but when my goods are sitting on the water that doesn't make me any money. That's money out of my pocket. It's literally not being sold. It's not in an FBA warehouse. It's not in my third- party warehouse. It's not being sold. So are we starting to see the shift of other opportunities out there as a second and third option, or do you see this actual major wave starting to move towards quicker turn around times? It's an easy trading partner, like you said, because of where we're located, and then also you don't have to worry about a boat. I mean it's on a truck for most of these things, right?

Patricio Tellez: Yeah.

Ryan Cramer: It's a little bit easier to get to and no matter where you are it can get there in no time at all. You don't have to fly halfway around the world to go check out the warehouse. You can connect with them on a time zone. A lot of these things are pros, so why isn't more people doing it?

Patricio Tellez: And let me say, I think for many people, especially the FBA sellers, I think Mexico is going to be become a first option because there's many things to consider, right? So with all this going on, let's set the chain supply nightmare aside, right? So it's super expensive. If you were... So 20- foot containers are now out of the question, right? You don't even consider it because it's so expensive, right? You're bringing 40- foot containers. So just consider that just from a cash flow and flexibility standpoint, right? You're bringing product from China, so you might be just trying to figure out what are you going to put in that container, right? In many cases you have your one, two, maybe three acings that are great, but you still need to fill that up, that container. So you're bringing products that you might not, if you had the chance, you might not be bringing so many, right? You might have two variations, a third at best, but then you have to bring other four colors to fill that out. So just from a cash flow perspective, just the fact that being in Mexico you don't need to bring a 40 foot container, you can bring a truck. Right? And bring a lot less inventory, and you can be sending weekly shipments to the U.S. from Mexico. So you have the flexibility to just optimize your inventory that you're bringing in, and then you don't have... For months, you don't have your money tied up in the logistics, so it just makes it a lot easier. So even though... So right now with the cost of shipments, everything that's going on, even labor in China, it's going to be inevitable that it doesn't go up. So with those factors and how the market is right now, I think Mexico is very competitive with price against China. And then if you add up all these things that are actually, in the end, is add up to your bottom line, right? You have smaller MOQs. You can be sending more regular shipments. You can be bringing less products, right? To optimize your inventories. So those things, I think, when you consider them all... Yeah, if you see a price, if you see a quote from a Chinese manufacturer and a Mexican manufacturer, while Mexico's not going to beat many... Most manufacturers are not going to beat the Chinese manufacturers in price. It's impossible, right? That's not where Mexico is competitive. But when you add everything up, it really makes you consider if Mexico is a better option. And then I would add one more thing. When you consider that you can have a closer and stronger relationship with your manufacturers, and that means you can do things that would be a lot harder in China or it would require a lot more money. You can do customizations to your product, you can find better quality materials and have a different shade of product. And maybe you can sell for more, right? Increase your selling price and increase your margins with offering a better product and easier relationship with your manufacturer. So if you see it from that perspective, I think Mexico makes a lot of sense for FBA sellers if, right, if your strategy is to build a brand, to offer better products, and to increase your margins. And just don't not be up at night at 3: 00 A. M. dealing with somebody in China. If something goes wrong, it's going to be a lot harder to solve if you're dealing with somebody in China than in Mexico. So for all those reasons, I think Mexico has to make sense for a lot of people watching this.

Ryan Cramer: Yeah, it's checking my boxes in my mind. I'm not seeing any negatives. What would be those negatives, if you will? There has to be a reason people shy away from Mexico. What would those be?

Patricio Tellez: So, the negatives are definitely... So doing business in Mexico is not as easy as in the U.S., as you can imagine. So the first thing that is complicated in Mexico is that the regulations, locally, are a lot more strict in many ways in customs than they are here in the U. S.. Everything takes longer, just to set up a company, get your permits and customs product classification. Everything just takes longer. So you need to have somebody in Mexico that knows how to navigate those waters because it's going to be definitely more complicated, more expensive than it is here in the U.S.. But the main thing I'm going to say is there is no Alibaba, there is no organized directory of manufacturers in Mexico that you can just look online and find 1000 manufacturers. That doesn't exist. Actually, the one government agency that was in charge of doing that, our new president, he got in last year. The first thing he did was to shut down that agency. Doesn't make any sense. Was the agency in charge of promoting Mexican businesses? They shut it down and now it doesn't exist. So there's no centralized database of manufacturers. So you need to... It's really... We go on a case- by- case basis if it's something we can help. I'll look at the product and we'll help you find a manufacturer in Mexico, but that's not as easy as it is in China. There's no Alibaba. So that's a big one. And then on the other hand, when talking to manufacturers, because many of the manufacturers are smaller than in China, many times they'll have problems with accommodating your production capacity. They have a limited capacity. So they might not be able to accommodate your production, a same amount every month, so you need to really develop a relationship with them to understand what their capacity is, what it is they can and they can't do. Because they all say, " Yeah, I can do that." Right? " I'll get you that material. I'll get you that quantity," but things come up in dealing with them and you have to just be proactive in talking to them and knowing in advance that they can do what they are saying they're going to do. But basically... So that's, I think, the biggest problem with working with Mexican manufacturers. Just you don't have the same, say, stability as you would with a Chinese manufacturer in many cases.

Ryan Cramer: Right.

Patricio Tellez: But it helps that we're close and you can be in contact with them.

Ryan Cramer: So there's no way to find a... If I'm looking for some sort of raw materials manufacturer or anything like that, I can't... There's no equivalency to an Alibaba that exists in a foreign country like Mexico, in this case, that you can just look up and say this is what I want, I want them to be around for a long time, so where's that trust come in? Are people building that out? How do you find reputable manufacturers to work with if that's the case?

Patricio Tellez: So there are... So the Mexican embassy here in the U. S. has an economic promotion office, and you can contact them or you can contact the U. S. embassy in Mexico and they'll point you to the right direction. There is no centralized database. We're working in doing exactly that. Right now we do it manually. We work with brands to help them find manufacturers in Mexico. That's one of the things that we do at Algo Mas. It really works on a case- by- case basis. We're working on a project that we're probably going to launch later this year, but right now it's all done manually. You can always go online and look up manufacturers and suppliers of these types of products, but you'll need to then talk to them, but I would suggest to go to Mexico and visit with them or have somebody in Mexico to deal with them in your behalf. That's one of the things that we do, as well. But right now... So if you're right now with your product and you want to look for products, I would say Google is your friend, of course, but also contact the Mexican embassy where you are and they'll guide you through the process of finding suppliers because in Mexico it's done on a state level, so you go to the state's Chamber of Industry, Industry Chamber, and they'll have those contacts. In many cases those lists are not even updated. Now, with COVID, many companies shut down.

Ryan Cramer: Right.

Patricio Tellez: Many companies were acquired. So we found... This is something that we deal almost every day. So we found that not even the government's databases are updated. So it definitely helps to have somebody in Mexico that can help you through this whole process.

Ryan Cramer: Interesting. So what... I'm fascinated by the culture in Mexico and what means most to them, right? So here in the United States you'll get a segment of people who are like, " I need it manufactured and sold in the United States." We're kind of shifting. We're talking about sourcing, but also manufacturing and selling in Mexico. So if we're shifting to the selling in Mexico side, does the Mexican customer... Do they care about where a product is made or what it is? Or is it just quality? Or is it price? What's the customer avatar, if you will, of a customer if I'm looking to potentially start selling in Mexico?

Patricio Tellez: Yeah, and this is a very interesting point because in the Mexican culture... And you can imagine, being so close to the U. S., right? A big part of our modern culture has been formed by U. S. media, U. S. brands, and your U. S. consumption habits. So in that way, the Mexican consumers follow along very closely to what happens here in the U.S.. So we used to say that before all this, before Amazon, before the online explosion, it used to be that the Mexican market was lagging maybe five years from the U. S., right? So you could be here, see what's working and then take it to Mexico. In a couple years, it will be a big success. Right now it's probably-

Ryan Cramer: So just a five year delay trend, yeah.

Patricio Tellez: Yeah. Right now it's probably more like a two year and it's shrinking all the time, but that's, I think, the biggest advantage for U.S. sellers. If you have a product that is working in the U. S., right? You can... Literally, you can do it now. Go to the best sellers in the U. S., look them up in Amazon. com. mx, and what you will see is that you'll probably find the first half of the first page of the first page results might be some Prime sellers, some FBA sellers, and local offers. But all the rest on that first page of a best seller? You're going to start seeing a lot of international listings, right? So many of you might be already selling in Mexico through NARF, right? So you can create your international listings and you're selling in Mexico. So what most people don't know is that when a Mexican buyer goes to Amazon, finds a product, and it's an international listing because it's coming straight from an FBA warehouse here in the U. S., so the product's going to be a lot more expensive just because it has to go through customs, shipping, it has to be imported and delivered to the customer's door. The product's going to take... It can take anywhere from six days to a couple weeks and it's going to cost a lot more. So when you see a very popular product in the U. S. that has many international listings, offers, that's a great indication that that is a popular product and if you had a local FBA offer then it would sell a lot better than international listings.

Ryan Cramer: So you're saying... So FBA matters a lot to the Mexican market, right? To get there quickly, effectively, but even for price reasons.

Patricio Tellez: Yeah, exactly.

Ryan Cramer: Both consumer- wise and seller-wise that matters.

Patricio Tellez: So Amazon Mexico says, same as here, right? They say most of the sales in Amazon are FBA, right? So that's what they say. I don't think the data shows that, so it's not 85%. It's probably less than that towards the 70's, 65. It's growing very fast, so it will be there. So FBA is important for same reason it is here, right? A lot of people pay their Prime membership, they expect a fast shipping. But also it's important because it's actually... It costs less, right? It's not... In many cases the import makes it just not reasonable, because there are other websites that compete with Amazon in Mexico. There's actually... MercadoLibre is actually the largest marketplace in Mexico. So there are alternatives to Amazon, and so if you're selling a product for 1400 pesos that somebody can buy for 600 in MercadoLibre, that's... I mean you might sell a few, because there are people that don't even look elsewhere and they buy on Amazon, but if you want to launch a brand, grow your brand, and move a decent volume, so you need to be competitive and the way to do that is to offer FBA locally. But just going back to your original question, if you have a product that works very well in the U.S., you can be confident... Of course, you need to do your market research like you would here in the U. S., but if you have a product that sells well in the U. S., you can be confident that it will work in Mexico.

Ryan Cramer: Awesome. So that being said, we actually did have someone ask a question for you, Patricio. Listening from Mexico City, so we're talking to someone who's in Mexico and he's talking about selling. Is there... First off, he asks is there a course that you offer, I'm assuming Algo Mas, that brings products from Mexico to sell in the... To bring products to Mexico and sell here. So getting products in source locally and sell locally, and is it possible to do FBA from U. S. to Mexico? So we did touch a little bit on that. Do you have any-

Patricio Tellez: Yeah. So I think that question-

Ryan Cramer: It cross- referenced, yeah.

Patricio Tellez: And actually, that's another big opportunity that we haven't talked about because if you think about the size of the Latino market here in the U. S., as you can imagine that there's products that are native to these countries in South America that have a big market here in the U. S.. So that's a big untapped market opportunity that not many people think about because you would need to be Latino to understand the products and all that.

Ryan Cramer: Right.

Patricio Tellez: So that's something that we teach and we have a partnership with a logistics company that they solve all the import and logistics to bring products to the U. S.. So yeah, that's something that we do.

Ryan Cramer: Well that's a fascinating localization conversation that you can have both either in the United States or even in Mexico, is not just looking at numbers, per se. We're going beyond numbers. We're looking at who that avatar is, by definition. Who are the people that are buying these products? Like who are the male/ female, older/ younger, what nationality, what religion even? You just have to get really deep into that avatar. Is that something that you and your team are looking more into and really being specific at, " Hey, we're going to win this population," and just be really good at it instead of maybe just a keyword, or is there a happy medium for both of those conversations to have?

Patricio Tellez: That's definitely something that we've, actually, we've done for years. Just knowing how to recognize certain demographics and certain markets. And in many cases, or in most cases, we're talking about niche markets, right? And so they are very attractive in the sense that there's a big lacking of offering of those products and if you can match those markets and those buyers to the products that are lacking in Amazon, then you can build a pretty decent business doing that. So that... Just going into what you just mentioned, that includes seasonal offerings. Like for example, in talking about religions, right? So you have Christmas, and then you might have Hanukkah. You have all these types of demographics that change regionally from what you would usually find here in the U. S. in a U. S. population to the Latino population, right? So the products, customs, all that changes. So that's something that we've done being from Mexico. My wife is from Argentina, so we have... And with Algo Mas, we have people all over in every country in Latin America. So one thing we've done for years is to try to find those opportunities in the U. S. market and bring the right offering of products to those demographics.

Ryan Cramer: So with that being said, you touched on a couple different marketplaces. If I'm a seller and I have to choose between Amazon and MercadoLibre, we're talking about two completely different marketplaces. Is there one that you would maybe try before the other if I'm new to the marketplace, I'm new to just selling online in Mexico or in South America, which one do you feel would be easier to get into or even more profitable long- term, do you think? Is it going to be Amazon?

Patricio Tellez: No doubt, Amazon. By far. For many reasons. First of all, it's more profitable because demographic... So Mexico... And I guess, maybe it is or it used to be same here in the U.S., but Amazon is more aspirational in Mexico, right? So you have just a thing about demographics, you have a higher demographic with larger buying power on Amazon in Mexico. So that just makes it... Just gives you better opportunities to bring certain types of product, and even sell for a higher price. But having said that, I think for... And the nature of the marketplace for people that don't know MercadoLibre, MercadoLibre is like an eBay, right? So it's a different animal. So being on Amazon is a platform that will allow you to position a brand, position a product, and then you can grow from there. And we're in retail, physical retail, in Mexico, as well. So what we're starting to see, which is the same thing that happened here years ago, is that retail buyers are starting to look at Amazon first to find products, find other brands, right? Find upcoming small brands to have them on their shelves. So definitely Amazon is a place that you want to be. In certain products, certain categories, there might be more volume in MercadoLibre, but Amazon's growing fast and I think it's inevitable that Amazon will become the largest player. Just as it happened here, it will happen in Mexico. So being right now in Mexico, it's a big opportunity because right now the marketplace is an opportunity, but also it will help you position the product and then you can sell in different marketplaces. There are a handful of important marketplaces in Mexico, and then you can... So you start growing from Amazon and then you grow to the others.

Ryan Cramer: How important is, I would say, localization to the Mexican customer? For example, just making sure your listings are optimized appropriately, speaking cadences, are languages translated, even in a packaging, the look and the feel of your products in that environment, you mentioned a lot of customers are looking at the United States in trends and it might have been five years out, now it's two years out. Now constantly, the customer's eyeball is constantly looking all over the place. What is it that is attracting the eyeball? Is it the same that the customer in the United States is or do you need to maybe make some tweaks here and there to really stand out?

Patricio Tellez: Definitely. I'll say that the main difference between the American consumer and Mexican, and in general Latin American, is that just the whole thing of buying stuff online and this whole internet everywhere has been in Mexico and Latin America, has been, let's say, has been there for less time, right? So more people are... Like it used to be 10 years ago, maybe, that some people are afraid of using their credit cards and buying online, so they'll ask a lot more questions before they buy a product in Mexico or Latin America than they do here. So there's definitely a big component of trust that if you don't have your listings optimized to Mexico in Spanish with, not only translated in Spanish because Amazon does, if you're doing NARF, Amazon translates, has an automatic translation. Or you might hire, go to Fiverr and hire a Spanish translator, but it matters if the translator is from Venezuela, from Spain, from Columbia, from Argentina, the Spanish language changes from country to country. So it's important to have a native local Mexican- looking and sounding listing to build that trust. And same thing as you, I know when you go into Amazon, you can tell difference from a Chinese seller, right? Just by looking at their listing and reading a few words, you know that's a Chinese seller as opposed to a U. S. seller. Just in language or certain differences. So same thing happens for us reading U. S. listings in Mexico. Even though they're in Spanish, they're not the same. So it's very important for... And I'd say the main factor is trust. So you want to have a well- optimized listing to be able to compete.

Ryan Cramer: Well trust brings up an interesting word. I think loyalty is what a lot of people in brands are trying to build. How loyal is a customer in Mexico? Is it they're lifetime customers if you do right by them? Or what's kind of the trust factor there? Is it once you've earned their trust they will be loyal to brands or is it price point, what's the most important thing to an avatar or a customer down there?

Patricio Tellez: So that's an interesting point, and is something that we've been seeing more and more. Just by the fact that there is less options, really, than there are here, right? So right now, it's very hard if you have your private label and you're trying to launch a brand, it's very hard to build a trust because the consumer has so many options. And definitely Amazon opened up those opportunities for sellers for products in Mexico, as well, but there's just less options in Mexico so it's easier... Let's say spending the same amount of money, and doing the same amount of work that you're doing in the U.S. is going to generate results so much faster in Mexico just because if you're able to establish that trust initially, buyers will be more loyal to a brand just by the fact that there is less options. And then people trust U. S. brands and U. S. products, right? So depending on the product. If it's something very local, if you're buying your tacos or your salsa, you want them to be from a Mexican company, right? Because that's a very local product. But for all the rest, U. S. brands are regarded probably better than Mexican brands. So if you're a U. S. brand and you can craft the right message, you can communicate with the Mexican consumers in their language, you'll be able to build that loyalty a lot faster in Mexico.

Ryan Cramer: Is there grocery available in Mexico for Amazon?

Patricio Tellez: Yeah.

Ryan Cramer: Okay, so is there opportunity... I feel like this is almost a topic that a lot of people kind of glaze over, and it's non- perishable goods or something that's localized or you, yourself can be... For example, I love the story of the barbecue seller, for example. They have their own branded sauce or spices or whatnot, seasonings, and they sell them in the United States during the summer seasons. Obviously it's a seasonal product and then they throw them into Amazon Australia because in our winter it's their summer.

Patricio Tellez: Yeah.

Ryan Cramer: So it actually makes sense seasonality. Is there going to be an uptick, do you think, in terms of grocery as it kind of becomes more popular in that direction? I feel like a lot of people got excited about... Or used to, I should say, curbside pickup or delivery of groceries and perishable goods. Is that important to the culture down there, or is that something that's kind of not caught on yet?

Patricio Tellez: I think, especially groceries, and we can talk about different types of products, but even supplements, right? That sort of product is very big in Mexico, and same thing I talked about. Just U. S. brands, you automatically trust a U. S. brand with a product like a food product or a supplement product immediately. And actually we get a lot of calls from, especially supplement sellers, because I think if you have a good product in the U. S. and you've found your consumer here in the U. S., it's easy to translate to Mexico. The problem there, if you're manufacturing, let's say if you're manufacturing in the U. S., to get into the Mexican marketplace, the bar of entry is very high because you need to just the local FDA, let's say the Mexican FDA, just the requirements are really tough and takes a long time. So you can take anywhere from nine months to 18 months to get a supplement approved, for example. And it can take you 10, 12, 000 bucks to get the certificate and you're going to need lab tests. So of course there's a lot of cons in this type of product, but on the other hand that creates a big opportunity because not a lot of people are entering into that market because it's not easy. So if you know how to deal with those permits and that process, then you have a big opportunity. And then with groceries, same thing that happened here... Mexico is actually still... It's closing down again, businesses, and they're going back to having to be inside. So that's still going to be a market that grows and it's going to be a big opportunity, I think. This year and next year are still going to grow a lot.

Ryan Cramer: Is there a category that people should either avoid, and then also on the flip side is there a category that's almost too easy to get into? I would say more easy to get into in Mexico than it would be into the United States?

Patricio Tellez: So I'm going to say electronics is something that we've stayed away in Mexico, just because there's a lot of competition from Chinese sellers cheaper. So in certain tough products, and in those products price matters. Price matters more than it does here in the U.S., right? Just because people don't have as much money to spend than people here and credit to access is not... Access to credit and all that. So there are certain types of products where we've tried to stay away because of the returns and all this in Mexico, the return rate seems to be higher in Mexico than it is here in the U.S.. And competition is tough in certain products. And one of the things that happened is, in Amazon Mexico is, when Amazon did their big push to bring Chinese sellers, there weren't many U. S. sellers entering the Mexican marketplace so it got flooded by Chinese sellers. So most of the top sellers in Mexico are Chinese, but to me that's not something I worry about because I think the Chinese will... It's very hard to compete with in the products that they're very good at and they have lower prices than everybody, and they're bringing directly from China. But I think where I see the opportunity in Mexico, is going in the completely opposite direction. Just offering better quality products, higher priced, manufactured locally. And I think that Mexico, it's a 130 million people market. Amazon Mexico is going to... It's now a thing, it's big, but it's going to grow. It grows every month, so I think the opportunity is not in trying to compete with cheap products, rather offer value and build a brand, definitely.

Ryan Cramer: I love that, and I agree with you. I think that you look at the opportunity where... The statistic where I thought a lot of growth opportunity is happening, is if you look at how many new warehouses are being opened in terms of logistics centers in different marketplaces. For example, in Australia you saw... Gosh, I want to say like 50% or growth year over year in terms of number of warehouses. It slowed a little bit in the United States, but you're talking about looking at different marketplace opportunities. If you're selling in the United States and you're looking at the next possible option, I would feel that Mexico would be one of those, like you said, budding areas just because of who they model kind of after... I would say who the economy models after and just how quickly they kind of are tied to our country, unfortunately. It's almost like localized by geography instead of just choosing to know what the trends are halfway around the world, right? It's almost what's popular here, or there's so many different similarities. So with that being said, what about you and the team? Where's kind of the growth that excites you, and then maybe where's kind of the fear on the other hand that kind of keeps you up at night? Both working in the United States and working in Mexico, as well.

Patricio Tellez: I just want to touch on one thing you said, and I hadn't thought of that. So Amazon Mexico had two warehouses, two distribution centers, not even a year ago, and today there are six. They just opened a sixth one. So yeah, they're growing at a very fast pace. And to answer your question, I think the thing that excites me the most, really, is as Amazon keeps growing and as more and more people get into the Amazon. com. mx or buying in Mexico, I think there's a big hole in Amazon's catalog. There's not many options. So what's starting to happen in Mexico is that a lot of the offers are Chinese products, so people that don't want cheap products from China are not able to find a lot of products. So many of the buyers from Amazon Mexico are actually buying directly on Amazon. com and bringing the product from here and they don't care that they're paying more and that they are paying dollars, and they don't care that they are waiting for longer because they want better products. So the thing that excites me the most is that I think we have 18 months until people start noticing this and catching up to the opportunity in Mexico. So almost anything that you... If you have a good product, anything that you launch right now on Amazon, launch a few campaigns, and the money you're going to be spending in your PVC campaigns in Mexico, it's a fraction of what you do here in the U. S., and you're going to be spending more and more here in the U.S.. In Mexico, there isn't a lot of competition for key words. You can be on the main key words, and still paying cents. So I think the biggest opportunity now is to launch a product, do the right things, and you'll be able to build a brand and get traction and get reviews and get volume up a lot faster than you will here in the U. S.. And the thing that worries me, really, is that to move fast enough by the time that people notice Mexico and start bringing all the international competition that we are very far ahead of everybody else. That's really what worries me, is speed. We can not launch product fast enough because opportunity is huge.

Ryan Cramer: Yeah. And this is what it's kind of... People like you in this space is you look at international opportunity, although it might not be as big as what other people want it to be right now, you're talking about a year or two out, now that you said they're catching up when more adoption, and people are buying from dot com instead of dot mx, but that's because the goods just aren't available on dot mx right now, so it's very fascinating to see the yearning for the goods that are available that could... Again, the United States has 300 plus million people out of billions of people in the world. The buying power is really shifting around the world as people become more mobile- friendly, as Amazon starts to grow in that capacity and people look at online versus retail in that capacity so I think it's just a super fascinating demographic and look how on marketplace to sell in if you're trying to grow internationally. It seems like one of the easier ones to dive into. Again, Europe, again one, UK and Germany would be two and 2A, and then you would be looking at other budding marketplaces that are starting to really take off, but Mexico always fascinated me in that regard of they have buying power, they are shopping, their trends are very similar to the United States, why not look at that as a potential either sourcing partner or a marketplace to sell into? So Patricio, we've talked about you have a course. There's a bunch of other things that Algo Mas is doing. How can people reach out to you? I know I would talk to you for multiple more hours. For the listener who wants to learn more or just kind of pick your brain, how do they reach out to you and connect with you and just kind of understand more of the marketplace that we were talking about today?

Patricio Tellez: So you can reach out on LinkedIn. Send me a text in there. Or I think we have a link, we have a website if you already have a brand or successful products in the U.S. and want to expand into Mexico, we can help you take care of the logistics, the imports, and the localization of the product and the Amazon operation. So we have a form there that you can fill out if you feel like expanding to Mexico is a good option for your brand. Probably the link is going to be somewhere here, but reach out on LinkedIn and I'll be happy to talk and help anybody with their questions.

Ryan Cramer: Of course, yeah. In the show notes if you're listening to this, the link will be there as well as the comment section if you're looking at the post on social media, Facebook, YouTube, LinkedIn, go ahead and click on those just to kind of reach out and start that conversation. I think it's never too early, obviously, to look at international growth. It's good to start now before you might be ready, and then what those opportunities look like in terms of being first to market or one of the very few in terms of competitions or market in a marketplace that is yearning for products to be brought to them. So it was really cool, as always, to pick your brain and listen to you talk and just understand. Do you have any predictions for the rest of this year? You said we might be going on lockdown or there's other things happening. Is there something that you're kind of gearing up for and trying to do it right then going to Q3/ Q4?

Patricio Tellez: Yeah, in the Mexican marketplace, especially, yes. They're going back into lockdown. Just e- commerce sales and Amazon sales are going to go through the roof. Same as here, we're expecting, of course, the biggest Q4 we've had. But this is going to continue throughout next year, for sure. So if you're getting ready for Q4 and you're bringing a lot of product, you should consider, I think, sending some product to Mexico. Start selling there. Whether if you're doing NARF or selling FBA locally, I think Q4 just gives you the best opportunity to launch your product in a new market, get some sales fast, get reviews fast. The PPC spending is very cheap right now in Mexico, so there's no better opportunity than this Q4 to really jumpstart the launch of your brand in Mexico for sure.

Ryan Cramer: All things I like to hear. It's cheap, you can get more sales, and it's easier to get into than maybe in a different marketplace. So awesome conversation, now a friend of the show, Patricio Tellez of Algo Mas. Again, check him out on LinkedIn. Thank you so much for hopping on today. Just a wealth of knowledge in terms of a marketplace a lot of people don't talk about, so appreciate you spending some time today with us and our audience.

Patricio Tellez: Thanks for having me, Ryan.

Ryan Cramer: No problem. Thank you. Again, thank you everyone who hopped on, again listened to us talking about sourcing and selling in Mexico. This is Crossover Commerce, my podcast about selling on Amazon, just anything and everything on Amazon and e- commerce in this corner of the internet that I hold so dearly to my heart. People like Patricio coming on to talk about different topics like selling in Mexico. We have a great slate of podcasts coming your way. We had three more this week already. All of them are live, so if you are new to this space go ahead and subscribe to us on all of our social channels on YouTube, LinkedIn, or Facebook, or you can follow me directly on all the same channels, again, as well as Instagram, and this podcast is actually brought to you and presented by PingPong Payments who actually helps international sellers keep more of their money when they sell in different marketplaces, helping more than 115 million customers... Excuse me, transacting more than 115 million dollars a day for over a million customers worldwide. People saving more money to grow into different marketplaces and repatriating their money. Go ahead and check out PingPong Payments today, and again it's in the link in the description below. But of course, I'm Ryan Cramer, the host of this show. Catch us next time on episode 138 which will be tomorrow, on Tuesday, where you can catch me live here on this show. I'm Ryan Cramer again, we'll catch you guys next time. Take care.

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Ryan Cramer of Crossover Commerce talks with Patricio Tellez of Algo Más about sourcing and selling in Mexico.

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Today's Host

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🎙 Ryan Cramer - Host

|Partnership & Influencer Marketing Manager

Today's Guests

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Patricio Tellez

|Co-Founder at Algo Más