Friend said on the retailer’s earnings call March 21 for the fiscal third quarter ended Feb. 28, 2023, that Nike Digital sales grew 24%. That, plus 19% growth at Nike physical stores, led to 22% Nike Direct growth.

Nike Digital refers to sales through the retailer’s websites and apps. Nike Direct refers to its direct-to-consumer sales.

Third-quarter total revenue grew to $12.39 billion. That’s up 14% compared with the prior year’s third quarter. Nike Direct sales in the quarter reached $5.3 billion. That’s up 17% year over year.

Digital sales for the retailer’s namesake brand increased 20% year over year. Nike-brand revenue totaled $11.766 billion, with Converse-brand sales accounting for the remaining $612 million.

Nike ranks No. 10 in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers.

Nike Digital sales growth started with Amazon exit

The retailer stopped its first-party sales on Amazon.com in December 2019.

Less than a year after exiting the marketplace, online sales increased 75% in the retailer’s fiscal Q4 ended May 2020. Online sales were approximately 30% of total revenue, Nike reported at the time. Nike Digital sales had reached $5.5 billion for the full year.

And that trend has been ongoing, said Jim Corridore, senior insights manager at Similarweb. Similarweb, a digital intelligence platform, measures web traffic for more than 100 million websites.

He told Digital Commerce 360 that although Similarweb can’t see exactly what shoppers bought directly from Nike or the price point of those items, it can track how many people have gotten to the checkout page. Checkout traffic, or the number of users who have gotten to the sign-out page and received a “thank you” confirmation, grew 8.5% year over year for Nike in its fiscal Q1 2023, which ended in August. It also grew 20% from the company’s fiscal Q4 2022, which ended in May.

A Similarweb analysis of traffic to Nike’s main landing page, Nike.com, also showed 5.1% year-over-year growth for the fiscal first quarter ended August 2022. However, compared with the fourth quarter ended May, traffic was only up 0.02%.

“People are still interested in going on Amazon and buying Nike shoes, and there has emerged a market to fulfill those needs,” Corridore told Digital Commerce 360. “Third-party sales on Amazon have spiked to the point where it’s almost as high as first-party sales were in December 2019, when Nike exited the market.”

Amazon.com Inc. is No. 1 in the Digital Commerce 360 Top 1000 database. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

Nike Digital sales breakout by region

North America

Nike Digital sales in North America grew 25%, though the retailer did not provide a dollar amount. That fueled 23% Nike Direct growth as the retailer’s total revenue in the region grew 27% to $4.913 billion. Friend attributed the growth to holiday sales.

Footwear accounted for $3.322 billion in the quarter. That’s up 31% from $2.532 billion in the year-ago quarter. 

For the nine months ended Feb. 28, total sales in the region reached $16.253 billion. That’s up 23% from $13.238 billion in the year-ago period.

Europe, Middle East and Africa (EMEA)

Nike Digital sales in the EMEA region grew 42%. Friend attributed that growth to Western European markets, specifically citing the United Kingdom. Nike Direct sales grew 29% in EMEA as the retailer’s total revenue grew 26% in the region to $3.246 billion. That’s up 17% year over year from $2.779 billion.

For the nine months ended Feb. 28, total sales in the region were $10.068 billion. That’s up 9% from $9.228 billion in the same period the year before.

The retailer has lowered fulfillment costs in the region by reducing split shipments and adding pickup points, Friend said. 

When it comes to membership and marketing, Friend said, “if we’ve got more members coming in through the top of the funnel who are more engaged and buying more frequently, we should start to see an improvement in our ROAS or return on ad spend from a digital perspective and give us a lot of confidence that we’re building a moat to be able to continue to serve and grow our digital business.”

Greater China

Nike Digital sales declined 11% in the quarter, though Nike Direct grew 3%. Friend attributed this to consumers shifting back to physical stores as China lifted COVID-19 restrictions. Revenue from the region was $1.994 billion. That’s down 8% from $2.160 billion in the year-ago quarter.

For the nine months ended Feb. 28, total sales in the region were $5.438 billion. That’s down 9% from $5.986 billion in the same period the year before.

This was the market in which Nike sales declined across the board in the third quarter, as well as year to date.

Asia Pacific & Latin America (APLA)

Nike Digital sales grew 23% and Nike Direct 22% as the retailer’s revenue increased 15% in the quarter in APLA.

The retailer’s equipment sales declined to $53 million. That’s down 15% from 63 million in the year-ago quarter. It’s also the only revenue decline in the quarter outside the retailer’s Greater China market.

Revenue in the region totaled $1.601 billion in the retailer’s fiscal third quarter. That’s up 10% from $1.461 billion.

For the nine months ended Feb. 28, total sales in the region were $4.735 billion. That’s up 11% from $4.273 billion in the year-ago period.

Nike Q3 2023 earnings summary

For the fiscal third quarter ended Feb. 28, Nike Inc. reported:

• Third-quarter revenue increased to $12.39 billion. That’s up 14% from $10.87 billion in the previous fiscal third quarter.
• Revenue in North America was $4.91 billion. That’s up 27% from $3.88 billion in the year-ago quarter.
• Nike Direct sales increased 17% to $5.3 billion.
• Nike Digital sales increased 20% and represent 27% of total sales.

For the nine months ended Feb. 28, Nike Inc. reported:

• Total revenue was $38.392 billion. That’s up 11% from $34.476 billion in the year-ago period.
• Total revenue in North America was $16.253 billion. That’s up 23% from $13.238 billion in the year-ago period. It’s also more than 50% greater than the revenue from the retailer’s next-largest market: Europe, Middle East & Africa.
• In EMEA, total revenue grew 9% to $10.068 billion. It was $9.228 billion in the year-ago period.

Percentage changes may not align exactly with dollar figures due to rounding.

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Global retail sales through all channels hit $21.21 trillion last year, just a 1.0% uptick from $21.00 trillion in 2019, Digital Commerce 360 estimates. That means online’s share of total retail sales crossed 20.0%, with ecommerce accounting for all retail growth and gains in the online sector more than offsetting declines in store sales.

Historically, digital penetration rises each year as consumers get increasingly comfortable shopping online and retailers fine-tune ecommerce operations to deliver orders more quickly and efficiently. But COVID-19 magnified trend lines in a big way in 2020.

Globally, more than $1 in every $5 that went toward the purchase of consumer goods last year was spent on the web, Digital Commerce 360 estimates. Online penetration hit 20.2%, up from 16.4% in 2019 and 14.4% in 2018. The nearly four percentage-point gain in ecommerce penetration is a major headline, as anything around a two percentage-point bump in digital share over the preceding year is typically noteworthy.

Big markets’ share of global retail e-commerce sales

The world’s two largest economies—the United States and China—dominate global online retailing. Together, these two powerhouses have accounted for more than half of the worldwide digital sales of physical goods for years. In 2020, the pair amassed nearly $2.29 trillion in web sales, representing 53.3% of the global ecommerce market. But that was down from 55.1% in 2019 after years of growing market share, signifying that other countries gained ground on the largest players in an unusual year.

A number of markets outpaced both the U.S. and China with higher online growth: In North America, Canadian ecommerce skyrocketed by 71.2% last year after rising just 22.1% in 2019, according to data from Statistics Canada, a government-run agency. And in Mexico—a very low-penetrated country—online sales swelled an incredible 81.0% in 2020, according to the Mexican Association of Online Sales, or AMVO.

In Europe, the United Kingdom grew ecommerce by 36.0% last year, according to IMRG, the country’s online retail association. And online product sales in France climbed 32.0%, according to FEVAD, the country’s ecommerce federation. Additionally, Russia boosted digital sales by 45.0% in 2020 while Brazil’s ecommerce market saw even higher growth at 66%, Euromonitor reports to Bloomberg.

The U.S.’s banner year in ecommerce

Despite major surges in smaller markets, just the year-over-year gain in online revenue dollars alone for the U.S. during 2020 was larger than all but a few total ecommerce markets across the world. And as usual, the country had an outsized impact on the overall landscape in global online retail.

The U.S. is second among the biggest markets for ecommerce—behind only China—and comprised 18.5% of global digital sales. As shoppers turned to the web in wildly inflated numbers as the pandemic raged, consumers spent an astounding 32.4% more online with U.S. merchants than in 2019, according to U.S. Department of Commerce retail data. Ecommerce hit $791.70 billion in 2020, up from $598.02 billion the prior year.

That’s the highest annual U.S. ecommerce growth of any year for which data is available and also more than double the 15.1% year-over-year jump reported by the Commerce Department in 2019.

Ecommerce penetration hit 19.6% last year in the U.S., Digital Commerce 360 estimates. That’s up from 15.8% in 2019 and 14.3% in 2018. The nearly four percentage-point gain in online’s share of total retail sales during 2020 is by far the largest year-over-year uptick in penetration ever recorded. No other year has registered even a two percentage-point bump in digital share over the preceding year.

Sales through all channels reached $4.04 trillion last year in the U.S., up from $3.78 trillion in 2019, according to a Digital Commerce 360 analysis of Commerce Department data. The sizable 6.9% lift—the highest annual growth since 1999—was surprising after a year marked by store closures, lingering consumer anxiety over being in public spaces and the enormous boost to ecommerce. After all, total retail increased just 4.0% in 2019.

Digital Commerce 360 studies non-seasonally adjusted Commerce Department data and excludes spending in segments that don’t typically sell online, such as restaurants, bars, automobile dealers, gas stations and fuel dealers.

But online sales drove nearly three-quarters—or 74.6%—of the gains in total retail in 2020, and that’s the highest share of overall annual growth ecommerce has ever represented. It’s also nearly 11 percentage points higher than the 2008 share, which came in second place, and substantially higher than online’s 54.0% share of spending gains in 2019. But interestingly, the fact that ecommerce didn’t account for all gains means that offline—or primarily in-store—sales grew 2.1%, which is the same rate as pandemic-free prior 2019.

The U.S.’s record-breaking online performance was a major contributor to the health of the global ecommerce market in 2020. In fact, excluding the U.S., global web sales increased by 22.4% year over year in 2020—lower than the 24.1% with the U.S. That’s because the growth in China’s ecommerce market slowed last year.

China’s web sales growth slows in 2020

China’s numbers typically overshadow the U.S., as online sales in the country have been more than double domestic ecommerce revenue for years. But the U.S. made a little headway in 2020, closing the gap a bit after increasing web sales by $193.68 billion to China’s $189.18 billion gain, according to currency-converted data from the National Bureau of Statistics of China, a government agency. Still, China accounted for more than a third—34.9%—of all ecommerce across the world in 2020.

The online sales of physical goods reached nearly 9.76 trillion yuan, or roughly $1.49 trillion, in China last year, up from more than 8.52 trillion yuan, or roughly $1.31 trillion, in 2019. But the 14.5% rise in digital revenue was a deceleration from 21.4% year-over-year growth in 2019. While percentage changes often taper off over time as figures get larger and growth is harder to achieve, pandemic-related shifts in consumer behavior led to many markets bucking that trend in 2020. So it’s notable that China didn’t see the same rise in ecommerce growth. Especially in light of the online sales jump in the U.S. of 32.4%—more than double that of its Asian counterpart.

While China’s ecommerce gains gave a boost to the country’s floundering overall retail performance in 2020, it wasn’t enough to offset an 11.2% decline in the offline sales of goods.

Total retail sales of consumer goods excluding automobiles hit nearly 35.26 trillion yuan, or roughly $5.40 trillion, in 2020, according to the National Bureau of Statistics of China. That’s a 5.3% decline from almost 37.23 trillion yuan, or roughly $5.70 trillion, the year before. The dropoff in sales through all channels is a big swing from 2019, when retail climbed 8.8%. Here, again, the retail landscape in China proved to be quite different from the U.S., where overall retail had a banner year.

China’s ecommerce penetration continued to lead all countries with more than a quarter of the sales of goods—27.7%—occurring online in 2020. That’s up from 22.9% in 2019 and 20.5% in 2018. The country’s 2020 online gains paired with a decline in overall retail meant digital share surged 4.8 percentage points in a 12-month period—double the year-over-year lift in 2019 and higher than the U.S.’s 3.8 percentage-point increase last year. With more than $1 in every $4 now spent online in China, the ecommerce penetration gap between both countries widened in 2020, with an 8.1 percentage-point difference between the two.

Marketplaces account for nearly two-thirds of global ecommerce

Much of the story in ecommerce continues to center on the world’s biggest online marketplaces, including Amazon.com Inc. in the U.S. and Alibaba Group Holding Ltd.’s Tmall and Taobao, both dominant forces in China. All of the third-party selling platforms ranked in the 2021 Digital Commerce 360 Top 100 Online Marketplaces sold nearly $2.68 trillion in 2020. That’s up 29.0% from nearly $2.08 trillion the prior year. This means online marketplaces accounted for nearly two-thirds—62.5%—of global ecommerce in 2020, up from 60.1% the year before.

But the rankings are quite top heavy. Taobao, Tmall and Amazon (Nos. 1-3) represented 62.6% of the Top 100’s collective total gross merchandise value, or GMV, in 2020 and an incredible 39.1% of global ecommerce for the year.

Amazon runs a hybrid marketplace, meaning it both lists its own inventory and operates a platform through which other retailers sell their products. In 2020, the web giant’s global first-party revenue surpassed $302.99 billion, up 41.4% from nearly $214.22 billion the year before. Figures capture the sales of the company’s own products plus the commissions and fees the company received from its marketplace sellers, Amazon Prime memberships and other subscription services.

Including purchases made through third-party sellers, the value of goods sold on Amazon reached a Digital Commerce 360-estimated $475.00 billion in 2020, a 40.1% jump from $339.00 billion the year before. As consumers leaned heavily on Amazon during the pandemic, the company accelerated both first-party revenue and total GMV growth to roughly double its 2019 upticks.

It’s worth noting that Amazon grew far faster than the overall global market last year and accounted for 16.3% of all worldwide ecommerce gains. It also increased total GMV at roughly double the rate of Alibaba’s pure-play marketplace competitors.

Taobao grew its total GMV by a Digital Commerce 360-estimated 17.5% in 2020, to $609.58 billion from $518.79 billion in 2019. Tmall saw an estimated 21.0% jump over the prior year, with total GMV reaching $593.45 billion last year after hitting nearly $490.46 billion in 2019. An astonishing 80.5% of online sales in China flowed through these two marketplaces last year, and collectively, they represented 23.3% of global gains in ecommerce.

A look at the top 10 global marketplaces further reveals China’s staggering power over worldwide online retail. The country holds three spots on the list—with hybrid marketplace JD.com Inc. joining Alibaba’s biggest names—and yet, this trio brought in more than two-thirds of the total GMV of the top 10.

Percentage changes may not align exactly with dollar figures due to rounding.

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So what will developments will lie in the year ahead? The December issue of Internet Retailer examines how ecommerce may evolve next year.

Inside the December issue

• “Retailers adapt to rising fraud rates” looks at how merchants are working to ensure they have safeguards in place to combat fraud.
• “What California’s new privacy law means for retailers” explains the potential impact of the new data privacy standard.
• “Retailers adapt to the evolving marketing landscape” examines how online merchants plan to spend their digital marketing budgets next year.
• “How the new North American free trade agreement will impact ecommerce” looks at how the U.S.-Mexico-Canada Agreement may drive more retailers to sell across borders.

Compliments of our sponsors: ACI Worldwide, Lucidworks, Melissa, Monetate, Radial, Top Ten Wholesale.

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The two centers will cover 1.4 million square feet and will create more than 3,000 new jobs in the country.

“The investment in Mexico is part of a comprehensive strategy that we started in 2016 that will allow us to reduce substantially the delivery times of our products,” says Ignacio Caride, general director for MercadoLibre Mexico.

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E-commerce accounts for about 3% of total retail sales in Mexico, MercadoLibre says. That’s compared to 13% in the U.S., according to Internet Retailer estimates.

Currently, 80% of the items sold through MercadoLibre in Mexico use Mercado Envíos, the company’s shipping and logistics service, and more than 70% are delivered within 48 hours, the company says.

Amazon.com Inc. also is stepping up its investments in Mexico. Last year, after operating for about two years in the country, it launched its Prime two-day delivery service in Mexico for about $23 a year—far less than the U.S. fee of $99. Amazon, No. 1 in the Internet Retailer Top 500, began selling physical goods in Mexico in 2015.

MercadoLibre Inc. operates in 19 countries including Argentina, Brazil, Chile, Colombia, Mexico, Peru, Uruguay and Venezuela. MercadoLibre says it is the 7th most visited retail site in the world.

EBay.com Inc. had been the Buenos Aires-based company’s largest shareholder since 2001, but in 2016 announced it was selling most of its stake in the company.

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The all-cash deal will let Target customers order groceries and other goods online, and then have the items sent directly to their doors from nearby Target stores. Target is No. 20 in the Internet Retailer 2017 Top 500.

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Buying Shipt further beefs up Target’s logistics operations—earlier this year, the retailer announced the acquisition of software company Grand Junction, which also manages local and same-day deliveries. Target now offers same-day delivery in New York City and can send orders from 1,400 of its stores. Competition in this space is growing fiercer, though, as rivals Wal-Mart Stores Inc. (No. 3) and Best Buy Co. (No. 10) also offer same-day service, keeping pace with Amazon (No. 1).

Four out of five shoppers want same-day shipping, according to a survey by fulfillment software maker Temando, but only half of retailers offer it.

“With Shipt’s network of local shoppers and their current market penetration, we will move from days to hours, dramatically accelerating our ability to bring affordable same-day delivery to guests across the country,” John Mulligan, Target’s chief operating officer, said in a statement.

The deal will give Target same-day delivery at about half of its 1,834 stores by next summer, with the number growing to a majority of stores in time for next year’s holiday season. The service costing $99 a year for unlimited deliveries—will initially encompass categories like groceries, household essentials and electronics before expanding to all major product groups by the end of 2019.

Improved position

“While it will not affect Target’s capability this holiday season, the fact that Target will have this service in place during 2018 will significantly improve its online competitive position,” Charlie O’Shea, an analyst at Moody’s Corp., said in a note.

“We are now at a point where same-day delivery service is becoming the rule for top retailers, rather than the exception,” says Tushar Patel,  chief marketing officer at order management, e-commerce and omnichannel technology vendor Kibo. “With the acquisition of Shipt, Target has unequivocally positioned themselves in Amazon’s swimming lane of fast and seamless delivery services. This announcement also comes on the heels of UPS admitting that many Black Friday and Cyber Monday package deliveries are being delayed because of the unexpected flood of orders from online shoppers. Bottom line, these types of delays are simply not acceptable to shoppers any more,” he says.

“The question that remains unanswered is if consumers will pay for same-day delivery,” Patel says. “With the acquisition of Shipt, Target is betting on it and is marching in double time to make sure they get general merchandise, fresh and frozen groceries into the hands of their customers. We believe it will force more and more retailers to expand their delivery service capabilities, which are and will continue to be critical to have ready during high traffic shopping days.”

Target rose as much as 2.4% to $62.47 on the news, while the shares of Shipt’s existing retail partners Kroger Co. (No. 88) and Costco Wholesale Corp. (No. 9) pared earlier gains.

Kroger said it’s still optimistic about the prospects for home delivery after expanding its logistics operations in recent years via partnerships with Instacart Inc. and others.

“We feel really good about the variety of partnerships Kroger has going,” corporate communications head Keith Dailey said.

Costco chief financial officer Richard Galanti declined to comment.

Online preference

Consumers’ increasing preference for shopping online, along with Amazon’s purchase of upscale grocer Whole Foods and its encroachment into new arenas like apparel, have sent retailers scrambling to improve their online offerings. E-commerce sales are up about 17% this holiday season, according to Adobe Systems Inc., and online merchants racked up a record $6.59 billion on Cyber Monday alone, the company found.

The question for traditional retailers is how to handle all those internet orders. They could build their own delivery network, but it’s an arduous and expensive process. That’s why many of them are seeking help from e-commerce startups like Shipt and Instacart.

Founded in 2014, Shipt serves about 20,000 customers through partnerships with retailers including Publix Super Markets Inc., HEB Grocery Co., Kroger and Costco. It will continue to operate independently and plans to expand its business with other retailers, CEO Bill Smith said in an interview.

‘Scale matters’

“We’ve spoken to a number of our existing partners about this deal and all the conversations have been very positive,” Smith said. “Having multiple retailers allows us to grow our membership base and make it more attractive. In same-day delivery, scale matters.”

For now, Target shoppers will need to pay Shipt’s $99 annual membership fee to gain access to the service. Once a customer orders, they send a “shopper” into the store to grab the groceries, and then deliver the items. Target is working on how to integrate Shipt into its website and mobile shopping app, Mulligan said.

The deal is expected to close before the end of the year and will be “modestly accretive” to Target’s profit in 2018, while boosting online sales, the company said. The retailer’s e-commerce sales already grew 24% in the third quarter.

Instacart partnership

Target has worked with Shipt’s rival Instacart for same-day service in cities like Minneapolis and Chicago since 2015, and Mulligan said he “will have conversations with them on where we go next.” Instacart didn’t immediately reply to a request for comment.

The two companies began discussing the deal in the middle of the summer, Mulligan said. They decided to pursue an acquisition rather than just a partnership in order to plow Target’s resources into expanding Shipt’s business, and to maintain its current level of customer experience.

Smith will stay in his role, reporting to Mulligan, and its 270 employees will remain in Shipt’s offices in San Francisco and Birmingham, Ala.

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El Puerto de Liverpool, which conducted its first e-commerce transaction in 1997, is spending just a fraction of the amount as Amazon.com Inc., No. 1 in the Internet Retailer 2017 Top 500; MercadoLibre Inc., Latin America’s biggest online marketplace; and Wal-Mart de Mexico SAB on bolstering internet operations in Mexico. Instead, its shares have tumbled to a five-year low amid a focus on opening new brick-and-mortar stores at a record pace.

Liverpool, No. 9 in the Internet Retailer 2017 Latin America 500, which traces its roots to a Mexico City clothing store set up in 1847, offers fewer products online than its peers do and many of its items can only be purchased in stores. Shipping is free but can take longer than five days when there’s high demand, compared with as little as one day for some Amazon orders. Perhaps most importantly, it doesn’t accept cash payments for online purchases, which cuts off a big chunk of the population in Mexico, where fewer than half of adults have credit cards.

“Liverpool’s business model is largely threatened,” Credit Suisse analysts led by Antonio Gonzalez wrote in a note this week. “Investors should no longer think about e-commerce in Mexico as a phenomenon that will impact stock prices in the distant future. The future for e-commerce is now.”

While online shopping only represents about 3% of retail sales in Mexico, analysts at HSBC predict it’s set to grow substantially after Amazon introduced its Prime membership club to Mexico earlier this year. A potential change to the North American Free Trade Agreement that would let Mexican consumers buy more online from the U.S. and Canada without having to pay tariffs could also lead to more cross-border e-commerce.

Liverpool shares have tumbled 17% this year. Walmex has gained 18% and Mexico’s benchmark stock gauge is up 3.7%.

Alejandra Tovar, a spokeswoman for Liverpool, didn’t immediately respond to a request for comment.

El Puerto de Liverpool is planning to open 11 stores this year, expanding floor space by 6%, according to its latest earnings report.

But it’s only invested about $30 million on e-commerce in Mexico during the past few years—the same amount that MercadoLibre has invested on free shipping in Mexico this year alone, according to Credit Suisse. Wal-Mart de Mexico has spent about $190 million on online efforts during the past two years, Credit Suisse says. Amazon, which entered Mexico in 2015, is planning to open a warehouse near Mexico City that would triple its distribution space, Reuters reported in September.

These efforts already appear to be paying off: Mercado Libre captured 9.5% of online sales last year while e-commerce platform Linio, Amazon and Wal-Mart de Mexico each controlled just under 6% of the market, according to data from Euromonitor International Ltd. El Puerto de Liverpool’s online sales were 1.7% of the market.

“Mercado Libre is investing at a pace that is simply not being followed by bricks-and-mortar players, which will create a permanent dislocation in market share,” Gonzalez wrote.

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Amazon, No. 1 in the Internet Retailer 2017 Top 500, is letting people pay for goods ordered on its website at the corner convenience store, while Walmart’s local unit and retail giant Grupo Elektra SAB, No. 99 in the Internet Retailer 2017 Latin America 500, have set up kiosks at megastores that work much the same way. Even MercadoLibre Inc., Latin America’s biggest online marketplace, has gotten in on the trend.

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Behind the shift is a population slow to set up formal banking accounts, with less than half of all adults in Mexico carrying around credit cards. While China and India have faced similar challenges, their workaround—allowing delivery people to accept cash payments—isn’t an option in Mexico because of the nation’s sky-high rates of assaults and robberies.

Tapping into Mexico’s consumer base would be a boon for the world’s top internet merchants. Retail in Mexico is a $168 billion business, but the e-commerce market was valued at only $17.6 billion last year, the Mexican Internet Association says. Consumers paid for half of those online purchases by dropping off cash in person.

“There’s not a single important retailer in Mexico that’s not investing heavily in e-commerce,” said Eric Perez-Grovas, president of the Mexico online sales association known as AMVO. “Companies that have been in Mexico forever have brand recognition and their physical stores allow customers to go in, make payments and collect packages.”

Amazon, the latest entrant in the online-offline hybrid marketplace, launched its Amazon Cash program last month, allowing customers to deposit money in an account at more than 6,000 convenience stores and pharmacies throughout Mexico and use the credit to make online purchases.

“We work hard so our clients have the best shopping experience possible,” said Julio Gil, an Amazon spokesman. “We continue working on additional payment mechanisms that will adjust to what our clients in Mexico need.”

Walmex, the local unit of Walmart, has installed about 2,000 kiosks throughout its stores that double not only as a point of payment but also a training station of sorts for older and less tech-savvy customers. The company hopes shoppers using the kiosks today to shop online and then pay in cash will eventually do the same using their smartphones, according to Philip Behn, senior vice president of e-commerce at Walmex.

Elektra has also installed about 250 kiosks, and aims to have one in every store by 2018.

“It’s a process of evangelizing,” said Juan Carlos Garcia, Elektra’s director of e-commerce. “Many customers have never shopped online.”

Elektra, known for giving credit to riskier segments of the population that traditional banks usually eschew, is getting ready to extend loans to e-commerce shoppers starting Dec. 1.

“We’re pioneering online credit,” said Garcia. “It’s in our DNA to know how to loan, how to charge and how to adapt to our clients’ needs.”

Spearheading the trend is Oxxo, the ubiquitous convenience-store chain owned by beverage-maker Fomento Economico Mexico SAB, or Femsa. Oxxo is working with MercadoLibre and Elektra, accepting payments at its almost 15,000 locations. Last year, it accounted for 35% of such transactions in Mexico, the internet association says.

The hybrid model appears to be working, helping to lure more internet shoppers. Even as Euromonitor International says more than 90% of Mexico’s population prefers to pay for any transaction in cash, online sales have grown almost 10-fold in six years, according to the internet association.

While Mexicans may be slow to embrace formal banking, the same can’t be said for technology. Last year, almost two-thirds of the population had internet access and 91% had smartphones.

“Retailers are constantly looking for ways to make their payments more flexible,” Euromonitor International said in a report. Kiosks like the ones Walmart rolled out “represent a good strategy in terms of helping consumers feel more confident when buying products online.”

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