Is Spin by Oxxo's Growth Slowing Down?

Trying to get Latin Americans set up with a bank account, let alone a credit card, is a complex problem. About half of the region's population works under the informal economy, which operates primarily with cash. Informality makes the concept of a bank account irrelevant and, due to tax obligations, perhaps even risky to some. That represents a massive business opportunity in our region and explains why 44% of LatAm's unicorns (many of which probably can't claim that status anymore) were in the Fintech sector in 2022.

It also helps explain why Mexico's massive chain of convenience stores, Oxxo, made a move into the Fintech space in 2021. As you heard here first, Oxxo is one of the biggest retail chains in the Americas, with more locations in Mexico than Starbucks has in the US. Starbucks is technically a hyper-successful bank through its rewards program, so why not Oxxo?

Estimating from FEMSA's (its parent company) reports, Oxxo does 12M transactions daily. Assuming a different person makes each transaction, ~10% of Mexicans use an Oxxo every day. The company, clearly understanding that this traffic of people was an unseized opportunity, started strong — after its first full year of operations (2022), it reached 3.9M active users. The growth was unprecedented in LatAm; it took Nubank, the most successful neobank in the region and perhaps the world, more than four years to reach the same amount of customers in Brazil.

In the latest earnings report, however, the growth appears to have slowed. Spin by Oxxo added 300K customers in the first quarter of this year, compared to an average of 900K per quarter in 2022. Whether this slowdown is cyclical or due to external factors like more restrained consumer spending it's yet to be seen. But one thing is clear — the competition to gain a spot in Mexicans' wallets is fierce; Nubank reached 3.2M customers in Mexico by the end of 2022.

This week’s opportunity:

One of Oxxo’s parent company’s divisions (one of the largest bottlers in the world), Coca-Cola FEMSA, just posted 17 new jobs in the last week in Brazil, Mexico, and Argentina. 🇧🇷🇲🇽🇦🇷