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Amazon plans mega-warehouse for Mexico growth spurt

Amazon.com Inc is preparing to open a 1million square-foot warehouse near Mexico City as part of an effort to boost its presence in Mexico's young e-commerce industry.

The new warehouse will be completed next year in the Tepotzotlan municipality about 25 miles north of the country's capital, according to four Mexico City real estate professionals familiar with the plans.

The facility would triple Amazon's distribution space in Mexico, home to around 120million potential customers.

Amazon.com Inc is preparing to open a 1million-sq-ft warehouse in the Tepotzotlan municipality about 25 miles north of the country's capital

Amazon.com Inc is preparing to open a 1million-sq-ft warehouse in the Tepotzotlan municipality about 25 miles north of the country's capital

Amazon's Mexico push comes amid talks to revamp the North American Free Trade Agreement. 

NAFTA could benefit the Seattle-based retailer if the U.S. persuades Mexico to raise the $50 limit on the value of online purchases that can be imported duty-free.

Amazon is a relative newcomer to Mexico. It opened its Kindle e-books site to Mexican customers in 2013 and expanded into sales of physical goods just two years ago. 

It is already the nation's third-largest online retailer, growing much faster than rivals such as Wal-Mart Stores Inc.

Amazon posted $253million in sales in Mexico last year, more than double the year before, according to market research firm Euromonitor International.

Amazon is already the nation's third-largest online retailer, posting $253million in sales last year, more than double the year before

Amazon is already the nation's third-largest online retailer, posting $253million in sales last year, more than double the year before

Sharing a nearly 2,000-mile long border with the U.S., Mexico would seem a logical place for Amazon to expand. 

But duplicating the company's U.S.-style success could prove tougher.

Online shopping comprises nearly 3 percent of all retail sales in Mexico compared with over 10 percent in the U.S.. 

Some Mexican shoppers are wary of online fraud and many do not have credit cards.

Some analysts believe Amazon is willing to take the risk as it races to bulk up in foreign markets to compete with fast-moving global competitors such as China's Alibaba Group Holding Ltd.

'Amazon is not afraid to plow into a new market in a very big way, take a big hit, but say, 10 years down the line, this is going to be big and profitable,' said Neil Saunders, managing director at the GlobalData Retail research firm.

Amazon spokesman Julio Gil declined to comment on plans for a new warehouse in Mexico. 

He said the company's Mexican unit is aiming to expand its product offerings, offer faster deliveries and make the purchasing process as smooth and secure as possible to inspire consumer confidence.

'We're trying to eliminate any friction,' Gil said.

Amazon´s stock climbed more than 1 percent on Wednesday, reaching $994.10 a share by early afternoon.

FLUID LOGISTICS

Amazon currently operates two distribution centers in Mexico totaling more than 500,000-sq-ft.

Both are in Cuautitlan Izcalli in the state of Mexico, adjacent to the autonomous district of Mexico City, whose metro area is home to more than 20million people.

The new warehouse will be constructed about seven miles from the existing facilities. All are located along the so-called 'NAFTA' highway, an industrial belt that runs through Mexico's factory regions to the U.S. border.

The new facility is being built by industrial developer Fibra Prologis, according to sources familiar with the plans. 

The Mexico-based real estate investment trust owns 34.2million-sq-ft of manufacturing and logistics space across Mexico. Prologis declined interview requests.

At 1millionsq-ft, the new facility would be able to distribute bulky products such as

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