Paco Camacho: Hey, Héctor. Yes, I think regarding spin, one of the things we have learned is — and we had kind of the thesis that the store would be helpful in the acquisition of customers. But to be honest, it’s exceeded our expectations. And this has translated into the cost of acquisition, right? Because some of the incentives and some of the strategy that we had at the beginning have turned out to not really be necessary. You know, it looks like we can continue to add sorts at the pace that you’re seeing without incurring on a very high cost. So to finish comment on digital, the actual network of physical stores and these 13 million times somebody is getting asked today, if you already have a spin account, that has turned out to be very, very powerful.
And so yeah, we are continuing to grow. I mean, on the Spin side, I think we added — we’re adding something like 400,000 stops per month. And on the premium side, it’s significantly faster than that. So going back to an earlier question a few minutes ago, I think the bigger challenge is on engagement, on generating an engagement and having more things for people to do while they’re on the app, spending more time. And then, of course, this is going to translate into better digital media numbers as well, because people are going to be there for longer. So that’s really the number one item on the agenda is increasing engagement and monetization as opposed to just sheer number of subs, because that’s happening more or less on its own.
Paco Camacho: And in fact, Héctor, this is Paco. But just to add to Juan’s point. The fact is that as a metric, for example, today, we focus significantly more on active users rather than total users for Spin, because what is important is those that are making at least one transaction a month, and then once you have those transacting at this once a month, then you focus on the size of the transaction and the number of transactions that they make. And that’s where the team is localizing at this stage, which is understanding what is the journey of the consumer, how a consumer in one location of a certain sociodemographic uses the card, do they use a physical card, do they use a digital card, do they use it to transfer money, do they use it to pay, do they used it to receive payments from other people.
And depending on how they are using that card, then is the type of offering and the type of journey that we put that consumer into. So when you look at the transaction, the reality of the transactions grew almost 16% during the month. And what the team has learned is that those users that have a higher frequency are, obviously, the ones that have each interaction at higher ticket, too. So — but again, as I said, clearly, it is different if you are students, how you use the card versus if you are someone that is working in Tijuana and you’re sending money to Hatay [ph]. So I mean, clearly, all those different ways of using Spin will play a role in terms of how we activate it in the store and what type of offers we do to each of these consumer segments and cohorts.
So again, lots of possibilities, but once again, the focus shouldn’t be on some merchant than recruiting, but it’s significantly more on the frequency and how active those consumers are using the platform.
Juan Fonseca: I think the other part of your question, Héctor, had to do with the B2B. And as you know, that’s the second element, all we’ve talked about right now and the success we’ve seen so far has been on the consumer to close the loop in the ecosystem. That’s the other big part of the strategy. As you know, we acquired NetPay, which basically gives us the infrastructure, so the rails on which to build this trade and the good relationships that Coca-Cola FEMSA has obviously with all mom-and-pops in the southern part of Mexico. And with the ability to distribute non-coke products through also distribution centers and also commercial relationships trying to bring a digital solution so that, that mom-and-pop through the Spin ecosystem with obviously a differentiated product more tailored to their B2B needs with different — I mean, ability to provide services, potentially credit, et cetera, and have access through the digital framework to accept payments to order from cost or to order from other products, that would be, again, using the [indiscernible] that we built with Pepsi, that would be kind of the other side of the prong – of the prong sorry, that could bring both sides together and close the loop and try to provide an ecosystem, both on the consumer side, as well as on the mom-and-pop/little restaurant side.
So that’s a little bit of what we’re trying to do there.
Héctor Maya: For that part, is there a timeline when is it that we could possibly be seeing that or more details on that?
Eugenio Garza: We’re still in the early stages. Again, we have pilots running in some of the Coca-Cola FEMSA regions, and we’re still tinkering with the value proposition on how to do it. So it’s still early days to – to have a full timing. That initiative obviously has different implications from an acquisition cost perspective, which was the easy part with the B2C side on OXXO. So we’re still working our way around that. Having said that, we do believe that the value — potential value creation in a win-win with the mom-and-pops and small little so restaurants in the Coca-Cola FEMSA network is large enough for us to be able to devise the business model that works for all of us.
Héctor Maya: Thank you. Thank you very much.
Eugenio Garza: Thanks, Héctor.
Operator: The next question comes from the line of Ulises Argote from JPMorgan. Please go ahead.
Ulises Argote: Hey, guys. Good morning. Thanks so much for space for question. Just one quick one here from my side. On the release there, you’re mentioning on the proximity formats, the decrease in the contribution of financial services. So just to understand there, if there’s any change in competitive landscape or dynamics or if there’s any kind of specific situation that are impacting that part of the business? I mean when you spoke already about kind of Banorte going back and forth, but it would be great if we could get just some extra color there. Thank you.
Eugenio Garza: I mean on that front, yes, Banorte literally just came back like a few days or weeks ago, so it would not be in the numbers. And of course, we had lost Citi and we — there’s been some volatility there. So I think looking backwards, certainly, there’s been — it’s been one of the reasons where we’ve had some noise. But yes, going forward, we are expecting, I think, more balanced or stable dynamic. There’s nothing — no new information regarding a shift in the partners or how we interact with them.
Paco Camacho: One of the reasons you are seeing a little bit of that weakness, Ulises, is that, I mean, we have purposely also managed pricing to be — I mean, not only competitive, but also provide value for the customer and pricing has not kept up with inflation for services. So that’s why with the high inflation period we’ve experienced over the past few quarters, as you look through the income statement, that there is a loss in the very high marginal profitability that this services bring. There has been some decay in that profitability because we haven’t kept up pricing on purpose.
Ulises Argote: All right, perfect. Thank you, guys.
Paco Camacho: Thank you.
Operator: The next question comes from the line of Alejandro Fuchs from Itaú. Please go ahead.
Alejandro Fuchs: Hello, Paco, Eugenio, Juan. Thank you for taking my question. I could follow-up maybe to Álvaro’s question on pressures on labor costs, right? We’re seeing this across the board in Mexico and think that in next year, there would only be more pressure, right? We have changed it maybe to the working leads. We have many changes on the demand payment — so I wanted to get a sense in how the company is thinking to the budget next year, if there’s any way sort of OXXO and even more efficient than it already is or how you guys thinking maybe of trying to mitigate some of the potential impacts coming into next year? Thank you.
Paco Camacho: Yes. Alejandro, thank you for the question. Indeed, I mean, when you look at OXXO’s strategies, one of the strong action plans that they have is the optimization of the store itself. And they have historically been very good at it. So, the reality is that regardless of whether or not there are cost pressures, which there will always be some and then obviously, like the labor one, they can be higher in one given — in any given year. But the reality is that, that is a continuous process. And also its continuously saving costs out of the operation. And that is something that they have done for many years. They have — they are very good at it. And you can rest assure that moving forward, they will continue to actively pursue that is part of the long-range plan actions that they have Then as for the cost themselves, they are, in fact, modeling some increases for 2024 as part of the budget generation for next year.
