Turkey: Loading e-commerce

As Turkey’s internet usage rises and opportunities for online shopping gain traction, the rapid expansion of the e-commerce market has attracted the attention of international players.

Approximately 36.4m Turkish people have access to the internet on a regular basis, according to the International Telecommunications Union. With the infrastructure for internet service in place and user numbers climbing, the Turkish market is the 12th-largest for internet usage globally, and a penetration rate of only 45% means there is still plenty of room for growth going forward.

The country has a number of e-commerce sites that go beyond the retail offering, serving such niches as online bidding, the sale of second-hand goods, real estate, ticket purchases and food delivery. The nation’s three leading players are the for-sale-by-owner website Sahibinden.com, the auction house Gittigidiyor.com and the miscellaneous goods retailer Hepsiburada.com. Other major players include the Ticketmaster subsidiary, Biletix.com, and food delivery platform Yemeksepeti.com.

The range of items on offer through local websites – electronics, car accessories, stationery, books, movies, health products and clothes – has been central to the market’s rapid expansion, with frugal customers seeking out the best deals and high-end buyers purchasing hard-to-find luxury goods.

International companies have started to take notice of Turkey’s upside potential. The world's largest online marketplace, eBay, announced in April that it would expand its stake in Turkish counterpart GittiGidiyor.com from the minority holding it acquired in 2007 to controlling 93% share.

At the same time, at least one of Turkey’s major e-commerce companies is looking abroad. Yemeksepeti.com has expanded its network to 3500 member restaurants in Turkey, processing some 15,000 daily orders from more than 900,000 registered customers. The firm brought in $105m over the course of 2010 and has been actively expanding internationally, taking orders for 400 Moscow-based restaurants through its subsidiary izrestorana.ru and 450 restaurants in the UAE via foodonclick.com.

The recent eBay move to increase its exposure to the Turkish market follows a very upbeat 2010 for local e-commerce companies, with the metrics for several services illustrating confirming this headline trend. Biletix.com exceeded 1m registered customers in 2008 and sells approximately 3.5m tickets through its website each year. Having seen revenues of $164m in 2008, Hepsiburada.com is expecting to reach turnover of TL1bn ($660m) in 2011.

According to Aytuğ İğneli, the general manager of Hepsiburada.com, the major players in e-commerce have seen exponential growth with the expanded provision of internet services. “In 2010 we acquired an average of 1500 new members every day,” she told local press.

The growth trend illustrated by Hepsiburada.com fits that of the larger industry. The company’s 2010 report reported that Turkish e-trading volume was approximately TL260m ($171.8m) in 2003, but over the course of the decade it grew rapidly, reaching TL10bn ($6.6bn) by 2009 and TL15bn ($9.9bn) by the end of 2010.

Such growth has seen Turkish entrepreneurs quick to offer new logistical and niche services for the burgeoning sector. Among these news services are E-Cozum, an e-commerce platform that supports small and medium-sized enterprises (SMEs) by integrating supply, logistic and financial services; mmmNefis, an online store for traditional Turkish foods; Netport Bilisim Hizmetleri, which works with the e-commerce provider SmartShop to assist SMEs with online solutions; and Baba2Baba.com, an e-commerce portal for merchants. These new businesses are playing a key role in expanding online activity, as they enable more firms to move online while diversifying their revenue streams.

While its growth outlook is positive, the e-commerce sector has had to face a number of challenges during its expansion. Most recently, allegations of illegal activity damaged public perceptions of the industry. Quest Net, which recently rebranded as QNET, was hit with accusations that it was operating a pyramid scheme. The Turkish ministries of industry and finance both investigated the firm's activities, seizing documents and detaining employees in the process. However, after initially being banned from operating in Turkey, the ministries reconsidered and have allowed the firm to remain in its rebranded form.

Though there is still some cause for caution on the part of local customers, the e-commerce industry is unlikely to be negatively affected in the medium term. Growth expectations are even driving postal services throughout the Mediterranean to collaborate on preparations for the uptick in shipments. A new mail service and e-commerce logistics agreement was signed in Rome in mid-March, with 13 providers, including Turkey, forming the Postal Euromed group. The new organisation is expected to develop common policies with regard to transporting packages and one of the key areas to be addressed is the creation of a common e-commerce platform for member countries.

With local and regional developments supporting further expansion, and the online marketplace seeing strong, sustained growth, operators are confident that 2011 will be another solid year for e-commerce companies, with the sector likely to continue to benefit as new technologies are rolled out.