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The Turkish economy heavily relies on private consumption, which constitutes over 55% of its GDP, making the consumer goods and retail sector crucial. Recent growth was primarily driven by the expansionary policies implemented by the government during the COVID-19 crisis, including employment and credit support. The low-interest-rate policies, in place since September 2021, have further encouraged borrowing and consumption but resulted in sharp depreciation of the Turkish lira and high inflation rates of 64.2% by January 2023.
The growth rate has been declining due to high inflation, the devaluation of the lira, and rising corporate and consumer debt. The upcoming presidential and parliamentary elections in 2023 may prompt the government to maintain the economy’s stability, but the prospects for consumption growth will be challenged. On the positive side, the gradual recovery of the tourism sector, with over 30 million visitors in 2021, and close to 50 million in 2022, is expected to continue.
Additionally, The Turkish population is relatively young and growing, with a tendency to prioritize consumption over saving, indicating a strong outlook for the long term. Online shopping, driven by the COVID-19 pandemic and increased internet and credit card usage, is expected to experience continued growth during the 2022-2026 period.
Before the pandemic, the growth of online shopping in Turkey was driven by rising internet penetration rates, increased use of credit cards, and the country’s youthful population. Online shopping experienced a significant increase during the pandemic and its popularity continues to grow. However, high food prices may curb spending in the near future. It is expected that the share of online sales in total retail sales will reach 4.34% in 2022, according to estimates from Edge by Ascential.
The most popular categories for online shopping include household goods and appliances, electronics, fashion and apparel, as well as food and groceries. Popular online marketplaces include Trendyol, controlled by Alibaba of China, Hepsiburada, N11 and Gittigidiyor, which offer a wide range of products and brands.
3rd party merchants maintained their dominance in e-commerce in 2021 with DSM Grup Danismanlik Iletisim ve Satis Tic AS being the leading player through its Trendyol platform for apparel and footwear. The fragmentation in the market remains high as the shares of Trendyol are not significant. The success of Trendyol is credited to its acquisition by Alibaba Group Holding Ltd, a Chinese e-commerce player, in 2018. The merger brought in support, knowledge, and insight which helped Trendyol expand aggressively. In 2021, Trendyol aimed to raise over USD1 billion through a private placement aimed at UK and US investors. It has also being growing ever since. During fiscal year 2022, Trendyol continued to grow rapidly, with 68% order growth and approximately 80% GMV growth in local currency year-over-year.
It is expected that 3rd party merchants will continue to hold a strong share in e-commerce. Some players have recently moved over to the 3rd party merchant model, such as Trendyol which initiated the model in 2017-2018 and generated 70% of its revenue through this model by 2019. Hepsiburada (D-Market) started its 3rd party merchant model in 2016 and generated 70% of its sales revenue through this model by 2019. In 2021, Hepsiburada.com was valued at USD3.9 billion in its initial public offering on Nasdaq, the first Turkish firm to do so. In the same year, Dogus Planet, owner of Turkish e-commerce platform N11, applied for a domestic initial public offering with the Turkish Capital Markets Board (SPK).
Leading marketplaces such as N11, GittiGidiyor, and Hepsiburda carried out service improvements by introducing new payment and delivery options. One of the areas where online marketplaces are investing heavily is in marketing for Black Friday. The leading marketplace investments in service development and consumer preference for marketplaces are set to continue benefiting the sales of 3rd party merchants over the forecast period. The acquisition of local companies by international players, such as Alibaba and Trendyol, and new entries such as Amazon service for Turkey, are set to add further dynamism to e-commerce through the intensification of competition.
Onmichannel: As the retail industry evolves, omnichannel retailing is becoming increasingly important and is expected to continue to be a major player in the future. There is a growing emphasis on blending physical and digital retail experiences while still highlighting the unique features of each. Physical stores with a digital component, known as phygital stores, and interactive shopping experiences are predicted to be areas of significant growth.
Consolidation: As e-commerce advances, it is becoming more centralized. The largest online marketplaces currently account for a large portion of e-commerce sales in Turkey. It is predicted that, due to the current size and influence of these marketplaces, businesses that wish to have a presence online will have to use the marketplaces for sales even if they have their own e-commerce channels. As a result, the e-commerce market is expected to become more consolidated in the coming years.
In Turkey, There are about 41.6% of people use credit cards, and 63% of people use debit cards. While there are 21.3% of people purchase on the internet, there is only 28% of people with online banking accounts.
For E-Commerce Customers in TurkeyWhat are the major driving factors to purchasing online?
There is 40.84 million consumer goods e-commerce users in Turkey, and they spend total of around 21.26 billion USD dollars in 2021. That makes a per capita spending on consumer goods e-commerce of around 521 USD. Also, in those e-commerce users, about 45.5% of them purchase through their mobile phone.
Our consumer research practice tracks what customers spend and how they make decisions across major economies in the world.
