Online shopping booms, marches to consolidate

Online shopping booms, marches to consolidate

ISTANBUL - Reuters
An online shopping boom in Turkey can be attributed to prominent international investors, sector professionals have said, yet a consolidation period awaits for small firms that will struggle to gain scale in order to survive.

The e-commerce sector in Turkey has flourished over the past five years, catching the eye of leading international investors and e-commerce giants.

According to a Turkish e-commerce report by business consultancy firm Deloitte, 17 mergers and acquisition deals were closed last year in the country. Nevzat Aydın, chief executive of online food delivery site Yemeksepeti, estimated foreigners had invested some $500 million in the sector over the past two years.

EBay initially invested in its Turkish clone GittiGidiyor in 2007, expanding to purchase almost the whole firm four years later, while Naspers bought 68 percent of Markafoni in 2011. Amazon invested in online flower delivery site Ciceksepeti the same year, while tech-focused hedge fund Tiger Global bought into private shopping club Trendyol.

Most of the big deals have likely been completed for the time being and industry experts expect a period of consolidation as smaller e-businesses struggle to ensure their survival by scaling up and attracting heavyweight partners.

Almost every e-commerce business in Turkey with an annual turnover of over $30 million already has a heavyweight investor behind it, and there are not many potential targets left for newcomers, industry executives have said.

Many small-scale e-commerce firms, of which there are several thousand in Turkey, are too small to absorb big investments easily and lack distinctive business models.

Industry executives estimate at least 8-9 million people shop online with a turnover of some $7.2 billion last year, as per capita income has nearly tripled over the past decade and internet access and use rises.

According to calculations based on the data, last year, Turks spent $450 million online on clothing and accessories, $395 million on groceries and food and $2.1 billion on electronic goods.