Nation heir of the Ottoman Empire, Turkey seems to be regaining the splendor of its ancestors as is now considered an emerging market and one of the world’s newly industrialized countries. In fact, the socio-economic framework that has been drawn in recent years puts Turkey on the spotlight, making it a very attractive market for international merchants interested in reaching Turkish consumers.
The Turkish economy had a steady growth until 2017; however, there were several internal and external factors which led to its downturn. Despite this fact according to the World Bank, if these conditions are dealt with effectively there is growth recovery expectation in 2020. Given this context, it is more than pertinent to look at the state of Turkey’s economy and its market, especially regarding the prospects of e-commerce.
A brief overlook of Turkey’s economy
What immediately stands out since the first approach to this market are two main aspects: the fact that Turkey is a member of the G20, the group of the most important economies in the world; and the fact that it was one of the emerging markets with the largest GDP at current prices in the world in 2018 (USD 766.43 billion). Along this fact, Turkey was among the European countries with the highest GDP at current market prices in 2018, having ranked in 7th place in top 10.
Regarding the share of economic sectors in the 2017’s GDP, services had the highest contribution 53.37%, followed by industry 29.16% and agriculture 6.08%.
To these indicators of economic growth, it shall be added the following:
- 82 million inhabitants in 2018.
- The youngest and fastest growing population in Europe.
- The city of Istanbul’s economy alone is larger than the collective economies of twelve EU countries.
Overall, this is the economic context that has been leveraging the Turkish economy, enabling the conditions for its foreseeable growth.
The evolution of e-commerce in Turkey
In Turkey, the economic context has enabled a steady increase in the e-commerce market over the past few years, as numbers indicate: the size of the e-commerce market was USD 12.5 billion in 2018, a 8% increase from the previous year. Regarding the consumer behavior, e-commerce has the highest share (43.7%) in the total expected digital revenues in 2019.
Taking these numbers into account, the question arises: what are the key points that contributed to this scenario?
- 54.1 million internet users in 2018.
- Internet penetration rate of 66.6% in 2018.
- 37.9% smartphone penetration in 2018.
- In 2017, an estimated 30% of e-commerce was carried out on mobile devices, which represented USD 3.5 billion in a total transaction value.
- In 2017, 67% of smartphone users said that they wanted to use their devices for online payments in the future.
- The price advantage is the main reason (56%) presented by Turkish consumers for purchasing online.
With the expectation of a rising line in the aforementioned set, it’s projected a growth of 24.2% of e-commerce spending by 2020. When it comes to revenues, there’s an expected positive annual average growth of 2.9% from 2019 up to 2023, which will result in “electronics & media” and “fashion” being the main product categories primarily purchased online.
As for the preferred way to pay for online purchases, payment cards (64%) were the most used method among Turkish consumers in 2018, followed by cash-based payments (15%) and bank transfers (10%). It is also important to mention mobile payments (which are included in the “Other” category in the table below) because they can be a relevant alternative payment method in certain segments, such as gaming.
Turkey’s promising economic landscape is attracting business however, to penetrate this market one must be aware that this is a country with a very different culture, where the weight of religion and tradition is an undeniable fact. That is why it is recommended that international companies partner with a local expert such as BoaCompra, whose expertise and knowledge of the Turkish market can help these companies to overcome potential adversities and master their e-commerce business.
Get in touch with us to learn how BoaCompra can help your company expand to this promising market: