Even amid political tremor, there’s at least one trend in Turkey that investors are betting will continue unabated: shoppers moving online to find deals. Tiger Global Management LLC is among those backing Turkish e-commerce companies benefiting from soaring demand. Trendyol.com, an online fashion retailer the firm has invested in, is predicting its sales will more than double over the next two years as shoppers are drawn to its luxury-brand accessories and ready-to-wear clothes by brands, such as Prada.
“There is tremendous growth potential in e-commerce business in Turkey,” Demet Mutlu, a 35-year-old Harvard Business School dropout who founded Trendyol, said in an interview at the company’s offices in Istanbul. Trendyol targets sales of more than 1 billion liras ($340 million) this year and 1.5 billion liras in 2017, up from 600 million last year, she said.Those banking on Turkey’s e-commerce growth include EBay Inc., Amazon.com Inc., Earlybird Venture Capital, Delivery Hero Holding GmbH, Abraaj Group Ltd., and Naspers Ltd., all of which have invested in the country of almost 80 million people in the past five years.
While Web shopping still accounts for a tiny portion of Turkey’s retail revenue, it’s set to rise 24 percent to 31 billion liras this year, helped by improving Internet access and an economy projected to grow at a 4.5 percent clip, according to Hakan Orhun, head of the country’s e-commerce association Etid.Erdogan’s GripPolitical risks are prompting others to reassess their views on Turkey. Last year, the country dropped out of the top 30 markets to invest in, as ranked by A.T. Kearney Inc.’s Global Retail E-Commerce Index, after coming in at No. 22 in 2013.President Recep Tayyip Erdogan is tightening his grip over Turkey, and the political convulsions that prompted Prime Minister Ahmet Davutoglu to resign on May 5 are weighing on investors’ minds. On Tuesday, Erdogan approved a new cabinet led by a minister seeking to expand the President’s powers.
Online sales could expand to 4.5 percent of Turkey’s retail market of 1.5 trillion liras in five years, according to research by Etid and Deloitte. It now accounts for about 2 percent, compared with 6.5 percent in developed countries on average and 4.5 percent in emerging markets, according to the study.
Turkey’s online-retail market is “a huge opportunity for investors, with more and more people starting to take part in entrepreneurial initiatives and helping to develop a vibrant startup culture,” said Cem Sertoglu, a partner at Earlybird Venture Capital in Istanbul. His firm’s $150 million Turkey and Central and Eastern European fund has invested in 10 companies in the country, including online furniture seller vivense.com and real-estate marketplace tapu.com.
Kleiner Perkins Caufield & Byers and the European Bank of Reconstruction and Development have joined Tiger Global in backing Trendyol, bringing the total the retailer has raised to $52 million. Markafoni, Trendyol’s main rival, was sold by founder Sina Afra to South Africa’s Naspers in 2014. Turkey’s Boyner Group owns another competitor, Morhipo.com.Trendyol is already looking further to other markets.“There is huge potential to grow outside Turkey and we are considering this as the next step,” she said. “Our investors are fully supporting this move.”