Rise of the cyber spenders: E-commerce in Turkey

As we have touched on before at ITE Transport & Logistics, e-commerce has the power to radically change a country’s logistics sector. And, with a valuation of $11.6 billion predicted by 2020, Turkey is shaping up to be Eurasia’s hottest e-commerce market.
 
What does this mean for transport and logistics services providers in Turkey and beyond? Simply put, it points towards a dropping of bricks-and-mortar operations and more demand for consumer-orientated delivery services.
 

The shape of e-commerce in Turkey

Around 44% of Turkey’s 77 million population actively engages in shopping online. That’s a core consumer base of over 33.3 million shoppers. By 2020, Turkey will have 44.3 million e-commerce users, representing 71.8% of the nation’s total population.

Since 2008, e-commerce sales have been growing at an accelerated rate in Turkey. Across the past 9 years, it has been growing at a third year-on-year, showing the sector’s huge potential.

The Turkish e-commerce market is Europe’s second largest – impressive for a nation with under 50% internet penetration until as recently as 2015. The increased speed and connectivity of mobile devices is playing its part in expanding online sales, with over 40 million smartphone users predicted by the end of 2017. A third of current online shoppers in Turkey make purchases from their phones, tablets or other devices.

In short, e-commerce is big in Turkey and, crucially, is growing bigger. The rise of online retail is partly being fuelled by three changes in Turkish society:

•    Rising middle class – Over 41% of Turks consider themselves members of the middle class, meaning they are enjoying higher purchasing power than ever before. With a GDP per capita of $10,500, Turkey is on the verge of hitting OECD High Income status. Turkey’s rising incomes has led to an increased number of internet-ready devices are in the hands of shoppers with cash to spend.
•    Urbanisation – Turkey’s urban population now totals above 75%. More and more Turks live, and are growing up, in major cities and towns, surrounded by the latest technological advancements. This has created a divide between elder generations, who are less tech-savvy, and more computer literate younger members of Turkey’s population, again encouraging growth in online sales.
•    Young population – As mentioned above, urbanisation is highlighting changes in Turkish demographics. Much of the nation’s urban population is made up of 18-35 year olds, who enjoy larger incomes and busier lifestyles than their parents. They tend to favour easily accessible products and services, reflecting the activity of 6.8 million online shoppers in this age group.

The above three elements of Turkish society are creating the perfect environment for e-commerce sales to grow in Turkey. And, when they do, Turkey’s logistics services will have to react accordingly.
 

How will e-commerce change Turkish transport & logistics?

As mentioned above, e-commerce sales in Turkey are expected to exceed $11.6 billion by 2020 – almost double the current figure of $6.9 billion. All signs are pointing towards higher levels of goods requiring rapid, effcient delivery.

Much of the logistics activity in Turkey is outsourced, with some sectors being more affected than others. 20% of companies involved in fashion, high tech and consumer products only directly handle their own logistics operations for example.

Outsourcing is very much the prevailing trend.  46% of all outsourced activity goes to “dedicated suppliers” i.e. those partners considered trusted by retailers, whereas only 30% of all outsourced logistics work is carried out by regular 3PLs. 

Currently, very few retailers are using B2C distribution. Bricks-and-mortar operations are still the focus for retail companies at present, especially in the consumer goods industry. B2C distribution, such as direct delivery to customers, is viewed as a long term goal – something at odds with e-commerce’s ferocious growth over the past few years.

So how can logistics providers capitalise on these trends? With outsourcing such a huge part of Turkish transport and logistics services mix, it is likely to produce a range of opportunities for small-to-medium carriers, including fulfilment, package processing and delivery. 

Countries experiencing similar e-commerce growth are predicted as requiring huge levels of investment in its warehousing and fulfilment centre operations. Russia alone is ploughing $30 billion into new warehouse facilities in order to keep up with demand generated by online sales. 

Likewise, Indonesia is seeing a spate of multi-million dollar logistics centres being built across the nation – again as a response to demand generated by its e-commerce sector.
 
Transport and logistics providers in Turkey must learn from these examples and be adaptive if the nation wants to remain a competitive regional logistics hub. Operators must:

•    Monitor operations & control the forwarding cargo and turnover
•    Organize delivery actions on the same day in the relevant city
•    Establish and train special teams for E-commerce deliveries
•    Follow the returns processes very strictly & minimize it as much as possible.
•    Configure delivery forms to represent time & day definite, time priority, hourly delivery, night delivery, appointment, delivery on the same day & so on

In the meantime, foreign investors can provide expertise, technologies and skills necessary to aid Turkey’s burgeoning e-commerce sector in reaching its full potential. 

 

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