TECHNOLOGY

New regulations are helping push Turkey’s technology sector in the right direction, but more help from banks is needed if fintechs are to reach as many customers as possible.

Up until 2019, the group mostly focused on B2B. But we believe that B2C will catch up in the coming years, which is why we made strategic acquisitions to help to grow in that segment. On the B2B side, we believe enhancing our service set is the key to growth and are investing in several new services related to corporate and employee expenses. In 2019, we introduced MultiTravel, a corporate travel solutions platform where companies can get plane tickets, hotel accommodation, airport transportation, and short-term car rental in a single portal. Within that, company policy can be inserted so that each employee can access the portal within those. It is cost effective and easy to run.

DEMİRHAN ŞENER

We actually have two product portfolios. One includes products based on government mandates, including electronic invoicing, electronic ledgers, electronic archiving, and electronic delivery notes. We also have complementary products that are available if a customer wants to transform their operations above and beyond what is required by the government. These digital tools allow companies to be more flexible and cost-effective and to operate in a more optimal manner. We offer, for example, software that allows companies to integrate their operations with the software of their banks. Such tools help our customers operate more optimally and save money.

KORAY GÜLTEKIN BAHAR What does the future hold for the technology sector in Turkey?

joint projects between banks and fintechs. Moving forward, there should be more cooperation rather than competition in the market. Growth is inevitable as banks cannot fill the gaps that fintech can. There are many fintech companies in Turkey; the problem is finding the technical power and finances needed to run the business. As for us, on the B2B side we will maintain our strong market share in sectors such as meal cards, fuel expenses, and flexible perks, and enhance our service portfolio, like corporate travel expense management. When it comes to the B2C part, we are the market leader in terms of market share. We will maintain that position, bring new features to our services, and try to increase the gap between us and the runner up. On the investment side, we are always looking for new opportunities. As a technology company we will continue in investing IT infrastructure and software solutions. But these are not the only area of investment for us. AI, RPA, and machine learning are our hot topics currently. We have introduced our first machine learning solution in our operations recently and have seen the benefits from the first day.

Our biggest challenge is continuing to develop our local know-how as we open up new markets. When we enter a new one, we need to dive deep into local regulations and requirements before we launch a new product. Our team knows how to leverage local knowledge and develop a strong sense of moving forward, though it is still a difficult process, and it will likely remain a challenge as we move forward and enter new markets in the East. But overall, we have made strong progress and will continue to develop well. For our business, there are not many changes in terms of industries, because e-government changes impact every area of the economy. It is more about the size of the company rather than the sector. In Turkey, for example, these requirements were only relevant for companies with revenue greater than TRY25 million in 2014, which then dropped in ensuing years. For Italy, all invoices have to be electronic, and this means that everyone has to be compliant. There are different thresholds in different markets, and every government has a different roadmap. The ultimate target is to mandate all companies to use these new processes. ✖

KGB

and not just for businesses, but in traffic on the street, where scooters branded with e-commerce company logos weave in between crawling rush hour traffic.

It is a traffic pattern that mirrors the economy itself. Multinational retailers in Turkey are mired in uncertainty over macroeconomic trends and slowed growth, while more nimble e-commerce companies take advantage of the literal and figurative agility of a mobile marketplace. What slows down bigger, brick-and-mortar shops does not slow down e-commerce services that connect smartphone owners with products on demand. However, just like driving a twowheeled motorbike, there are risks. E-commerce is not only competitive, but also potentially subject to unexpected shocks in its way. Purchases from apps are sometimes impulsive and can easily entice customers to part with their money, but that process relies on what’s in their wallets to begin with. Companies that cannot adapt to the ebbs and flows of consumer desires and needs will suffer, just as they would in the analog marketplace.

As a middle-income country, international retailers should not expect to see the kind of big-ticket items flying off the digital shelves as they might in the US, so the name of the game is selling by volume. Deliverable lunches, last-minute gifts, and smaller, impulsive purchases, conducted at scale, are a better long-term bet than relying on more expensive selections. Those could be more vulnerable to currency shocks and credit crunches than the less volatile costs of fast-food or same-day-delivery flowers.

Turkey, however, offers a number of advantages for e-commerce companies, including the rapid growth rate of the industry itself. This signals consumers’ comfort with the practice of buying online for products they have never seen or tasted, a big psychological step.

Amazon and Alibaba are already on the scene, but are following different models. Amazon has opened its online marketplace, while Alibaba decided to purchase established Turkish e-commerce player

E-COMMERCE IS IMPOSSIBLE TO IGNORE IN TURKEY,

Trendyol in 2018. Getir, Yemeksepeti, and Çiçek Sepeti are also popular marketplaces for consumer goods, meals, and gifts.

A report from market research firm Nielsen puts the overall value of e-commerce in Turkey at EUR5.7 billion, a 38% increase over 2017. That represents 5% percent of retail sales nationwide. On an individual basis, however, Turks spent EUR160 per capita in 2018. That is far lower than the global average per capita spending on e-commerce of EUR735. Nevertheless, the widespread acceptance of e-commerce should be read as good news for the industry overall and investors who dare to learn the rules of the road.

“The most popular product categories are shoes and clothes (68% of consumers buy these online), followed by consumer electronics (58%), personal care and cosmetic products (49%), and books, movies, and games. Ordering food from restaurants is also popular (47%),” according to the site ecommercenews.eu.

Growth trends are also strong for e-commerce, according to Eshopworld, an e-commerce branding company.

“There are currently 31.39 million e-commerce users in Turkey, with an additional 6.72 million users expected to be shopping online by 2021.” That figure could rise to 38.11 million by 2023, when the annual per capita spending on e-commerce is set to reach USD253.

Eshopworld also found that 76% of online sales are done on desktop, 16% on smartphones, and just 3% on tablets. The share of desktop purchases suggests that people make their shopping choices online at work or at home, and that the average shopper is wealthy enough to own such a device. A trend to watch would be more purchases by smartphone, suggesting that lower-income consumers are embracing the convenience of e-commerce as well. As that share increases, e-commerce companies may need to adjust what specific consumers they are targeting, expand or change product selection, or offer discounts to encourage repeat purchases. With per capita spending likely to remain relatively low, volume will remain the make-or-break factor in Turkey’s e-commerce sector. ✖