Turkey’s e-commerce industry has “still a way to go” sources in the county’s commercial capital Istanbul told Asia Cargo News.

A trio of reasons – the new Istanbul mega-airport, a recent devaluation of the lira and a good home base market not victim to last-mile concerns – are given as the main reasons for further strong growth.

Istanbul’s new international airport, currently working through its soft opening ahead of a planned hard opening on December 29, has a lot more cargo capacity than Ataturk Airport: 6 million tons in total, of which Turkish Airlines gets 4 million.

Turkish acknowledges this new capacity will allow it to do more e-commerce, but the advantages go further and involve other carriers as Emre Eldener, president of UTIKAD, the Turkish freight forwarders association, pointed out in an interview with Asia Cargo News.

“The new airport is huge with a lot of potential. We are expecting that more airlines will start calling at Turkey and that Turkish Airlines will start flying to more destinations more frequently,” Eldener said. Over time, he said, it could result in “reduced freight rates for exporters.”

Also helping the e-commerce industry is recent devaluation of the lira, down by 40% at some points, which has made Turkish products much more competitively priced. Those cheaper goods can now be moved by an industry is already to scale and with some experience.

“Fifty billion Turkish lira (US$9.17 billion) – that’s what’s expected,” ETID chairman Emre Ekmekci told Asia Cargo News when asked about expected turnover in 2018. ETID is Turkey’s main e-commerce trade body, involving all the big players across the ecosystem.

Even before the export opportunities arose, the industry was consistently reporting 35% growth a year in Turkish lira terms (12% in US dollar terms) over the past decade, Ekmekci added. To make the point of how much further this could grow, e-commerce in Turkey is 3.5% of retail sales, only half of what it is in China, Ekmekci said.

Traditionally strong e-commerce products in Turkey include electronic goods such as TVs, cell phones, kitchenware and computers. Goods for mothers and babies such as formula, nappies and car seats are quickly migrating to e-commerce over traditional retail, reflecting the young age of Turkey’s population.

“Turkey is very young. There is a digital generation of 10 million people soon expected to come of discretionary spending age,” Ekmekci added. “We have a huge population driving this,” he added.

Where there is a weakness is in large consumer goods – white goods. These industries and manufacturers see e-commerce as a threat and want to continue selling offline, Ekmekci said.

Another e-commerce driver is the country’s rural population, which doesn’t have the same access to physical shops that urban dwellers have. Fifty percent of Turkish e-commerce is outside the big cities, said Ekmekci.

Turkey’s good national roads system makes it easy for e-tailers to ship goods to the countryside. “The entire country can be reached within two or three days,” said Ekmekci. “E-commerce companies in Turkey are investing in one-hour, two-hour, reserved time slots. Those are premium services,” he told Asia Cargo News.

The real growth, though, is not likely to be within Turkey, where some 40% of the market remains unbanked, but overseas, especially regionally. Turkey’s e-commerce sector might lag behind that of China and Europe, but it is far ahead of its neighbours, where the industry will likely grow next before going global, Ekmekci said.

“With the introduction of the new airport Istanbul becomes an international air logistics hub for the region and air shipments become cheaper with that investment,” Ekmekci said. The region in question is the Middle East/North Africa (MENA) and the Commonwealth of Independent States (CIS), he added.

Corroboration for this comes from the freight forwarders at UTIKAD, who flag one issue to watch: modal shift as costs fall. “It’s a possibility, especially for European destinations and the CIS,” said Eldener, who mentioned Kazakhstan as a destination which in future might see goods flown rather than driven in, providing the economics of it work.

Also helping is the reputation of Turkish products – those from China are considered cheap in much of the region – underpinned by an initiative of the Ankara government to improve the quality of exports.

One other reason for a more regional focus is the large doorstep market, particularly in Arab countries. “There’s an awful lot of market in the Middle East. There’s a lot of capacity,” said Ekmekci.

By Michael Mackey

Correspondent | Istanbul