Controversial

The Changing Face Of Turkish Commerce

When most people think of commerce and Turkey, the first image that jumps to mind is probably of Istanbul’s Grand Bazaar (pictured below).

istanbul-grand-bazaar

Which is not entirely unfair given that the Grand Bazaar is over 500 years old and was the most visited tourist attraction on Earth in 2014 with approximately 92 million visitors.

However, it’s also not an entirely complete picture of Turkish commerce either, particularly in the four years that PayPal has been open for business in Turkey.

“When you look at Turkey specifically over the last four years since 2009-2010, I suppose e-commerce has grown really rapidly,” PayPal’s Regional Director for Turkey, the Middle East and North Africa Kivanc Onan told PYMNTS in an interview. “Today we estimate it to be around an $8 to $10 billion industry in that space – though that is still the mainly on the domestic side of trade – Turkish merchants selling to Turkish consumers.”

And while the domestic picture is strong, Onan told PYMNTS that truly interesting changes in e-commerce in Turkey are happening in the cross-border space.

“When we came to Turkey four years ago, Turkish merchants and sellers were somewhat participating in global marketplaces, but when you compared actual purchases from abroad versus sales to consumers around the world, it was nowhere close.”

To clarify, Turkey was at the early days of using PayPal, an incredibly net importing company. Ninety percent of its cross-border goods were flowing into Turkey, while only 10 percent were flowing out. That relationship, as of this year, has inverted.

“Over the last four years, we have seen a tremendous shift in that and see ourselves as a strong player in that space. We’ve been working hard to bring Turkish merchants online to participate in global commerce. This year with surpassed the consumer purchases and Turkey has very uncharacteristically became a net exporter country.”

This is no small feat in Turkey, which on the whole is a net importer and faces what Onan describes as “serious economic challenges.” Flipping to a net exporter on the PayPal platform is a big accomplishment and one they are hoping to push forward with a new program intended to help more merchants dip a toe into international commerce.

“We recently launched a nationwide campaign around ‘I win, Turkey wins,’  that showcases exporting merchants and how they are actually delivering value to consumers, themselves but also the Turkish economy,” he explained.

Onan noted that Turkey, with its especially youthful population – the average age is around 30 – has a particularly entrepreneurial bent and a lot of familiarity with e-commerce. This makes PayPal’s job as a commerce, payments and tech evangelist somewhat easier.

On the other hand however, there are challenges. Merchants like the idea of international e-commerce, but are often scared off by the administrative details of engaging in it.

“My team and I particularly work in engaging different groups around Turkey and making sure the merchants are knowledgeable about and what does it mean to sell abroad from a customs, logistical and payments point of view.”

As for surprises the team has encountered since they arrived? Onan says he has not been so much surprised by what he has found, so much as he has been surprised at what he has not – namely a strong push for mobile commerce.

It isn’t that smartphones aren’t available – regionally smartphone penetration is high and, among Turkish banks, mobile services are apparently common.

“I think there is a certain potential on the mobile side that points to the idea that soon there will be a breakthrough,” Onan noted. “It always feels like it is at the brink of a big explosion in terms of mobile commerce and mobile activities, but it remains surprising to see that it hasn’t more fully taken place. The fact that it hasn’t happened yet is, to me, the big surprise.”

The potential is there, Onan noted repeatedly, and there are early signs that is might be heading toward use – but for right now consumers – and merchants are holding off.

“Even though [mobile penetration] ranges around 50 percent, how comfortable are people for using their phones to buy things or use online. The other element is the merchant readiness, and merchants have been a little hit lagging on this.”

Onan did note however, that despite the lack of ignition so far, he has high hopes that this year will actually see some movement. He also noted that he has felt this way in the past.

What he is not unsure of, however, is Turkey’s potential to become “an even bigger net exporter.” Turkey sits in a unique position – geographically and socially – according to Onan and is already surpassing its neighbors when it comes to getting into the e-commerce swing, and that is a trend he says there is every reason to continue to expect.

Will it be enough to displace the image of Istanbul’s Grand Bazaar? Probably not. But do we face a world where 91 million people will visit it in person, while another couple billion shop it online? One thing we can bank on, if PayPal has anything to do with it, is that we certainly will be soon.

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