Turkey’s e-commerce sector booked remarkable growth and transformation in 2023
Consumers in Turkey are increasingly turning to online shopping for its convenience, driving significant growth in the country’s e-commerce market. That is according to research from Dogma Alares, Iyzico and the Turkish e-commerce association ETID.
Business activity in e-commerce experienced significant growth during the pandemic and has continued to expand steadily even after the pandemic’s effects have subsided, both globally as well as in Turkey.
In Turkey, the growth rate of e-commerce sales volume was 69%, which increased to 110% the following year. In 2023, the e-commerce sector grew by 132%, reaching a sales volume of 1,855 billion Turkish lira. At the same time, the number of ecommerce transactions in Turkey surged by 45% and 43% in 2020 and 2021, respectively.
However, the growth rate decelerated to 23% in 2023, with the total number of transactions reaching nearly 6 billion. In 2023, Turkey’s e-commerce imports made up 3.75% of the country’s total e-commerce volume, while exports accounted for 2.88%.
Turkey’s relatively young and dynamic population is a significant factor in the potential growth of e-commerce. Other drivers include the convenience of online shopping and delivery, a maturing e-commerce landscape, mounting confidence in online payments, and continued growth in smartphone ownership and internet consumption.
Further growth
While Turkey’s e-commerce sector is experiencing growth as a proportion of national GDP, a comparison to other countries reveals significant untapped potential for further expansion.
China dominates the global e-commerce landscape, contributing over 33% to global e-commerce retail sales and generating a significant portion of its GDP through ecommerce6. This contrasts with Germany, where e-commerce represents a smaller share of the economy despite its high per capita income.
In 2024, Turkey’s e-commerce market is expected to grow by 5.7% to reach $82.4 billion, said Dogma Alares, Iyzico and ETID.
Technology
New technologies play a crucial role in the development of e-commerce, such as artificial intelligence (AI) advancements. AI stood out in e-commerce recently, as in many other fields. Technologies that allow customers to virtually try on various clothing or accessories provide significant value to consumers.
AI’s ability to create virtual models and showcase products on them leads to major cost savings for sellers. The popularity and advancement of large language models in 2023 have opened up new possibilities for e-commerce vendors to deepen customer interaction, better understand their needs, and respond to demands more effectively. Developments driven by AI technology are enhancing efficiency and adding value across the e-commerce landscape for all stakeholders.
Given the global enthusiasm surrounding advancements, AI has the potential to profoundly reshape the ecommerce industry. Consequently, stakeholders must stay informed about these developments and actively work to implement them.
Sustainability
Another important trend for e-commerce stakeholders to address is sustainability. Concerns about climate change are increasingly capturing the attention of public authorities and influencing the preferences of individual consumers. The authors highlight that e-commerce businesses need to adapt in response to these concerns.
The European Union’s ‘Ecodesign for Sustainable Products Regulation’, aiming to achieve the objectives of EU’s 2020 Circular Economy Action Plan, is a clear indication of the EU’s concrete steps in this regard.
The Digital Product Passport, part of this regulation, is expected to have significant impacts on ecommerce. This application aims to create a specific identity card for products, making it easier to track the environmental impacts of the production processes associated with the product. This step by the EU helps individual consumers, who increasingly prioritize climate change, to better understand the impact of their choices on the environment.
International organizations, including the World Bank and the United Nations, are providing incentives for local governments to reduce their environmental impacts. For instance, the 2024-2028 protocol between the World Bank and Turkey outlines a strategy that encourages Turkey to prioritize environmental considerations in its economic activities.
“Since the European Union is a key trade partner for Turkey, it is essential for Turkey to stay updated on sustainability developments within the EU. Adapting to these legal changes can enhance Turkey’s competitiveness in global e-commerce market,” noted Erdal Güner, partner at Dogma Alares.
A clear example of how Turkey is tackling 21st-century technologies and issues is the recently enacted Crypto Asset Regulation. This regulation demonstrates that regulators in Turkey are recognizing and addressing new technologies such as blockchain. This situation paves the way for 21st-century technologies and concerns to have a deeper impact on daily life.
“The significant impact of such technological and regulatory developments underlines the need for e-commerce stakeholders to adapt to the dynamic world by closely monitoring these trends,” said Güner.
The outlook
E-commerce continues to thrive globally, and likewise in Turkey, the industry witnessed a remarkable year of expansion and transformation in 2023. The industry’s momentum, driven by digital transformation, is expected to continue. Five major trends are forecasted to influence the sector in the years ahead: generative artificial intelligence, blockchain technology, direct-to-consumer models, embedded finance, and sustainability.
