Pre-IPO Pedia | Valued at $16.5 billion, how Trendyol becomes the No.1 e-commerce platform in Turkey

According to Statista, the Turkish e-commerce market will grow at a compound annual growth rate of 14.6% from 2021 to 2025. Under this growth rate, Turkey's e-commerce market is expected to reach US$25.673 billion in 2025.

Although e-commerce currently accounts for only 5.3% of the overall Turkish retail market, the dynamic Turkish e-commerce market can be expected to grow vibrantly along with the rapid internet penetration.

According to SimilarWeb, as of July 2022, the most visited e-commerce platform in Turkey is Trendyol, with more than 200 million monthly visitors. Founded in 2010 as an online fashion retailer, it has grown to become Turkey's e-commerce leader recently.

Today, IPO Buzz will take you to the story of Trendyol.

The founder of Trendyol, Demet Mutlu, was born in 1981 and graduated from New York University. Before founding Trendyol, she worked for well-known companies such as Deloitte and Procter & Gamble.

At the age of 35, Mutlu went on to study for an MBA at Harvard Business School. At the time, the e-commerce market in the US was in full swing and many of the students attending business school were dropping out to return to their home countries to develop e-commerce businesses.

Consequently, Mutlu, as one of them, also had a great desire to set up her own business.

After research, Mutlu realized that the e-commerce market in Turkey was still undeveloped and full of potential at the time. Then, she dropped out of Harvard and returned to Turkey to develop an e-commerce business.

When setting up an e-commerce platform, one of the most important things is to select a proper position. As Mutlu herself has been a fashion enthusiast since childhood, with a collection of over a hundred pairs of shoes, she always has an eye for the fashion needs and preferences of females.

Another reason that influenced the position of Trendyol was Turkey's well-developed clothing industry.

Not only are local clothes relatively inexpensive to produce, but they are also influenced by European fashion in terms of styling. As a result, Turkey has nurtured many local niche designer brands.

However, although there are numbers of designer brands in Turkey, they are mostly concentrated in large cities such as Istanbul, making it difficult for consumers in remote cities to get access to the latest fashion.

Mutlu believes that it would be a great business opportunity if women in remote areas are able to buy the latest fashions from Istanbul.

Once the company was established, Trendyol set up a buying team to visit the offline stores of local fashion brands and convince them to set up their shop on Trednyol's website, helping them to rapidly expand their popularity and grow their business in a short time.

Trendyol's own branded clothing can be designed, manufactured and sold in just one week. And if a kind of product is identified as a "hit" during the sales process, it can be largely produced immediately.

Currently, Trendyol's own brand revenue contributes close to 40% of the total revenue.

Today, Trendyol's clothing is very popular not only in Turkey itself, but also in the Middle East and North Africa.

As Trendyol's user base has expanded, the platform has also continued to diversify its merchandise offerings. Currently, in addition to major fashion brands, consumers can also purchase electronics, home furnishings, food, health and jewellery on the platform.

Between 2018 and 2021, Chinese e-commerce giant Alibaba made several investments in Trendyol to position its e-commerce business in the Middle East market, eventually taking an 86.5% stake in Trendyol.

Trendyol has launched four additional services to complement its e-commerce business. Trendyol Express specialises in the express delivery of goods on the platform. Trendyol Go offers grocery and food delivery services. Trendyol Pay offers digital payment services. Dolap offers online buying and selling of second-hand clothing.

According to data, as of 2020, the number of sellers on Trendyol is about 98,000, of which 97,000 are SMEs (small and medium-sized enterprises). The platform has 19.3 million active customers and it is estimated that around 75% of Turkish women have shopped on the platform. The company currently serves over 30 million customers and delivers over one million parcels per day.

Based on its current business, Trendyol is now planning to take steps towards international expansion, trying to open up new markets by setting up offices in cities such as Berlin, Luxembourg and London. The company plans to generate a third of its future revenue from outside Turkey.

Insiders said that Trendyol is on track to achieve a GMV (gross merchandise volume) of approximately US$10 billion in 2021.

In July 2011, Trendyol Group completed a US$25 million funding round led by Tiger Global Management. It was the highest venture capital investment received by any Turkish internet company at the time, and Mutlu became the first female entrepreneur in Turkey to receive venture capital.

The next round of funding was ten years later. At that time, the development of the emerging e-commerce market came to the top. In April 2021, Trendyol Group received an exclusive $350 million strategic investment from Alibaba, valuing the company at $9.4 billion.

In August 2021, Trendyol Group completed another round of funding with US$1.5 billion which was led by SoftBank Group and General Atlantic, soaring its valuation to US$16.5 billion.

In January 2022, the President of Trendyol Group, Caglayan Cetin said that, "As a Turkish company, we are considering a dual-listed IPO in Istanbul and elsewhere. The second stock exchange could be London or New York. "

Meanwhile, Cetin also said the company is planning an IPO in 2024-2025, but the team is working to bring it forward to next year.

Mooers, what do you think of Trendyol's IPO prospect? Feel free to comment below.