On-Demand Delivery Market in Turkey

Market Overview

On-demand delivery in Turkey was established on the backbone of the Bakkal system and started with online food services like Yemeksepeti, which brought the quick online delivery model to the Turkish consumers. At the same time, Getir helped evangelise the online grocery delivery market in Turkey by being one of the first movers in the space and launching their services in Istanbul in 2015 by leveraging their market knowledge through BiTaksi, the cab hailing platform.

With certain challenges associated with a centralised operation, Getir learned from its traditional bakkal predecessors and pioneered the concept of dark stores which along with their delivery network allowed them to reduce the delivery timelines to less than 10 minutes. These dark stores are typically at the gravitational centre of the orders in a given locality.

Online shopping in Turkey has increased in all kinds of purchases, however, grocery shopping was a pioneer in this movement which caused the e-commerce sector to complete its seven-years-long expected digital transformation in seven weeks during COVID 19. With this growth, a number of companies entered the on-demand delivery market, primarily to cater the online groceries, leading to a fragmented market dominated by domestic players. Recent years have shown several acquisitions of small groups or international players by bigger domestic players. Supermarket chains are transforming the market in terms of private branding and low-cost marketing through hard discounting.

Turkish Bakkals and Ciraks

When Evliya Çelebi, the Islamic world’s Marco Polo, chronicled Istanbul’s daily life in the 1640s, he found 1,590 bakkal (local grocery shops) operating in the Ottoman capital. Most employed three workers: the master bakkal, a female supervisor, and a çırak, the apprentice who wandered the cobblestone streets each morning taking orders he would deliver later that day. These stores relied on intricate knowledge of their neighborhoods, and their growth introduced two novelties to Ottoman shopping culture: proximity and credit. Most streets had a bakkal of their own, and each kept a debt ledger, a veresiye, that allowed customers to shop on credit.

Bakkals’ mixture of convenience and sociability helped their numbers skyrocket in the 18th century, and they evolved into social hubs, where shoppers could trade information and gossip. Deliveries were always fast: since there was a bakkal on almost every street in central Istanbul, çıraks could move orders in no time. Bakkals so severely disrupted Istanbul’s town markets that Sultan Selim III was forced to regulate them to prevent other businesses from going bust. They also established what has become a visual signature of Istanbul: once the çırak arrives at a destination, a wicker basket attached to a rope descends from a window down to the street. The çırak will stuff the basket with groceries, and payment is made at the end of the month.

Market Size

Demographic Overview — On-Demand Delivery

Online Shopping Behaviour

Key Insights

• On-demand delivery is not a new concept in Turkey with the market being familiar with home delivery of grocery items through bakkals and ciracs

• The online on-demand delivery market in Turkey is fragmented and dominated by domestic players with 2–3 players taking up majority of the market share

• There is only a little above 3% market penetration of online channels when it comes to food and groceries providing a lot of opportunity for omni-channel models

• Growing internet and smartphone penetration, younger demographics, and gentrification of major cities are major growth drivers for online adoption of these categories

• COVID 19 accelerated the adoption of online channels for food and groceries and caused a near permanent shift in consumer behaviour

• With a low online penetration, the online food and grocery delivery market presents significant opportunities to disrupt the market through innovative and relevant operational models

• Due to the age-old presence and penetration of bakkals in the local markets, it becomes pertinent for new entrants to devise models aligned with them

• Online delivery of medicines / OTC drugs is not permitted as per the Turkish legislation

• There is significant competition in the online grocery and food delivery space in Turkey through companies operating with different models in tune with the local market

Growth Drivers

On-demand Delivery Verticals and Major Players

Impact of COVID 19

• Covid-19 has rapidly accelerated the widespread adoption of online grocery shopping

• Hybrid model between digital bakkals and traditional bakkals started to emerge

• A Mastercard report found that, at the height of the pandemic in Turkey, 59% of Turks began to shop near their homes, in order to help local shopkeepers. Since lockdowns began, 45% of respondents say that they’ve discovered new shops in their neighbourhood.

• While digital bakkals have gone old school, sales of individual e-commerce sites including those operated by bakkals have increased by 200% during the pandemic.

• The average basket amounts of online food and beverage purchases increased during the COVID-19 period

• The growth in fast delivery startups such as Getir and Banabi has exceeded 50%.

Opportunity Areas

With an online penetration rate of only 3% for online grocery shopping, there is still a huge playground for expansion and new omnichannel business models in Turkey.

Key Challenges

• High penetration of bakkals in downtown areas and major cities

• Inconsistent and inaccurate mapping of local areas and addresses

• Balancing demand and supply which becomes more cumbersome to solve for with more diversification in product portfolio

• The desire to see the products, freshness and delivery issues act as barriers by the customers

• Poor job satisfaction for delivery personnel with a reported 10% dying in the first year of their service

• Since the instant grocery delivery services market is mostly based on smartphone apps, there is always a competition to take up the limited space in consumers’ phones

• Turkish legislation prohibits the sale of pharmaceuticals via the internet or any other electronic medium (Article 24 of the Law on Pharmacists and Pharmacies), even to the extent that pharmacists cannot have websites.