(Reuters) – Turkey’s only listed e-commerce platform Hepsiburada will prioritise profitability over rapid growth and step up efforts to retain customers who are being hit by soaring inflation.
Inflation in Turkey hit a 24-year high of 85.5% in October, sharpening consumers’ focus on costs with increasing numbers turning to loans or credit cards to pay for more expensive goods.
Investor appetite for fast, and costly, growth has also waned as interest rates rise.
“My mandate here is to improve profitability”, new Hepsiburada CEO Nilhan Onal Gokcetekin told reporters late on Wednesday.
Gokcetekin said the path to improved profitability began with retaining customers through a company loyalty programme. It also started offering quicker payment and new lending options late last year.
“We are the only e-commerce company that has a country wide payment licence,” Gokcetekin said, adding that it plans to sell payment services to merchants outside its marketplace.
Hepsiburada also plans to further increase sales of more profitable non-electronic items, after their share of total sales rose two percentage points to 42% last year.
Gross merchandise volume, a measure of total online sales, rose 3.7% last year after the impact of inflation was stripped out, according to an earnings report released on Wednesday.
Order numbers grew 50% and active customers increased by 7.9% from 2021.
However, Hepsiburada’s net loss widened to 2.9 billion lira ($152 million) in 2022 from 2 billion lira a year earlier, while earnings before interest, tax, depreciation and amortisation (EBITDA) narrowed to a loss of 2.6 billion from a 3.7 billion loss in 2021.
The company reports its results in inflation-adjusted terms as Turkey is classified as a hyperinflationary economy per international accounting rules.
It expects to breakeven at the EBITDA level in the first quarter, unadjusted for inflation, despite a contraction in demand after a major earthquake in February. That compares with a 7 million lira EBITDA loss in the last quarter of 2022.
E-commerce is still growing in Turkey. Gross retail sales increased by 114% to 4 trillion lira ($210.10 billion) last year, with e-commerce accounting for an 11% share, industry data showed.
($1 = 19.0411 lira)
(Reporting by Can Sezer; Editing by Kirsten Donovan)
