Turkish Media Boss Trades News for Tech as Goldman Fields Offers

(Bloomberg) -- Hanzade Dogan Boyner is finding the task of building a Turkish e-commerce giant less daunting than running the country’s largest newspaper group.

With Goldman Sachs Group Inc. fielding bids for her company that could lead to Turkey’s largest technology deal, Dogan Boyner is free to instead focus her efforts on building her site, Hepsiburada.com, she said in her first interview with foreign media since leaving the embattled conglomerate founded by her father, the octogenarian billionaire Aydin Dogan.

“As the market leader, Hepsiburada’s mission is to lead our country’s digitization process,” Dogan Boyner said in an interview at her office in the Trump Towers Istanbul, which her family owns in a real estate partnership with the U.S. president. “We don’t have a disruptive approach” to competitors, she said, downplaying the inevitable talk that her company is Turkey’s version of Amazon.com Inc. “We are here to collaborate and enable them all to become digital players.”

While Dogan Boyner acknowledged the company is receiving buyout offers, she declined to comment on speculation that one of the companies interested was Amazon, which established an office in Turkey in August. Goldman, where she once worked as an analyst, is considering proposals on behalf of Hepsiburada.com so the business doesn’t become distracted, Dogan Boyner said. “We like to always consider our options. The interest in Hepsiburada is there.”

Four Sisters

Dogan Boyner, 45, is the second-youngest of four sisters who have inherited one of Turkey’s most politically sensitive conglomerates. In the 15 years that Recep Tayyip Erdogan has been in power, the group has faced incessant attacks for its news coverage and paid hundreds of millions of dollars in tax fines, while facing shrinking advertising revenues and criticism from all sides in a nation with one of the world’s worst press freedom records.

That makes the normally stressful job of establishing a tech company a welcome change of pace for Dogan Boyner, who exuded optimism and excitement for her site, and for the future of technology businesses in Turkey. She downplayed the nation’s reputation as one of the world’s main censors of Internet content, focusing on promising demographics and economic growth instead. Turkey has blocked Twitter, Facebook and YouTube numerous times in recent years, and sites including Booking.com and Wikipedia.org remain inaccessible.

Credit Cards

Yet the nation has one of the largest and youngest populations in Europe, with almost 80 million people, about half of whom are under the age of 30. Income per capita is over $10,000, and the economy’s rate of growth, according to official statistics that were revised upward last year, has been second only to China’s among large countries for much of the past decade. Its biggest tech deal was inked in 2015, when Germany’s DeliveryHero Holding GmbH paid $589 million for the ubiquitous food delivery service Yemeksepeti.com. 

“The fundamentals of this market are very attractive,” Dogan Boyner said, citing other factors including one of the highest credit card penetration levels in Europe and “relatively manageable” infrastructure for quick deliveries. E-commerce accounts for about 3.5 percent of total retail sales in Turkey, compared with almost 9 percent in the U.S. “We expect this penetration to increase to 8 percent in the next five years,” she said.

Her company is partly owned by Middle East buyout group Abraaj Group Ltd., which bought a 25 percent stake in 2015 for an undisclosed amount. The website features what appears to be a uniquely Turkish innovation aimed at the nation’s credit-hungry consumers: a partnership with local bank Turkiye Is Bankasi AS, which will offer potential Hepsiburada buyers immediate loans and payment plans for some products costing from 750 liras to 15,000 liras ($210 to $4,200).

Subsidiary Services

Part of Hepsiburada’s strategy involves building the web infrastructure for other e-commerce aspirants to thrive. The company last year launched its marketplace platform, which now hosts more than 8,000 merchants. This year it opened Hepsiexpress, which enables last-mile delivery and transport management for sellers in Istanbul and will soon be expanded to other cities. It’s also got a payment system called Hepsipay.

“We will be offering this system to other players in the future,” Dogan Boyner said. “We think about the ecosystem and how to grow it all,” she said.

The company is “cash-flow positive,” Dogan Boyner said, declining to provide details except to say that it was the largest by revenue in Turkey. Sales nearly doubled in 2016 when Hepsiburada launched its marketplace, and growth this year will “normalize” to about 40 percent, she said. The site has more than 12 million product listings and receives 70 million monthly visits, of which 85 percent are from people coming directly to the website or the mobile app. Those numbers dwarf the figures of other e-commerce players in the region including Dubai-based Souq.com, which claimed 23 million monthly visits and more than 400,000 products when Amazon bought it in March.

Cash Burn

“Our gross margins are very healthy,” Dogan Boyner said. “Once you have healthy gross margins, profitability is not a very big challenge.” The company’s efforts are “not on our bottom-line margin, but it’s on our overall growth and general health of the business,” she said. “When you look at other e-commerce companies in the world and in this country, many of them burn a lot of cash and are not financially stable. We have always been cash flow positive.”

Aside from creating a benchmark technology company for Turkey, Dogan Boyner also has other ambitions. Foremost among them is supporting female entrepreneurs, who make up only about 8 percent of the total in Turkey. Hepsiburada discovered that only 400 of its 8,000 merchants were female-owned, so this year, it began an initiative to support them, offering priority uploads to the site, free cargo and use of a studio, marketing support and higher visibility on the site. Since then, about 30 percent of new merchants were women, Dogan Boyner said. Women now account for about 1 percent of revenue, with a target of 10 percent within a few years.

“It’s an investment we’re very proud of making,” Dogan Boyer said. “We have to support women for their financial independence. This is important for women and Turkey’s continued development.”

To contact the reporters on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net, Benjamin Harvey in Istanbul at bharvey11@bloomberg.net.

To contact the editors responsible for this story: Benjamin Harvey at bharvey11@bloomberg.net, Vernon Wessels, Stefania Bianchi