Executive Summary / Key Takeaways

• Hepsiburada is solidifying its position as a leading e-commerce ecosystem in Turkey, demonstrating a strategic shift towards a profitable marketplace model and leveraging its integrated logistics and fintech solutions. The company achieved a real GMV growth of 12.1% and an EBITDA as a percentage of GMV of 1.1% in 2024, alongside its first quarterly positive operating income since IPO in Q3 2024.
• The company's core competitive advantage lies in its differentiated technology ecosystem, including HepsiJet for superior logistics, Hepsipay for unmatched lending and payment solutions, and the Hepsiburada Premium loyalty program, which collectively drive customer loyalty, operational efficiency, and revenue diversification.
• Hepsiburada is strategically positioned to capitalize on Turkey's high-potential e-commerce market, with its localized offerings and affordability solutions providing resilience against macroeconomic headwinds and a strong defense against global competitors.
• The acquisition of a controlling stake by Kaspi (KSPI), a preeminent payments, marketplace, and fintech ecosystem, is a transformative event expected to accelerate Hepsiburada's capabilities and unlock significant value creation opportunities, particularly in fintech innovation.
• Despite ongoing macroeconomic challenges and competitive pressures, Hepsiburada projects continued growth and margin expansion, with a full-year 2024 unadjusted GMV growth guidance of approximately 75% and an EBITDA as a percentage of GMV between 2.1% and 2.2%.

The Turkish E-commerce Landscape: A Local Champion's Strategic Evolution

D-Market Elektronik Hizmetler ve Ticaret A.S., operating as Hepsiburada, has evolved significantly since its incorporation in 2000, transforming from a retail website into a comprehensive e-commerce ecosystem. This journey has positioned Hepsiburada as a dominant local player in Turkey's high-potential e-commerce market, characterized by a large, young population with a strong interest in online shopping. The company's overarching strategy centers on profitable growth, achieved through cultivating customer loyalty, differentiating its services, and expanding its B2B offerings.

Hepsiburada's strategic responses to market dynamics are deeply rooted in its history of adapting to local consumer needs and competitive pressures. The company has consistently focused on building an integrated platform that addresses the unique demands of the Turkish market, from logistics to payment solutions. This foundational approach has shaped its current competitive advantages and its ability to navigate a challenging economic environment.

Technological Moats and Operational Excellence

Hepsiburada's core competitive advantage stems from its integrated technological ecosystem, which provides tangible benefits and forms a robust moat against competitors. This ecosystem is built upon three pillars: HepsiJet, Hepsipay, and Hepsiburada Premium.

HepsiJet, the company's in-house last-mile delivery service, is a critical differentiator, known for its reliability, speed, and convenience. In 2024, HepsiJet delivered 72% of all parcels dispatched on the platform, demonstrating its integral role in the delivery ecosystem. The service achieved an 82% next-day delivery ratio for retail orders in Q1 2024, significantly enhancing customer satisfaction. Furthermore, HepsiJet XLarge delivered 69% of oversized parcels in Q3 2024, showcasing its specialized capabilities. The company is also committed to sustainability, piloting electric vans with seven added to its fleet in Q2 2024 and a target of 50 by year-end. This operational efficiency and service excellence contribute directly to customer loyalty and repeat purchases, solidifying Hepsiburada's market position.

Hepsipay represents Hepsiburada's advanced fintech capabilities, offering an unmatched suite of payment and lending solutions in the Turkish e-commerce sector. This includes in-house Buy Now Pay Later (BNPL) solutions, consumer finance loans, and shopping loans from partner banks. Hepsiburada is the largest non-bank BNPL solution provider in Turkey, with its BNPL volume more than tripling year-on-year in both Q2 and Q3 2024. The total lending volume through the platform reached TRY 16.2 billion in 2024, a 2.6-fold increase from 2023, with BNPL and shopping loans utilized in over 3.3 million orders since their launch. The BNPL cost of risk remained manageable at approximately 2.6% in Q2 and Q3 2024. Hepsipay's digital wallet boasts 17.6 million customers and 21 million stored cards by November 2024. Its one-click checkout solution, "Pay with Hepsipay," expanded its integration to 140 key accounts by the end of 2024, doubling its total payment volume in Q3 compared to Q2. These financial services are crucial in a high-interest-rate environment, providing affordability and convenience that directly drive GMV growth and customer relevance.

The Hepsiburada Premium loyalty program is a key driver of customer loyalty and retention. By November 2024, the program had grown to nearly 3.7 million members. Premium members exhibit significantly higher engagement, with their monthly order frequency rising by 31% to 36% after joining the program. The program's robust Net Promoter Score (NPS) of 84 points, 9 points above the overall NPS, underscores its value proposition. Enhancements in 2024 included a partnership with Warner Bros. Discovery (WBD), expanding content benefits for members. The long-term objective is to enroll almost half of Hepsiburada's active customers into this program, leveraging it as a growth flywheel for the entire group.

Financial Performance and Strategic Momentum

Hepsiburada concluded 2024 with a strong financial performance, reflecting the diligent execution of its profitable growth strategy. The company delivered a real Gross Merchandise Value (GMV) growth of 12.1% for the full year, with an unadjusted GMV growth of 74% year-on-year. This growth was supported by a significant margin expansion, with the gross contribution margin reaching 11.3%, a 2.1 percentage point improvement compared to 2023.

Profitability metrics also showed a clear upward trend. EBITDA as a percentage of GMV expanded to 1.1% in 2024, marking a 0.7 percentage point rise year-on-year. On an unadjusted inflation basis, EBITDA as a percentage of GMV reached 2.1%. A significant milestone was achieved in Q3 2024, when Hepsiburada reported its first quarterly positive operating income (EBIT) since its IPO in its IFRS financials, a testament to its disciplined execution.

The improvement in EBITDA was primarily driven by the rise in gross contribution margin, partially offset by increases in operational expenses. Payroll and outsourced staff expenses rose by 0.5 percentage points due to annual salary increases and employee growth in subsidiaries. Shipping and packaging expenses increased by 0.4 percentage points, influenced by higher parcel volumes and rising delivery fees. Other operating expenses saw a 0.3 percentage point rise, including a TRY 180 million provision for a license fee and higher bad debt provisions.

Hepsiburada's cash flow generation also demonstrated resilience. For the full year 2024, free cash flow stood at TRY 3.7 billion. While this represented a decrease of TRY 1.9 billion compared to the previous year, primarily due to a decrease in net cash from operating activities and an increase in CapEx, the company's first half of 2024 delivered the highest free cash flow since its IPO. The CFO anticipates positive free cash flow for the full year 2024, driven by continued EBITDA improvement and diligent working capital management. The company also confirmed ample funding capacity for its BNPL solutions, utilizing both its balance sheet and instruments like asset-backed securities.

Competitive Landscape and Strategic Positioning

Hepsiburada operates in a dynamic and competitive Turkish e-commerce market, facing both global giants and local players. The company is recognized as Turkey's most recommended e-commerce brand, achieving an NPS of 75 overall and an impressive 84 for its Premium program. This strong brand perception is built on its speed of delivery, diverse affordability solutions, and customer trust.

Against global competitors like Amazon (AMZN), which maintains a smaller presence in Turkey, Hepsiburada leverages its deep understanding of local consumer preferences and its integrated ecosystem. While Amazon offers a vast global selection and advanced technological integration, Hepsiburada's localized logistics (HepsiJet) and payment solutions (Hepsipay) provide a more seamless and convenient experience for Turkish consumers. Hepsiburada's focus on domestic convenience and bundled services, such as the Warner Bros. Discovery content for Premium members, differentiates it in a market where local preferences and regulatory nuances are critical.

Compared to Alibaba's (BABA) Trendyol, another significant player, Hepsiburada's strength lies in its operational adaptability for local logistics and its unique payment license, allowing it to offer installments in categories like cosmetics and mobile phones—a crucial purchasing driver in Turkey. Regulatory changes in Turkey are also expected to create a more level playing field, with new license fees, a ban on private labels for large online players, and reductions in advertising promotions potentially constraining larger competitors starting in 2025. Hepsiburada's minimal global inbound share (around 1%) means new cross-border taxes could even provide a tailwind by impacting competitors heavily reliant on imports.

Hepsiburada is actively gaining market share, particularly in key categories. In Q1 2024, the company saw significant share growth in electronics, reaching approximately 32% according to GFK data, and also gained share in home and mom and baby products. This demonstrates its ability to outperform competitors through its value proposition and strategic execution.

Outlook and Forward-Looking Trajectory

Hepsiburada's management maintains a cautiously optimistic outlook, anticipating continued growth and margin expansion despite prevailing macroeconomic headwinds. For the full year 2024, the company expects to deliver approximately 75% GMV growth on an unadjusted basis, translating to roughly 13% growth adjusted for inflation. EBITDA as a percentage of GMV is projected to be between 2.1% and 2.2% for the full year (unadjusted).

Key drivers for this anticipated performance include the ongoing positive impact of strategic initiatives such as the Hepsiburada Premium program, the expanding off-platform volume of HepsiJet, and growing advertising and premium revenues. The company also expects positive seasonality from events like the back-to-school period in Q3 and Black Friday in Q4 to boost demand. Furthermore, innovation in the electronics market, such as new product introductions from Apple (AAPL) and AI advancements, is expected to provide tailwinds.

A pivotal development for Hepsiburada's future is the acquisition of a 65.4% controlling stake by Kaspi, which closed on January 29, 2025. This strategic partnership is expected to unlock significant value creation opportunities, leveraging Kaspi's expertise in payments, marketplace, and fintech. The synergy from this deal is anticipated to accelerate Hepsiburada's technological capabilities and strengthen its market position, particularly in its fintech offerings.

Risks and Mitigation

While Hepsiburada demonstrates strong strategic execution, it operates within a challenging macroeconomic environment in Turkey. Ongoing macroeconomic headwinds, including high interest rates (50% in Q2 2024 compared to 8.5% a year prior) and a tougher credit environment, continue to pressure consumer purchasing power. This has led to a contraction in demand for discretionary products, particularly in categories like computers and TVs. Boycotts against shopping, which began in March 2025, also present a challenge, limiting marketing activities in performance channels.

Hepsiburada is actively mitigating these risks through several strategic measures. The company's low-price offerings provide crucial value to customers during economic challenges. Its diverse lending solutions, including BNPL and consumer finance loans, offer essential affordability options. The Hepsiburada Premium loyalty program also helps retain customers by providing superior service levels. The company has adjusted its credit card policies to manage financing costs in a high-interest-rate environment. Management acknowledges that the next six to nine months will be demanding but expresses confidence in Hepsiburada's long-standing experience in Turkey to navigate through this period.

Conclusion

Hepsiburada stands as a compelling investment opportunity, transforming into a profitable and diversified e-commerce powerhouse within Turkey. Its strategic focus on customer loyalty, differentiated logistics through HepsiJet, and unparalleled fintech solutions via Hepsipay has created a robust ecosystem that drives both growth and profitability. The company's ability to achieve its first positive operating income since its IPO in Q3 2024, alongside consistent margin expansion and positive free cash flow generation, underscores the effectiveness of its strategy.

The strategic acquisition by Kaspi marks a new chapter, promising accelerated innovation and enhanced capabilities, particularly in the critical fintech sector. While macroeconomic headwinds and competitive pressures persist, Hepsiburada's localized strengths, affordability solutions, and strong brand loyalty provide a significant competitive edge. Investors should recognize Hepsiburada's strategic resilience and its potential for sustained growth, driven by its integrated technological leadership and its ability to adapt and thrive in the dynamic Turkish e-commerce landscape.