Turkish fast-fashion brand Trendyol, backed by Chinese giant Alibaba, made headlines this week with news of a £1bn buyout offer for online retailer Asos. At a time when most online players are reporting falling revenues as shoppers return to the high street, Retail Week gets to know more about the new entry into the world of online retail in the UK.
Trendyol approached Asos in December 2022 in a £1bn deal that valued Asos between £10 and £12 a share, The Sunday Times reported.
Asos had struggled for much of 2022, as Covid customer behaviours unwound and supply chain snarls and stock issues took hold. Since the offer was made, Asos’ woes have only deepened.
When news of the unsuccessful bid broke over the weekend, Asos’ share price jumped 15% as trading opened on Monday. That spike has since petered out, however, as the acquisition hasn’t come to pass.
Despite the fact it nearly came to own one of the biggest names in British fashion, not a huge amount is known about Trendyol.
What is it?
For starters, the name — for those struggling to know how to pronounce it, it’s ‘trend-y-all’.
Trendyol is Turkey’s largest ecommerce company with a mission to make “fashion accessible for everyone, where trends meet affordability”. The marketplace was founded in 2010 by Turkish entrepreneur Demet Suzan Mutlu, a New York University graduate who dropped out of her MBA at Harvard Business School to take a punt on a gap she thought she had spotted in the market in Turkey.
Trendyol has since grown to become the first Turkish decacorn (a privately owned business with a valuation higher than $10bn). In 2021, Trendyol received an additional $330m (£265.8m as per the latest conversion rate) investment from Alibaba, raising its share to 86.5% and bringing the overall valuation of Trendyol to $11bn (£8.86bn).
Shortly after, Trendyol went on to raise another £1.2bn in capital at a valuation of £16.5bn from investors, including SoftBank and Qatar Investment Authority.
How is it doing?
Despite sales of £2.6bn, the company is said to be loss-making.
In its latest results for the quarter ending December 31 2022, Alibaba group said its international business — which also includes Lazada, AliExpress and Daraz — delivered a 3% year-on-year growth, “primarily driven by the robust order growth of Trendyol”.
“Trendyol delivered a robust year-over-year order growth in the December quarter that was driven by rapid growth of its local consumer service business and strong growth of its e-commerce business,” the etailer added.
What and where does it sell?
Trendyol’s ecommerce business called Trendyol Marketplace sells everything from fashion and beauty to homeware and electronics, serving as a “one-stop-shop” for shoppers at a predominantly value price point. It boasts over 170 million items on its website.
The group operates out of Turkey and Germany and delivers to 27 countries in Europe, including the UK. Since 2010, Trendyol has grown to around 30 million customers and stocks from more than 240,000 sellers on its ecommerce platform.
Apart from the online ecommerce network, Trendyol’s business is made up of Trendyol Express, a last-mile delivery solution, Trendyol Go, an instant grocery and food delivery service through its own courier network, Trendyol Pay, a digital wallet, and Dolap, Turkey’s leading second-hand C2C platform, among others.
What about Asos?
What are the chances that Trendyol may come again for the pureplay giant?
In the six months to February 28, 2023, Asos reported an adjusted loss before tax of £87.4m and group revenue fell 8% to £1.8bn, down from £2bn during the same period the previous year.
As a result, the retailer has been forced to go back to the well, raising £75m in a share placing and opening a new £275m line of credit. Suppliers have also begun to cut ties with the brand over insurance and profit concerns.
As a result of Asos’ woes, Eleonora Dani, equity research analyst consumer at Shore Capital, believes the chances of Trendyol coming back in for the retailer seems very slim.
“The bid was allegedly made in December; not sure if Trendyol would still be interested in Asos after the disappointing set of interim results and the amount of debt Asos has piled up since then,” she says.
While an offer now be off the table, Trendyol may yet come back and flex its Alibaba-backed financial muscle by snapping up another UK pureplay business. Or, if it can see the opportunity, it may simply look to launch itself feet first into the UK by ramping up its own business here.
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