Going direct is not always the best strategy in Turkey
Companies looking to scale their presence in Turkey often assume that a transition to a fully direct presence in the market is the most logical next step as they seek to grow. However, this is not always the case. Instead, for many companies across industries, a hybrid presence is a more cost-effective way to cover the market.
What makes hybrid an attractive option for companies looking to grow their presence in Turkey?
First, Turkish distributors are relatively cheap. Turkish distributor margins are 23% lower than the global average distributor margins, according to FSG’s annual growth benchmarking survey. For companies selling low-margin products to numerous, geographically dispersed customers, working through a distributor could be the most cost-effective strategy to cover those markets.
Second, Turkish distributors can offer multinational companies access to markets that are difficult and/or costly to cover via a direct sales force. This is particularly true for Turkey’s traditional market – bazaars, open-air markets, individual merchants. The traditional market is heavily driven by relationships and having a local distributor with strong connections on the ground can make or break your access to this market.
Finally, multinationals in some industries, such as consumer goods, can find distributors with enough capabilities to be strategic partners. Because of the well-developed consumer market in Turkey, there is a wide supply of distributors who have the geographic coverage, networks, and capabilities to effectively cover the market.
Despite these advantages of working with Turkish distributors, companies often still need a direct presence to ensure the high quality customer support and technical expertise that higher-end or more technologically sophisticated products require. Multinationals who work with corporate or large business clients also find that a direct presence is the best way to serve these types of clients.
As a result, a hybrid model based on segmenting the market and selecting the right channel to cover each segment is often the most cost-effective strategy of scaling your presence in Turkey.