What Bazaars Can Teach Us About Digital Marketplaces

G Suite
G Suite
Jun 28, 2016 · 4 min read

By Aiaz Kazi, Head of Platform Ecosystem, Google for Work

We tend to look to the future to solve today’s problems, but after taking a trip to Morocco, I got to thinking about how we can learn from the past. The Jemaa el-Fnaa is a vibrant bazaar located in the bustling center of Marrakesh, a major Moroccan city. In the daytime, it’s mainly occupied by orange juice and water sellers who give way to entertainers, storytellers and dancers as the sun begins to set. Beneath all the frenetic activity is a smoothly operating marketplace and community that has persevered over centuries, evolving continuously as the modern city has risen around it, and yet remaining unchanged at the core. It’s amazing how the key principles that underpin the Jemaa el-Fnaa are still essential today. Marketplace designers could learn a thing or two by studying it.

A long long time ago…

The Jemaa el-Fnaa was founded in the 11th century. The bazaar, called “souk” in Arabic, has visitors flowing below cloth canopies to escape the heat from sunrise to sunset. Merchants post themselves in front of their stands, encouraging customers to come have a look at their wares. And despite Marrakesh’s hot summers, customers rarely shy away from weekend souk shopping. It’s a chance to sip refreshments and watch the flow of humanity go by. These markets are more than just businesses; they’re a way of life.

Come gather ‘round people (buyers and sellers) wherever you roam…

At its heart, the Moroccan souk is a two-sided marketplace, meaning it provides a central place for buyers and sellers to transact business. There are benefits on both sides. The market attracts multiple buyers to a central location, making it attractive for sellers. In turn, buyers can browse and try out some goods for free, and sellers will likely source goods that are in high demand. In exchange for matching buyers and sellers and providing the physical infrastructure, the marketplace charges sellers a flat rate to rent their souk space.

Just like the Jemaa el-Fnaa, today’s digital markets are organized as two-sided marketplaces. They provide buyer-seller matching, enable transactions and channel buyer demand back to sellers. They have evolved to monetize by charging a listing fee or taking a small percentage of each transaction a seller makes. Thus, digital marketplaces and souks are each based on a model where value is created by bringing together buyers and sellers, which is then monetized. The similarities don’t end there.

It’s a matter of trust…

Marketplaces have historically evolved from peer-to-peer communities. Nomadic merchants relied on locals to spread the word each time they moved to a new city. Although souks are now permanent, they still rely on the community to succeed. Take quality control, which the souk exerts through the allocation of stalls to sellers. The souk’s goal is to provide the best possible experience for buyers, so it relies heavily on feedback from the community to curate sellers. Over time, buyers identify low-quality and dishonest merchants, who aren’t allocated stalls in the future, thereby improving overall quality. Successful marketplaces, like the souk in Jemaa el-Fnaa, work hard to foster a vibrant community. Even today it’s a place where people come together, learn, gossip and have fun.

Software platforms need a community too. Indeed, the trust that a thriving community helps foster is even more crucial in digital markets, since sellers and buyers don’t see each other. The Google Apps Marketplace, for example, has developer and IT admin communities that support the ecosystem with information and services. The exchange of information not only educates prospective buyers, it raises awareness of the products and services offered. The community provides ratings for the apps in the marketplace and can often report abuse. In turn, just like the souk, a well-run software market will take action on the feedback that it receives from users.

I get by with a little help from my friends…

Buyers, sellers, and community aren’t enough. Marketplaces need ancillary services too. Moroccan markets can get unbearably hot during the day, which is why you’ll see orange juice carts sprinkled throughout. The point isn’t just to sell orange juice, it’s also to keep buyers hydrated and cool so that they can shop for longer.

In the modern digital world, partner services like these are still necessary for a well-functioning marketplace. If you look at Salesforce’s AppExchange marketplace, you will see a listing of partners who can help customers install the applications they buy there. Others provide training, education, best practices, and custom development services. These vendors are like the orange juice sellers. Their goal is to help sellers shape and improve the experience for buyers — and keep them coming back for more.

I believe in yesterday…

Platforms are driving the technology we use at home and in the office, but their underlying dynamics trace their roots back hundreds of years. While it’s wonderful to imagine the future, engineers have plenty to learn about platforms by embracing the past and studying a marketplace like Jemaa el-Fnaa. It might just hold the key to the next great software platform and marketplace.

Follow Aiaz on Twitter: @aiazkazi

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