As powerful as Amazon may be in the U.S., it’s not the dominant shopping site in many countries around the world. Local marketplace operators often win because they understand their market and its culture, and sustain close relationships with sellers.

Jeff Nolan, chief marketing officer, Kahuna

Jeff Nolan, chief marketing officer, Kahuna

Living here in the U.S., it’s a commonly expressed notion that Amazon is taking over the world. But it’s not really. It’s taking over the U.S., sure, but most Americans would be shocked to realize how much diversity and weight there is when it comes to international marketplaces.

If you want to put things in perspective, consider this: Amazon’s best-ever one-day sales tally (this year’s Prime Day) was about $4 billion. Chinese marketplace giant Alibaba’s one-day best dwarfs that figure at $30.8 billion (this year’s Singles Day).

Ever heard of Mudah? Probably not—because you don’t live in Malaysia. But it’s a massive marketplace—the largest in that part of the world, in fact—that lists millions of items for sale daily, attracts tens of millions of customers every year, andrecently partneredwith Southeast Asia’s leading lending marketplace to offer personal loans to Mudah users. And yet virtually no one in New York City would have reason to have ever heard of this 12-year-old company.

One of the reasons that local marketplaces tend to dominate is their innate cultural sensitivity and deeper understanding of local consumer habits and needs.

Digital marketplaces are one of the few remaining spaces in which local companies are often beating out massive global conglomerates. There are a few reasons for this.

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Boots on the ground

Digital marketplaces are big business these days, and getting bigger every year. A recent survey of marketplace executives found that the value of listings within 73 percent of marketplaces exceeds $500 million. The value of listings in 12 percent of marketplaces exceeds $1 billion.

That said, even digital marketplace powerhouses face challenges when expanding internationally. Consider OpenTable, for example, which is the most recognized restaurant reservation system in the U.S., with 45,000 participating restaurants. Despite its size and global footprint, the company has faced challenges moving into the Argentina market. That’s because, in Argentina, a locally grown mobile app called Restorandohas already become established, and it did so through the strength of its local knowledge and relationships.

Remember: Digital marketplaces, regardless of their technology backbones and slick user interfaces, are often still about connecting people with real-world physical businesses. Establishing a successful marketplace requires strong relationships with the seller community, and in the restaurant realm, having boots on the ground with the restaurateur community makes all the difference. And let’s be honest: First-mover advantage helps a lot too.

Understanding of need

While the general need and desire for digital marketplaces is universal, the nuance of the need and desire varies greatly by country and region. One of the reasons that local marketplaces tend to dominate is their innate cultural sensitivity and deeper understanding of local consumer habits and needs. This sensitivity enables local marketplaces to connect more intimately with consumers around not only their overall value propositions, but also via their marketing messaging.

In addition, they’re better able to pivot when shifts occur in the local economy or collective consciousness. Consider Mudah’s aforementioned expansion into personalized loans, for example. Such an expansion was based on an acute understanding of need in Malaysia—one that wouldn’t be possible for an outsider looking in to ascertain. It is equally interesting to consider than Mudah’s partner for loans, Lendela, is a Singapore-based marketplace for financial products that is not attempting to go it alone as it expands into Malaysia.

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And then there’s Uber,which has notoriously faced steep uphill battles to break into new markets. Some of the challenges, of course, are regulatory in nature. But even in countries where Uber’s legality isn’t an issue, like India, it faces strong home-grown competition. In India, that competition is Ola, a rideshare service that has benefitted and expanded on the strength of its understanding of the nuances of the Indian market.

Local pride

Finally, local pride represents a less tangible advantage for homegrown digital marketplaces vs. global conglomerates. In many countries, residents are proud to support companies born on their own soil as they strive to succeed in the face of mega-competitors from overseas. Of course, such pride is contingent on the local marketplace being able to deliver on consumer service and selection expectations, but all things being equal, people prefer to support their local marketplaces.

If you visit Singapore, for example, you’ll find that the name Carousell is far more prominentthan either Amazon or eBay. Headquartered in Singapore and founded in 2012, Carousell is a smartphone and web-based consumer-to-consumer marketplace for buying and selling new and secondhand goods. It is both a thriving marketplace and point of pride for those living in Singapore.

No matter how much we talk about the world getting smaller thanks to technology, digital marketplaces are one area where domination by a small set of mega-global-conglomerates has not taken hold. That’s because, ultimately, digital marketplaces tend to function much like their real-world counterparts. They’re built on relationships, they’re heavily nuanced, and they’re a point of pride for the communities that surround them. Success in these three key areas requires a local touch.

Kahuna provides services designed to help marketplace operators market to sellers and buyers.

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