SG Tehran: The Building of Esam.Ir, Iran's Global Online Bazaar

When Pierre Omidyar established what was to be the largest auction platform on the World Wide Web, he had a vision: the Iranian-born founder of eBay wanted to create a grand digi-bazaar. In a bazaar, what created and established trust for the shop owners was the physical presence of the shop. However, the bazaar has another important characteristic of credibility: the social proof of its shoppers. The company ended up developing a mission of connecting people instead of just selling products, building a social market with competitive bidding. The proof, core to the digital age, is that dynamic engagement - in the case of eBay, competitive bidding - versus the pure, one-sided interaction of brick & mortal sales draws in the masses. People could sell products to each other as if they had a real shop there, but the social elements drove a sense of curiosity and engagement.

The Technology of the World, the Hustle of Iran

The people of Iran are well familiarized with the notion of socio-economical marketplaces like bazaars. They have the bargaining spirit. With the combined experience of hustle from Iran, and the successful experiences he had in a developed market like Canada, Sam Modonpour started his a localized copy of eBay in Iran. As he graduated from Western Ontario University, his refurbished laptop business on eBay flourished. With the global experience, he came back to Iran to start up his own Iranian eBay -

Making great connections, he partnered with developer Amin Shokouhi and together they developed a platform based on the same mission as eBay: an online bazaar to connect local buyers and sellers. Just like eBay, the market response was fast: the internet touched more than half of Iran’s populations, and without any competitors, dominated local Google searches.

Only 2 hours after launching their website, recorded its first transaction from a distant Iranian location. The team spent 3 days to process that first transaction, and the company was out of the gate, beginning the online bazaar with few other contenders.

Advantages and Challenges of the First Mover

Fewer competitors, however, has its own setbacks: no one had tried launching a platform like before, and the challenges of making a system like this work in Iran were unclear. Inspired by the 380K to 2M daily transactions on eBay, Esam had big shoes to fill. To build both sides of the marketplace - the buyers and sellers - Sam chose an unusual marketing strategy for startups. As the primary, internal investor, he spent heavily on mass marketing to build brand awareness, resulting in thousands of monthly transactions.

Inspired Firstly by Iran, Secondly by eBay

It took three years of work on Esam to prepare it for its January 2010 launch. Along the way to today, Esam has faced serious external issues stemming from building in the challenging Iranian market. Besides government pressure and unique tax burdens that challenged Esam as a transaction-heavy online business, the Iranian postal network is weak and unreliable. Despite these barriers, Esam has built a strong relationship with its audience and now enjoys more than a thousand transactions daily.

The team has spend hours to tailor their platform and adapt the eBay system to the Iranian shopping culture. For instance, user interactions are a much bolder feature on Esam compared to eBay, which serves Iranian's tendency to bargain.

Iranian eCommerce is Heating Up

The heavy localization and local dominance have made Esam attractive for investment or purchase, should a larger player like eBay or Amazon decide to enter the Iranian market. Iran’s internet penetration rate is skyrocketing and millions of Iranians are using mobile internet. As much as this might be good news to active online platforms like Esam, it’s also creating the stage for new competitors to enter Esam's market. Leading the charge is the $5.7 billion clone factory, Rocket Internet. Their eCommerce teams have recently entered Iran’s online market with aggressive marketing plans, large staff numbers, and sizable budgets. Just for starters, the teams have cloned and localized Amazon and eBay as Bamilo and Mozando, respectively. Both are growing rapidly, creating serious competition for Esam and other local online platforms. ​While a challenge to local players, this new competition is the biggest proof that Iran is entering the global consumer market - and may be home to the next big user audience.