How to Develop Online Marketplace like Ukrainian Prom.ua?

Prom.ua - the largest marketplace in Ukraine, which employs over 700 thousand sellers and has more than 100 million different products, ranging from toothbrushes to large commercial real estate. The platform is ranked thirteenth in terms of Internet traffic in Ukraine in general and the first in the "E-commerce and shopping" category. Next we will tell you about how this startup succeeded to become the leader of e-commerce market in the country and how to develop your own online platform like Ukrainian Prom.ua.

A brief summary of Prom.ua marketplace

The history of Prom.UA is banal to say the least. Three programmers - Nikolay Palienko, Denis Gorovoy and Taras Murashko - wrote a code for the project in 2008, which was initially conceived as an "online website builder" for those who want to bring their business online. Then these guys decided to spend their salaries on advertising, and after some time (six months after the launch) a specialized foreign investor came to them himself and bought part of the business for $1 million.

However, the prototype for the founders of Prom was Alibaba, and they wanted to develop only the B2B segment. But a few years after the launch, the company's management discovered that the platform was increasingly interested in B2C, so they expanded the functionality of their site into a marketplace with three sections: products for companies, for end users and services.

Therefore, Prom.UA in five years after its launch has experienced a large-scale transformation from a B2B website builder for e-commerce to the largest Ukrainian marketplace, where you can buy everything - from pencils, dresses, dogs and ending with climatic complexes and fireplace portals. Moreover, sellers have two options for cooperation with Prom.ua:

• The seller can create simply his online store on the Prom.ua platform, adding up to 10 products to it. Meanwhile, his goods will not appear in the catalog of the marketplace and that means. The functionality of such an online store will be cut off. For example, it will not have a shopping cart - customers will be able to order goods only by telephone or e-mail.


• The second option is to register on Prom as a seller and subscribe for a fee. The price will depend on the number of posted items. In addition, you can create your own store at Prom.ua with the help of website constructor. Thus, the seller will get two sales channels: the presence in the Prom catalog and a separate store, which can be developed, advertised in Google, increasing organic activities through SEO and other marketing campaigns.

How to create a platform like Prom.ua?

To create such a Prom marketplace is a fairly complex software solution, which should be not only simple, convenient and pleasant in appearance, but also ensure a high level of security and reliability. Also such a marketplace should have a high bandwidth, sufficient to serve hundred thousands of sellers and dozens of millions end buyers. You can only achieve this by developing a marketplace from scratch.

This software should be developed by a highly professional development team with experience in launching relevant solutions such as Merehead. However, it is important because only a team like this can take into account all the nuances and peculiarities of this market and implement them in the code.

Niche and Target Audience

It all comes down to the idea. Before you start planning the future functionality of your startup, choosing the technology stack and searching for the optimal business model, you have to analyze the potential of the chosen niche. There are tens in thousands of marketplaces on the Internet and your task is to find the optimal market for launching a new site. Ideally, it should be a "blue ocean" - a new niche with no competitors. But it is extremely difficult, so if you find a market with relatively few competitors, that will be good as well.

Here are a few tips that can help with finding such a niche.

• A critical mass of suppliers and buyers exists. Since your marketplace will bring together buyers and sellers, essentially providing them with intermediary services, the chosen niche ought to have both as many of them as possible. A small marketplace simply won't pay for launching a project like a marketplace, even if you become the leader of that marketplace.


• A product is bought often or it is expensive enough. Another important criterion - the goods must be bought often enough and cost quite a lot. So, if the product is purchased rarely, then its price should be quite high, as in the case of real estate or cars. If a product is inexpensive, then in order for the marketplace to pay off, the product must be bought very often, as in the case of food, household chemicals and hygiene products. A combination of average purchase frequency and cost is also viable.


• The existence of a suitable infrastructure. If you choose a niche of perishable goods or goods that require special delivery conditions (plants, some medicines, etc.), it is essential that delivery services are able to deliver such goods in an appropriate time frame and in compliance with all transportation conditions.

Project value proposition

If you just launch a clone of Prom.ua (or Amazon), then this project is unlikely to be successful - why would users go to your marketplace, if they already use Prom.ua? In order for your marketplace to attract attention of buyers and sellers, you have to provide users with something that competitors don't have. In other words, you need to create a unique value proposition - a set of reasons that will entice users to your marketplace.

Here are the basic types of unique value propositions:

• Price Orientation. Provide customers with a significantly better price.


• An emphasis on convenience. For example, allow customers to reduce the time it takes to find, buy and deliver the product they need. Another option is to make it easier to buy or sell, similar to how Uber made it easier to book a cab or how Tinder made it easier to meet people.


• Focus on market access. Give your users the access to more vendors or products, like Amazon made it possible.

Business model and monetization project

As it was mentioned above, Prom is a marketplace focused on B2B- and B2C-markets. The marketplace provides the ability to sell a wide variety of products on its platform, as well as the ability to launch a separate page of the online store, whose products will be displayed not only in the listing of this site, but also in the general listing of the marketplace. The marketplace considers several models of monetization: subscription, commissions, advertising and additional services.

Subscription. At first at Prom.ua you could only post ads to sell goods and services, without the possibility of payment through the website. To make money, the platform offered the opportunity to launch a separate online store - a site with its own domain and a separate catalog of products. The cost of this service depends on the number of items posted. Now it is 5900, 7700 and 115000 UAH per year (160, 210 and 314 USD per year). This price includes not only the opening of the store, but also the budget for the promotion of this store within the Prom - 30-40% from the price of tariff.



Commissions. The second way to monetize is to charge small commissions on all trade transactions going through the marketplace. The size of the rates depends on the product group (consumer, industrial), the level of the seller's account (if the seller has many successful closed deals and good reviews, he gets bonuses and vice versa - bad sellers are restricted, very bad sellers are banned) and the product category. Typically it is from 2 to 15% from the value of the product or service.



Advertising. Also the marketplace offers promotion on its platform through CPC (price per click) and CPA (price per action). If a customer clicks on any promoted item in the Prom catalog and then places an order with the seller, he will be charged for the service. Obviously, this will only happen if the product ordered at the site is added to the active campaign of this store, and if it has taken up to 24 hours for the buyer to click on the product in the Prom catalog. CPA and CPC fees are also calculated based on the product group, seller's account level and specific product category.



Services. Besides, Prom offers an opportunity to connect several additional services, for example PromPayment - the buyer transfers money to the account of the marketplace, the seller will receive it only after the buyer picks up the parcel at the post office. The commission for the transfer of funds paid by the payer (buyer) to the financial partner of Prom.ua, is:

• 0.5% of the transfer amount (cost of goods) + 5 UAH for orders in the catalog;


• 1% of the transfer amount (cost of the ordered goods) + 5 UAH for orders at the seller's website.

In this case the seller himself pays the bank commission for Internet-acquiring service (2.2% of the transfer amount).

Key functions of Prom.ua marketplace

The functions of the user shopper's panel:

• User login. To start working with the platform, users must register with their phone number or Facebook or Google Facebook account. Registration is simple and only takes a couple of minutes.


• Search system, filters. This functionality in Prom is extremely well elaborated. Goods and services are divided into many categories and sections. At the same time there are a lot of filters which will help to find a good or service with concrete characteristics and specifications.


• Product description. All product listings are accompanied by a detailed description with details such as manufacturer, material type, condition information, shipping terms, product and merchant rating and other things that can help make a purchasing decision.


• Favorites List. Here the user can save items that he likes, but he hasn't been ready to buy them yet. A very convenient feature to save time and enhance the user experience.


• Shared use. Thanks to integration with popular social networks, users can easily share the products they like by swiping them on their social network pages and offering them to their friends.


• Ratings, reviews. Every customer can leave a review and rate a specific product and seller. Based on this information, Prom compiles a ranking of vendors, which affects many things, including fees and the very ability to work on the marketplace and use its services.


• Add to cart. Make sure your marketplace has a feature that allows users to add items to the cart quickly without leaving the shopping page. It would be also good if it is possible to interact with the cart using a pop-up window, for example to delete items and change their number.


• My Cart. After adding items to the cart, provide customers the opportunity to check information about products, related items and terms of purchase (cash, card, credit, cash on delivery, etc.) and delivery.


• Payment for goods and services. To ensure convenient shopping, you can add multi-payment integration and allow users to make payments via PayPal, credit/debit card, or Google Pay. In doing so, it is also desirable to add the ability to purchase with one button.


• Order Status. This is another must-have feature for any marketplace. It helps shoppers to check the current status of the purchased item and to track its location on the map in real time. You can also check the delivery date here.


• Order History. In Prom, users can view their order history and make repeat purchases with a single tap.

Functions of the custom merchant panel:

• Registration. For merchants, this process usually also involves providing additional information about yourself (company and store name, payment details, licenses, and so on). Make this process simple and fast as possible, so that it is not annoying and sellers don't leave you before registration is complete (a common problem for new marketplaces). In addition, it's also important to create a tooltip system to help users with important tips.


• Product Management. This functionality will allow sellers to categorize their products correctly, making it easier for buyers to find them in the store listing. Product description on Prom includes image, name, price, characteristics, detailed product description (text for SEO).


• Inventory Management. A very helpful feature for small entrepreneurs who are not willing to spend time and money searching for similar functionality on another platform. In addition, this dashboard helps to understand which products sell quickly and which ones sell slowly.


• Offers and discounts. To increase user engagement and prolong their interaction with your marketplace, you can add the ability to set discounts on items and make extended trade offers (three items for the price of two, main item + bonus, and the like). A very useful feature to stimulate demand.


• Rating and reviews. Sellers should be able to view customer ratings and reviews of their store and product. This is useful for collecting feedback and improving the user experience. Reviews can also be used for marketing - creating a positive image of the company.


• Reports and analytics. Your platform should collect sales information and create reports and graphs based on that information. They will help salespeople understand where their business is going at the moment.


• Payment Acceptance. Allow merchants to accept payments in multiple ways, whether by credit/debit card, Google Pay, or PauPal


• Refunds. Your marketplace counterpart Prom.ua should make also give sellers an easy way to manage returns.

Functions of the custom administrator panel:

• Buyer Management. Through this panel admin will manage the accounts of all buyers of the marketplace (add, delete, restore, change information about them; arbitration moments, etc.).


• Seller management. This panel allows you to verify (verify) sellers and manage their accounts (add, delete, restore, change payment information, change status, etc.).


• Customer support. This function is intended for collecting feedback from users and solving their problems. Usually, this is done via chat, e-mail, messengers and social networks.


• Category management. The administrator can also create, delete and change the names of the categories of goods and services. This should be done in accordance with search queries and requirements of the marketplace clients.


• Reports and analytics. On this panel the administrator can track important information about the marketplace (traffic, sales, payments, etc.).

Information architecture.

Depending on the complexity of your marketplace, the architecture can be multi-tiered or microservices. If your platform hasn't been too complex yet and you don't plan to develop it as a large marketplace that will include many subsystems such as inventory management, order management, chat system, analytics, etc., a monolithic architecture will be sufficient. Otherwise, you need to create a microservice architecture.

Backend, frontend and API

Frontend. These are all the components of the marketplace with which users will interact. In the case of launching a platform such as Prom.ua, the frontend includes a web interface and mobile applications separately for buyers and sellers. They are created with the help of such technologies:



Backend. It is the hardware and software part of the system, which is responsible for working with data and implementing the functioning the internal part of the application. Here is how the stack of technologies for the development of Prom.UA clone looks like:

• Web-servers: nginx, Apache.


• Web frameworks: Ruby On Rails, Phoenix.


• Programming languages: Ruby, Elixir, Python, PHP, Java.


• Database servers: PostgreSQL, MySQL.


• Hosting: AWS, Google Cloud Platform, Microsoft Azure.

API (Application Programming Interface). This is a set of protocols for connecting the frontend and backend, as well as integrating third-party services that extend the functionality of the marketplace. Here is an example of a set of APIs:

Testing

Afterwards there has to be a thorough and comprehensive testing of the created software product in order to identify all the bugs and errors, as well as to make sure that the usability, functionality, security, throughput and other things are consistent with the terms of reference for the development of the platform. After this, the platform is added to various listings (including the Apple App Store and Google Play) and a support team is set up.

The cost of launching an analogue of Prom.ua