How to Develop Marketplace like Ukrainian Rozetka?

Rozetka.ua is the most well-known online marketplace in Ukraine. Initially it was a business project of spouses Vladislav and Irina Chechetkin, who invested $250,000 in it, the service went through an amazing story of transformations during 12 years of its existence and has eventually become the Ukrainian analogue of Amazon. In this article we will explain why this family-owned startup is different from its competitors and how to launch your own analogue of Rozetka marketplace and the costs of such development.

A brief description of Rozetka marketplace

Rozetka project was launched in September 2004 and got the first sales in June 2005. Initially, it was planned to be an online store selling perfumes and cosmetics. However, this idea was abandoned quickly as the official representatives of the perfume houses noticed the activity from the new startup and prevented it from selling their products.

Still, it didn't confuse the Chechetkins family. They agreed to this injunction and refocused on selling technology very quickly, as Vladislav (one of the founders) was working in the company SkyLine, which was engaged in computers and components. The name of the site - Rozetka - was invented along with the unofficial slogan of the new store: "We sell everything that can be plugged into a socket".

Rozetka store started working in June 2005. The first sale on the site took place a week later - a Samsung cell phone. By coincidence, in the next ten years the sale of cell phones will be the main profit of the store. Computers, laptops, gadgets and a variety of computer equipment and peripherals came after cell phones.

Since the economic crisis in 2008, the online marketplace has expanded its assortment: now you can buy camping equipment, sports accessories, clothes, books, toys, cosmetics, and perfumes on the site. The platform is increasing its functionality in 2014, adding the possibility for ordinary retailers to sell their goods comfortably on the site, in other words, Rozetka is being repurposed as a marketplace. Simultaneously, the site upgrades the assortment again, adding medicine and cosmetics products for sale.

After a while it became possible to sell all kinds of kitchen utensils, alcoholic beverages, pet products, furniture, gardening and horticultural products, sanitary ware and food products on the Rozetka site.

How to create a marketplace like Rozetka?

Technically speaking, Rozetka is an online marketplace. Just like Amazon, AliExpress, or eBay. The following steps make up its development.

Niche and the target audience

The first thing to do when launching any marketplace is to choose the optimal niche for launching your project. Yes, you can launch a site that is focused on selling "everything and for everyone", but then you will have to compete with such giants as Amazon in the USA or Rozetka in Ukraine - it is expensive, complicated and risky. It is easier and more effective to start with one niche and then, with the marketplace's popularity grow, expand to other niches, as Amazon, Rozetka, and many others have done.

Any product or service can be a starting niche for your marketplace, such as electronics, photo sales, car rentals, travel services, food delivery, or dating (yes, Tinder is also a marketplace).

Well, every product can become your niche, as long as the following conditions are met:

A critical mass of suppliers and buyers exists. A marketplace is a platform that brings together suppliers of goods and their buyers. The number of both should be as large as possible, because if the market is small, it is unlikely that suppliers will be willing to use your marketplace - in too "niche" markets, almost all buyers usually know the suppliers by name and don't require the intermediary's services. It's easier to buy directly from a supplier.

Here are some examples of promising niches for a marketplace:

• Non-interchangeable tokens have become a real hit. They are minted and bought by celebrities, major brands, famous writers and artists, politicians and ordinary people. Moreover, their value often reaches up to tens of million dollars, and the volume of the market has surpassed the traditional art market.
• This is one of the most popular niches for online stores with fairly high profitability. It has many undercuts, however, that you can bet on to stand out from the competition.
• Amazon started out selling regular books, which was reasonable in 1994. Now the popularity of paper and e-books is declining, but audiobooks and visualized audiobooks are growing in popularity.

The product is being purchased often or it is expensive enough. This is another important criterion for selecting a promising niche. The essence of it is that the product must have a sufficiently high demand (audience + frequency of purchases) for you to recoup the launch of the marketplace. At the same time the product must have a correspondingly high price.

Here are some examples of how often products and services are purchased:

• Smartphone: once every 1-3 years.
• Furniture: several purchases in 3-10 years.
• Food shopping/delivery: daily or 2-3 times a week.
• Interior design: once every 10-15 years.
• Real estate: once every 10-50 years.
• Automobiles: once every 5-15 years.

If the niche has a low frequency of purchases and audience, then your future marketplace will be successful only if the price of goods / services is high enough, as for example in the car market or real estate market. Conversely, if the product is cheap, then you need a high frequency of purchase, as in the market of everyday household goods (napkins, household chemicals, etc.) and food. A combination of average purchase frequency and cost is also viable, but only if the niche is large enough, such as in the gadget or clothing market.

Always keep these rules in mind, otherwise you can repeat the fate of NextMover. This online site has been offering help to people who want to rent a small truck to transport various goods when moving. The website easily managed to find financing, launched an excellent marketing campaign and received a lot of positive feedback. But after a brisk start, the project was decided to close. Its owners did not take into account that people move every 2-3 years, and the cost of renting a pickup truck is only $50-200, i.e. this niche has a low frequency of purchases, low price and a small audience, so NextMover business was initially doomed to failure.

Project value proposition

The next stage of developing an online platform like Rozetka is to work out your unique value proposition, which is a set of reasons that will encourage sellers and buyers to use your site rather than competitors' sites or other options. Rosetta, like Amazon, has a unique value proposition - a combination of low price and fast delivery. But you don't have to go their way at all. More options are available.

Market Access Orientation. These sites try to maximize their audience to give providers of goods and services the biggest market for consumers. Uber Eats, Etsy, Netflix, Spotify, Udemy, Travelduck, Apple Store, and Google Play have all bet on this.

Focusing on the price of a product or service. This approach involves finding suppliers who will be willing to sell items on your marketplace at the lowest possible prices. This usually involves either a monopoly, or wholesale, or second-hand goods. Amazon, OLX, AliExpress, Uber, HostelBookers, Kyōyū, Couchsurfing, and Cycle.land have all chosen this path.

Focusing on higher quality. Better quality products, shorter service/delivery times, personalized service is another good way to stand out from the competition. Bright examples: Tinder - a fast, convenient and non-traumatic ( not much) way to meet someone, TaskRabbit - finding a performer who will do almost anything you want for you, Airbnb - convenient, very fast and safe housing search.

Speed Orientation. If your marketplace can deliver a product or fulfillment service very quickly, that can also be your unique value proposition. This is exactly how Amazon entices people to sign up for Amazon Prime. FedEx in the U.S. and Nova Post in Ukraine use the same approach, both of which offer fast postal delivery.

Business Model and Project Monetization

Further on, you need to decide which business model to use and how your project will bring in profit. Right now Rozetka is working according to the following business model: first, the platform works according to a scheme similar to franchising with fullfilment (a full range of services for suppliers - from storing goods in their warehouses to delivery and after-sales service), and also provides its platform for suppliers who want to sell goods on their own signboard.

In terms of monetization, marketplaces use these models:

• Commissions. With this model, they charge a percentage of each payment made on the marketplace's site. Usually it is 1-5%, which is charged immediately upon payment for an item or other transaction made through the marketplace. This monetization model is used by Uber, Airbnb, eBay, and Rakuten.
• Selling fees (or contract fees). In this case, the platform also receives a portion of each trade transaction, not a percentage, but a fixed amount. The fee may be the same for all transactions, or it may differ according to the product category. This model is used by YouDo and Thumbtack.
• Listing fees. In this case the marketplace charges a small fee from the seller for creating listings, regardless of whether the product is sold or not. Usually this model is used by marketplaces where handmade goods or collectibles are sold (Etsy), fairly expensive items such as real estate, cars, expensive furniture or art (Craigslist).
• Freemium. With this approach, you provide the basic functionality of the site for free, but induce users to buy some premium features, such as disabling ads, brighter ads, 24/7 support, and so on. Amazon, YouTube, Spotify, and many other sites use this way of making money.
• Subscription. This monetization option involves a mandatory monthly or annual fee for access to the site. It is usually used by sites selling large quantities or unique merchandise.
• Advertising. The most popular option for making money, which is used by almost all marketplaces regardless of niche or size.

Marketplace Rozetka's key functions

The functionality of marketplaces such as Rozetka is usually divided into three groups of users: administrator - manages the entire platform, supplier and/or seller - puts products for sale on the site, buyer - reviews and buys products. When launching an analogue of Rozetka, you also need to implement these three user roles and their corresponding functions and features.

Platform architecture and technology stack

Platform Architecture. The next stage in the development of the outlet analog is to create an information architecture of the project, which will visualize the platform logic, mark its components and the relationship between them. It is also desirable to create a navigation map (information architecture, which will be shown the user flows - the actions that the user needs to perform before reaching his goal, such as registration or purchasing).

Technology Stack. This is the set of technologies and development tools which programmers, designers and testers use when creating websites and applications. These are programming languages, databases, frameworks, various APIs, hosting, repositories, payment gateways, security tools, etc.

Here's an example of a stack of technologies that can be used to develop a marketplace like Rosetka:

• Google, AWS, Azure - hosting.
• Cloudflare/Amazon CloudFront - content delivery network.
• Node.js, Java, PHP and Ruby on Rails - programming languages.
• Firebase, Parse, Oracle and Red Hat - mobile backend as a service (MBaaS).
• Fonts.com, Google Fonts, Redbooth, Invision - product and design.
• MySQL, SQLite, PostgreSQL and MongoDB - databases.
• Google Analytics, adjust, CrazyEgg, Cloudera and Mix Panel - analysis, reporting, statistics.
• Braintree, Stripe, PayPal - payment gateways.
• Authorize.net, PayPal, Deem, SAP ERP - finance and accounting.
• Amazon S3 - data backup.
• Google Maps and Google Places APIs - geotargeting.
• Twilio, Push.io, Firebase, RabbitMQ - push notifications.
• Adometry, Effective Measure, Convertro, eMarketer, Criteo - marketing.
• Nexmo, Twilio - SMS, voice and phone verification.
• BuiltWith, SurveyMonkey, Companybook, Google Forms - sales and support.
• AWS Simple Queue System - Nginx messaging queues.
• Glassdoor Jobs, HireVue, Connectifier, Humanity - HR.
• Logstash, ELK Stack - log management.
• Docker and Ansible - deployment.
• Nginx - load balancer.
• Spring Security - security.
• MailChimp Integration - email.
• Git - code repository.

User interface design

The design is one of the other important things you should consider when developing a marketplace. It has to be simple, user-friendly, understandable and pleasant in appearance. In the case of Rosetka, the overall design structure (navigation) is similar in many ways to marketplaces like Amazon and eBay. That is fine, because the UX design should be recognizable, so that the user immediately understands what to do and how to do it.

Rozetka clone development process

Any online marketplace is a sufficiently complex software solution that must be convenient, highly functional and pleasant in appearance, as well as providing a high level of security and reliability. This can only be achieved by developing it from scratch, because ready-made solutions are always a compromise: a template design, low bandwidth, security risks and a monthly subscription fee to a SaaS solution provider, which is good for a quick and cheap start, but too expensive and impractical for long-term projects.

Furthermore, such a product should be designed by a team with experience in developing similar solutions, such as Merehead. Our company has been developing projects of different complexity in Ecommerce, FinTex, blockchain and cryptocurrencies since 2015. Explore our portfolio and find out the terms of cooperation via sales@merehead.com or by calling +1-206-785-16-88, as well as the feedback form below the article.

The process of creating a marketplace from scratch consists of 6 steps:

1. Goal Determination. During this stage, collected business goals and objectives, the requirements for the project, on the basis of this information is drawn up terms of reference - a list of functions, specifications, design requirements and technology stack. After that a collaboration agreement is signed.
2. Development of UI/UX design. Next our specialists develop user flows, information architecture and brand identity to create the user interface design of your future online marketplace.
3. Writing the software code. Now it's up to the programmers: frontend, backend, blockchain and mobile developers. They write the code for the platform from scratch, either extending or refactoring the existing software product (if you want to rebrand it).
4. Testing the product. Almost immediately after the first lines of code are written, they are sent to QA experts who check the product to detect errors, test its usability, functionality, load and reliability.
5. Deployment, release. The software product is moved from the working environment to the production environment after careful testing. If the marketplace has a mobile application, it is added to the tables: Google Play, App Store, Amazon App Store and Microsoft Store.
6. Product support. The final stage is training the customer's personnel to work with the created marketplace (admin panel), organizing the work of the support service and collecting feedback for further improvement, update and expansion of the marketplace.

Marketing Policy

As soon as your project is launched no one will know about it except for you and perhaps, your friends and relatives. For other users it simply doesn't exist, and until it changes, you can't expect sales and especially not profits. In order to change this, you need a marketing campaign that will attract both sellers and buyers to your site.

Cost of launching Rozetka analog

The cost of developing an online marketplace like Rozetka depends on many factors, starting with the complexity of the project (the number and depth of functions and their development) and ending with the location of the development team (IT specialists' salaries in the US are several times higher than in Eastern Europe, Africa or Asia). Here is the approximate cost of developing the Rozetka analog: