Prozorro Market: a public marketplace for businesses

Crises usually deal the heaviest blow to small and micro businesses. Their sales begin to nosedive, and some of them even have to balance almost on the brink of survival and frantically look for new sales markets and promotion instruments. Prozorro Market could become one of these instruments. Andrii Kuzmenko, Director of Professional Procurements state institution, tells us what kind of marketplace it is and what opportunities it opens to businesses.

Prozorro Market is the first public marketplace where public institutions buy all products they need: office supplies, furniture, fuel, etc. Any company can sell its products there, and successful history of doing business with public orderers is not required.

About the advantages of Prozorro Market

Among the advantages which businesses receive when offering their products at Prozorro Market, Andrii Kuzmenko named the following:

• An opportunity to gain new customers and increase sales turnovers. Prozorro Market opens an opportunity for businesses to enter a new market which was hitherto closed for many of them, because public orderers were buying small batches of goods worth up to 200 thousand hryvnias under direct contracts. Under these conditions, many suppliers could not even present their offers. But now, with the new procurement law coming into effect, orderers can use Prozorro Market to procure goods worth up to 200 thousand hryvnias. Today, over 700 state enterprises make their purchases in this marketplace, but their potential number exceeds 20 thousand. Therefore, perhaps almost every small and medium-sized enterprise can find a customer there.
• Simplicity of working with the catalogue. Quite complex public procurement procedures do not exactly motivate businesses to participate in them. Prozorro Market enables businesses to sell goods to the government without participating in tenders. All they have to do is to undergo a quite simple qualification procedure and confirm the experience in supplying the product they want to sell in Prozorro Market. After that, the company will receive orders and start supplying its goods. By the way, they won’t have to look for orderers: products in the catalogue will be available for viewing to state enterprises from all over Ukraine. And on top of that, companies registered in this marketplace will be able to save on marketing costs.
• A possibility to enter the marketplace with a narrow product range. While in order to be competitive in a traditional marketplace, suppliers need to offer a wide range of products, Prozorro Market has no such requirement. For example, if you sell lighting fixtures, the general catalogue of a regular online trading site could contain several thousands of them. Public orderers do not need this diversity. They usually buy more or less standard products. Therefore, based on an analysis of procurements, Prozorro Market created unified profiles of products which budget-funded organizations buy the most often. A profile is a sort of a product template with certain characteristics. To these profiles suppliers add their offers.
• Equality of all suppliers selling in the marketplace. Prozorro Market operates according to principles of the Public Procurements Law. It ensures competition in every product group. Therefore, if, for example, some company would want to include a unique designer table to the catalogue, it won’t be able to do it, because there is no other supplier of the same product. There will be no competition.

About cooperation mechanisms

“Receiving the status of supplier in Prozorro Market is not hard. First of all, an entrepreneur must decide on the category of goods they want to sell, sign an accession agreement and undergo qualification procedure. For that purpose, 20 goods delivery notes or tax invoices for the current and/or previous year, confirming the experience in supplying similar goods, would suffice. Or, five fulfilled Prozorro contracts in the relevant category. After that, you can register on one of the authorized Prozorro platforms and post your price offers,” Andrii Kuzmenko explains.

He added that suppliers don’t have to pay to access Prozorro Market. No monthly fee is charged, either. The only required payment is 5% of the contract value, due upon the entry of contract into force. This money is spent on funding operation and development of the marketplace.

“We heard the market’s request for the lowering of tariff, and came up with the proposal to change it. Considering the increasing number of sales via the marketplace, it became possible. A new Cabinet resolution on the electronic catalogue operation procedure contains a revised tariff schedule: 3% for amounts of up to 50 thousand hryvnias; 2% for amounts between 50 thousand and 200 thousand hryvnias; 1% for procurements worth over 200 thousand hryvnias,” the director of Professional Procurements talks about the innovations.

About the most popular product categories

Andrii Kuzmenko says that the most popular product group is fuel, followed by office equipment and supplies. In this category, paper enjoys the greatest demand. Approximately 20% of all contracts are about the supply of paper. Next comes computer equipment. The “furniture” category is also gaining popularity. A substantial demand for the medical products group, which is administered by Medical Procurements of Ukraine SE, can also be observed.

“I think that over time, when the catalogue will be supplemented with new products, the structure of sales in the marketplace will change. Recently, we added the “furniture” category, and in a relatively short period it became one of the most popular categories. Probably because presently, many schools are preparing for the upcoming academic year and buying a lot of furniture,” our interlocutor assumes.

“According to our observations, the highest competition occurs in the oldest categories which were created first. They include, for example, paper. The number of offers in that category is substantial. In newly-created categories, competition is always low, but over time it will grow. We take a lot of efforts to ensure that. Surely, like in regular marketplaces, people buy a product with lower price more willingly than a more expensive analogue. Nevertheless, prices in catalogues are the market ones, and we make sure that competition is fair,” Andrii Kuzmenko stressed. “To be sure, not all possible categories are available in Prozorro Market today. We are continuously working on augmenting the catalogue, and the number of categories will grow. For example, we presently continue to fill in such categories as “office equipment”, “office supplies”, “computer group”, “foods”, “household products”, “detergents” and “furniture”. We also expect substantial demand for building materials and automotive spare parts, and are going to start working on these categories.”

 So, if you haven’t found a category for your products in Prozorro Market catalogue today, it doesn’t mean that it won’t be there in a month. Regularly monitor the marketplace’s updates, and who knows, maybe new contracts with state enterprises will become a firm launching pad for development of your business.