How Two Friends Built A $540K/Year Marketplace For Automotive Products [Ukraine]

Evgeny Alyanchikov

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Published: July 10th, 2022

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Evgeny Alyanchikov

Founder, AVTOPRO

$45K

revenue/mo

Founders

Employees

AVTOPRO

avtopro.es

from Odessa, Odessa Oblast, Ukraine

started September 2011

$45,000

revenue/mo

Founders

Employees

Discover what tools Evgeny recommends to grow your business!

Discover what books Evgeny recommends to grow your business!

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Atlas Shrugged

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Hello! Who are you and what business did you start?

My name is Evgeny Alyanchikov, founder of AVTOPRO. At the time when we were students in 2006, I and my friend founded ABP. From a classic web studio, we have turned into a product company that deals with its projects in the field of advertising and mobile solutions. We have grown one of our projects into the leading marketplace in Ukraine for automotive products - Avto.pro, where I hold the position of CEO.

In this flagship product, we are building a first-of-its-kind platform that harmoniously integrates conflicting and undigitized segments, such as car owners and service stations; large auto parts suppliers and dealers; original, used, and analog car parts and components.

In 2021, more than 5,000 stores in Ukraine sold goods worth $105 million through avto.pro. It is important to stress that we are not intermediaries and are not tied to this turnover, the platform earns money from services and advertising.

Despite the ongoing war and significant losses, we are confident that Ukraine will restore its position by the end of the year, and then it will experience rapid growth. We are confident that with the solutions and services that our platform provides it can be successful not only in Ukraine but on a global scale and has all the potential to become the new Unicorn.

Another project that we launched after the start of the war is the ABP IT hub, in the city of Cariño, Spain. This is a global project that we are currently actively involved in, since the core of our team, including me, is here. And Avto.pro, as a large IT company, will need representative offices in many countries.

What's your backstory and how did you come up with the idea?

Ever since school, I had a firm belief that I could build a company capable of solving global problems and earn money by building decent and partnership relations.

The IT industry is a great opportunity to realize such ambitions, so my path began in this area, from the Ukrainian analog of American garages - a communal apartment in the center of Odessa with my friends, with whom relations turned into business partnerships.

Gaining versatile experience, including teamwork, turned out to be a much slower process than it seemed at the start, but without this, a long and difficult journey cannot be realized successfully. In 2011, we made progress in developing projects for our partners working on big data and large markets. These were mainly aggregators in which data is generated by users. At the time, we received valuable experience working with large libraries of books & films, architectural catalogs, medicines, and automotive parts.

We have developed hundreds of projects, interacted with different businesses, looked for the best solutions for them, and perfected our knowledge in development technologies, marketing, project management, and team building. After that, we decided to focus on one of the projects, choosing the most promising market. Promising and highly prospective in terms of market size and unmet demand, that has potential for global growth and the one that would be hard to copycat by competitors.

This is how Avto.pro was born. This is the project in which we apply all our experience, we are constantly learning further and being inspired by it more and more, realizing that we have not realized even 1% of all our potential, creating solutions that will change the market for a much better. After all, Avto.pro is a real game-changer.

The world is actively entering the digital era, where most tasks can be solved from the phone without even getting up from the sofa. And the same future awaits us in how we will manage and maintain our cars.

We see ourselves as a company that will help transform this market and user habits, starting with the digitization of the market, optimizing logistics and trade chains, rebuilding relations between car owners and service stations, and introducing simplicity and transparency to the process for the client and protecting the interests of maintenance professionals with decent earnings.

In 2022, we will enter the Spain market. This is a new stage for our Ukrainian company to become pan-European.

Take us through the process of designing, prototyping, and manufacturing your first product.

The auto parts market is one of the most complex and confusing markets. The major problem is big data in different formats and mostly in closed form. There are tens of thousands of car modifications, a single car consists of 5000-8000 components, and there are dozens of analogs from different manufacturers that can be found for most popular parts.

Our success was not because we invented something new. The truth is that we have been looking for a large market niche for a long time, a niche in which there is an unmet demand for an understandable service.

There are more than 1.3 billion cars in the world, which are dispersed throughout all countries; they are in varying degrees of exploitation and are serviced in millions of service stations and garages, most of which are small private businesses.

Logistics is the biggest problem in this market. The markup on the cost of a spare part can range from 40% to an unthinkable 1000% in the final price at the service station.

Manufacturers need to understand how many spare parts to produce; sellers - what and how much to buy to sell later; the owner of a service station or a car enthusiast - under what conditions it is better to buy and where. Without digitization, this is an impossible task. Therefore, the basis of our project is a patented database of spare parts and their availability in warehouses.

We have a whole department dedicated to this task, which involves programmers, managers, analysts, and spare parts experts. Only a few companies can afford such a department, and we are proud to be now reaching the level of quality competition with the giants in this industry. We succeeded in this through the constant use of technologies based on a large marketplace. In Avto.pro, all data is constantly checked and enriched not with theoretical, but with real data from the market.

Our entire project runs on the Microsoft Azure cloud and is supported by a team of over 100 experts in programming, design, usability, project management, and development team members, accountants and lawyers, SEO and SMM specialists, car parts experts, analysts, and call center support.

Our development has been evolutionary. Initially, we paid great attention to the solutions of major players, trying to offer solutions familiar to users, but after 5 years we began to notice that many competitors were trying to copy us.

Gradually, the confidence came that we can have our way and that our expertise allows us to think wider than the market, and form new habits and models. Not to follow the market - but to lead it in the right direction. Of course, this still needs to be proven in real-time practice, but our team has all the confidence now that we are capable of achieving this.

This is how we got our unique solutions in building catalogs, data search, trading rules, and platforms for cooperation between major players, that seemed to be irreconcilable competitors before. We form a loyal community, guarantee the security of transactions between its members, and create services and solutions for auto disassembly, service stations, data protection, etc.

Here are a few screenshots of what our website looked like before launch, after launch, and now today.

Describe the process of launching the business.

The project was launched in 2011, by 2012 we had the first hundred sellers and active monetization. We reached the first thousand paying customers in 2015.

We have never raised any funding from outside, we started and developed the project exclusively with our funds. This is our strength and our weakness. With the investments, we could have developed much faster, but it would no longer be our project.

We would have to work under the conditions set by potential investors. Since 2014, due to the beginning of Russia's military aggression, a purely Ukrainian project was undervalued by investors despite its performance and potential. What we had to do is to prove our ability to scale our business to other markets.

Entering European or US markets required substantial investments in the relocation of the team and marketing, and tight competition in Ukraine did not allow us to accumulate resources. The 2020 pandemic closed any such possibility, including travel, for a year and a half. Nevertheless, in 2021 we started preparations for relocation to finally enter the European market. The start of a full-scale war in February 2022, even more, focused on the localization of the product for the Spanish market.

Since launch, what has worked to attract and retain customers?

It may sound trivial, but knowing your customer and the market is the foundation of a successful business.

Also, among other key ingredients of a successful project are timing and place. Our success was not because we invented something new. The truth is that we have been looking for a large market niche for a long time, a niche in which there is an unmet demand for an understandable service, and when we found one through testing and trial we did not delay the launch.

After that, we were able to withstand the pace of development and market requirements, due to experience we made fewer mistakes and constantly worked on long-term planning. We systematically moved on according to our long-term strategy for 5 years ahead. This is a longer path, but it is associated with fewer risks, and the safety and durability of solutions are one of the values of our company.

Our most valuable findings have always been related to market research and looking at problems from different angles. We are not afraid to enter into an open dialogue with dissatisfied customers or competitors and, after listening to a flurry of criticism, we try to find a beautiful solution for everyone.

To keep customers and get new ones, you must always remember that using our service, customers must earn more than they pay us. To do this, we need to understand their business well, and they must understand the value of our service.

And the most precious thing we have is the members of our team, the situations we went through together, common experiences, common victories, and difficulties. Willingness to trust each other and faith in an ambitious future where we will fairly share our success.

The team development project is one of the most complex and interesting in my life. I am sure that I will not be disappointed in it, although I understand that this is an endless process, and not the result.

Attracting expensive qualified employees cannot be the main personnel strategy. Do not be afraid to work with novices - this is a great incentive for experienced employees to learn delegating duties, to better understand the issues themselves, and to fill the company with young blood and energy.

From my point of view, if you don't have endless resources and the market is quite stable, it's important to use long-term advertising channels, not those that are fast and expensive. Therefore, our focus has always been on SEO. This gives us more than 70% of traffic even when our brand is quite well-known and the keyword “Avtopro” is entered into the search engines 5 times more often than the word “spare parts”.

Good SEO is expensive and time-consuming, but there is a definite plus from it: Google is increasingly trying to rank sites by how useful it is for the user, and how they meet user demands, through behavior analysis and not just only based on brand awareness.

This means that by paying attention to Google's recommendations and working on them, you will undoubtedly improve your product, it's the technical part, usability, and content, and will carefully monitor PR, look for partnerships with other sites and be active in social networks.

Email notifications, return to pending actions, remarketing, and site notifications are difficult to implement, but they contribute to increasing loyalty. But the greatest contribution to retaining and increasing loyalty is still made by real people in the call center and support. This is a job of informing, giving feedback, and helping our clients grow their businesses.

Social networks are still not significant channels in our segment, but their influence is gradually growing. In the West, social networks have much more significance than in Ukraine. Now we are very actively working on the foundation of our development in social networks, which should be based on the ability to systematically work on creating high-quality content, analytics, and studying the factors that affect user coverage.

Before the war, our retention dynamics were at the level of 75% per month. We are talking about the core that has been working with us for many years in a row.

But it is not easy for newcomers to our business, and this leads to the fact that selling parts for beginners does not become the main job. On average, we have about 220 new paying customers every month, of which only about 20% then remain (if we take 12 months).

The most important rule that makes everything work: each participant must understand well what he is responsible for and manage this process. Less talking and abstraction, more clear understanding. This is what leads to a substantial increase in the required indicators.

How are you doing today and what does the future look like?

We are a Ukrainian company and together with the country we are going through the most difficult times, but we look to the future with great optimism. The threat to our business survival made us bolder and facilitated us to stop delaying really important changes. We see this as a huge plus.

The time has come for the company to expand the markets in which it is present. Instead of freezing the business in anticipation of the restoration of the Ukrainian market, we began expansion into the European Union. We organized offices and housing for the team members and their families in the shortest possible time and started work on the localization of the product from Ukraine.

All legalization procedures have become easier for Ukrainians, and public sympathy is on our side. This is the best time to integrate into the European Union, even though the integration process depends not only on interstate acts.

First of all, it is important for the ability of Ukrainian business and society to live and conduct business in Europe successfully, taking into account the mentality, law, and established business relations. Those contracts and the development that we are getting in Europe now will ensure our successful future in Ukraine and become a springboard for further scaling.

In addition, by developing the IT Hub in Spain, we are creating conditions for other Ukrainian companies to enter the EU along the beaten path.

Our main business is vital and quite stable, so even in times of war, our service is in demand. In the first month, we switched off nearly all monetization on the site, developed free tools like a Telegram bot, and earned only 10% of the pre-war period.

In April, site traffic returned to 60% of pre-war level, we switched on soft monetization and returned about 30% of the income. By the end of May, we have 70% of traffic and 45% of pre-war profits.

Having lived in Spain for more than 3 months, I can say with confidence that it is impossible to enter this market without being physically present here. Every other day we have meetings at events and conversations with potential partners and clients. Immersion in the local business environment, mentality, and rhythm of life are difficult to convey to the team remotely.

Now we are starting to speak the same language, and where there is understanding, the result will appear in the form of the right product/service and its presentation, sale, and partnership. By the end of the year, we intend to receive the first profit in Spain through Avto.pro, return profits in Ukraine to the pre-war level, and deploy an IT Hub for 100 specialists along with affordable high-quality housing.

Having achieved success in Spain, one of the largest countries in terms of the number of service stations, car fleet, and largest car yards, we will gain access to the rest of Europe. And adding the English language, we will have access to the USA, Mexico, and the countries of South America.

Through starting the business, have you learned anything particularly helpful or advantageous?

I can’t say that we had major mistakes because all the unfavorable situations gave us invaluable experience and did not cause serious damage to the business. And only by having such sort of experience, you can learn something. In theory, tips work poorly, but here are a few of them:

· Force yourself and top managers to work on long-term planning and its proper decomposition. Even though we live in a dynamic time full of uncertainty, nothing better keeps you in sync. Every time after a strategy session, I realize that I didn't know my own business all that well. What to say about other managers, who always have less information.

· Work through all agreements in detail before starting a business and duplicate important tasks in writing. Our memory is an interested party and remembers only what is convenient for our personality, often quite seriously distorting the essence.

· The purpose determines the structure of the company. With a planned goal, a good staff should not be turned into a Team, it's like the saying "The best is the enemy of the good." There can be a wonderful atmosphere in the team, and established work environment, stable processes, and satisfactory growth results. Whilst the team consists of people who know how to achieve ambitious goals together. But before that, as a rule, the team has to undergo serious tests. It is the result of total trust, the presence of constructive conflicts, high efficiency, frequent change of processes in the name of the Result, staff substitutions, and many more inconvenient things that you have to do in search of your Team.

· Don't be discouraged by rejections. To make a decision investors are not going to seriously understand your business. Essentially, they have their templates, and you either fit into them or you don't. It's a matter of luck and sorting through a large number of contacts. But they ask you great questions, the answers to which can help you. After you get the money, it will seem to everyone around you and your employees that you have hit the jackpot, and salary requirements will be high, but the money will quickly run out. You will very soon find yourself at the same point from which you started - you need to continue to independently solve problems, including income growth. Treat investments like a loan and don't expect more from an investor.

· Constantly engage in the personal development of not only yourself but also your team. Do not replace training with a formality - courses or seminars. Good training is a must practice, change your processes and, most importantly, apply them all the time. People quickly roll back, and only perseverance in applying new knowledge allows you to move to a new level.

· Look for new ways to replenish vitality, because the process of learning and changing business habits is very consuming and stressful. Team sports work well, joint travel, family meetings in an informal setting, and games. They can also become catalysts for personnel changes. When people understand that they are uncomfortable with each other outside of the working relationship, this will manifest itself in work, it is only a matter of time.

· The Internet is just a form. All the main things happen offline, which should be studied and should not be underestimated. This applies to products and the entire chain of processes that happen to them before and after they hit the web. This also applies to relationships with the team and partners, where the webcam will not replace personal meetings and synchronization.

· Attracting expensive qualified employees cannot be the main personnel strategy. Do not be afraid to work with novices - this is a great incentive for experienced employees to learn delegating duties, to better understand the issues themselves, and to fill the company with young blood and energy. Their loyalty goes through the roof, because with your help they make their first successes, get approval, and start their career growth. Those who don't make it are easier to say goodbye to, and those who make it are sometimes more than you ever expected.

What platform/tools do you use for your business?

Our choice of development environment and, accordingly, the partner was determined 15 years ago, this is .net and the entire Microsoft business environment. The decisive factors were: one of the largest communities and product lines, the presence of a Ukrainian representative office and an ecosystem to support and develop partners.

Today we are Microsoft gold partners, we actively use cloud hosting, Visual Studio, Dynamics 365, Microsoft Teams, Azure Active Directory Basic, Microsoft 365, Microsoft Dynamics AX7, Office 365, Power BI, Visio, Microsoft Stream.

What have been the most influential books, podcasts, or other resources?

I have never singled out business as a separate thing, this is part of my life, which is intertwined with other things I do. Everything influences everything and you cannot feel happy if you fail in some area. There was a time when I was inspired by science fiction novels, where characters discover new planets, save the world from mortal danger and fight for justice.

I was also highly interested in authors with non-standard theories that expand the perception of our reality, like Carlos Castaneda, George Gurdjieff, and Jiddu Krishnamurti. As well as novels and dystopias, in which sometimes there is more business philosophy than in the entire course of economics, because it deals with the inner world, true motives, and the essence of what the human and society are.

Examples of such novels: The Financier by Theodore Dreiser, Atlas Shrugged by Ayn Rand, Transhumanism Inc by Victor Pelevin, Fahrenheit 451 by Ray Bradbury.

There was a period when I stopped reading books altogether. This was due to fatigue from the monitor and a sedentary lifestyle. And I discovered the audio format while walking in the fresh air, which I highly recommend to those who have similar problems. The quality of perception when changing the format did not suffer at all.

Again, books that are written in the style of business novels are much easier for me to stick into my memory, due to the presence of a storyline and personal story, I especially want to note: Alfred Sloan’s "My History at General Motors", Eliyahu M. Goldratt’s ‘The goal. A process of ongoing improvement’, Patrick Lencioni‘s ‘The Five Dysfunctions of a Team’.

Advice for other entrepreneurs who want to get started or are just starting out?

Only your own business can be the key to your material success in the future, independence, and the basis for the well-being of your family. This can be your own business, or you being an integral team member or co-owner. Any other position as an employee is a dead end. Sooner or later, you will lose the ability to compete in the labor market and all the money that you have saved will begin to melt.

Any conscientious businessman in the long run begins to earn more and work less than an employee. Or not work at all.

Realize this and start your business or career in the company that allows you to join the business now. Be patient. The first attempts may be unsuccessful, but if you choose a salary instead of finding your business and purpose, every new year you are more and more at risk of never finding it.

Where can we go to learn more?

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