Ekana Innovation

Passion for First

Fruugo unveiling the curtains – Don’t kick the panda

Posted by Janne Saarikko on January 30, 2009

There has been a great deal of buzz about Fruugo during the last few months. This “biggest startup in Finland”, “Jorma Ollila and Risto Siilasmaa venture”, “Tekes funds their fun” and “most NDAs in Helsinki” rumoured company is now finally starting to unwrap from their stealth position.

I had a pleasure to be in the first group of non-NDA intros on the current Fruugo beta couple of days ago. This means I have access to their system. I can use it and even buy stuff (which I’m propably gonna do during the weekend). Yes, it’s still in beta, but it works!

I’m not going to give you a tour around the user experience of Fruugo, that is being covered already by Startupbin, who attended the same group with me. Also, for screenshots of the service in Fruugo photostream in Flickr.

How’s their business outlook?

Instead of judging a system like Fruugo by it’s cover, I think we should look at the business model they are providing. Before getting to talk to Fruugo people and seeing how the system will function, I had my expectations high.

I was thinking that this is a chance to make ecommerce really happening by removing the obvious obstacles that have slowed down the wider use of international business

  • Trusting the merchant
  • Trusting the buyer
  • Complex it systems required
  • Challenges with international payment systems
  • Language problems
  • Problems with the logistics
  • Problems with customs and other related paperwork

I knew that if Fruugo can solve most of these problems, they will be very successful.

And glad I was, when I was presented how Fruugo will work. Let’s see:

Trusting the merchant. Fruugo will check the background of all merchants in the system. They will also make sure that customers’ are being served by offering Fruugo customer service – someone to get in touch with and solve the problems with.

Trusting the buyer. Fruugo will take care of the customer side as well. Fruugo has their own “fraud management” system, that clarifies the problems with buyers behaving badly.

IT-systems. Instead of having to invest huge amount of money into websales systems, Fruugo will only need to have an interface with merchant IT-system. If the merchant is not selling online yet, there is no need to start a new multilingual webstore – just integrate the current system with Fruugo, and you’re good to go.

International payments. Fruugo has it. Customers pay with the systems they normally use in their country, and in their preferred currency.

Language problems. Not to worry anymore. Fruugo is localised in your own language, but you can also choose multiple languages that you understand. My primary language in the system is Finnish, but I also said I can use Swedish and English. When searching products, I can do a search using any of the languages, and I get the results in my primary language. If I was to seach for “hame”, “kjol” and “skirt”, I would always get a nice selection of skirts, in Finnish.

Logistics. This is something that may be in their future pipeline. Now the logistics are taken care by the merchant, but is of course automated and supported by Fruugo knowledge.

Customs. At this point Fruugo doesn’t really need to help with the customs, since their markets are within the EU. I personally believe this will be solved, once Fruugo expands outside of the EU.

Fruugo will start opening to limited number of users gradually. First they will take Finland, and very soon after that Sweden. It is expected, that Fruugo is available in most of Europe during this spring.

I had the opportunity to talk to Fruugo CEO Juha Usva and VP of Marketing Janne Waltonen about this. They are very convinsing, down-to-earth, cut-the-crap and brightvisioned with Fruugo and their opportunity. No, there is no company jet or huge parties. Fruugo is not hosting huge parties.

They are working hard to provide something that will hopefully change the way people do ecommerce.

And feeding their little baby panda. Gently.

Links: Fruugo CEO Juha Usva on MTV3 interview today (in Finnish)

Addition: Now Arctic Startup joined the club as well


11 Responses to “Fruugo unveiling the curtains – Don’t kick the panda”

  1. […] Tuoretta analyysiä ja käyttökokemuksia Fruugosta englanniksi. […]

  2. Interesting. So Fruugo is positioning themselves as some kind of a meta-level Amazon.com?

    It may well work out, I’m just wondering what the major, big, hairy market need is that they’re answering… I don’t doubt that they have it worked out, it’s just not that obvious.

    And therein lies their major challenge as soon as they open up: how to communicate in non-ambiguous terms what they bring to the table. Both in how they talk about their service and how they present it; user experience must actually *improve*.

    Looking forward to a good show.

  3. […] 1, 2009 · No Comments More about Fruugo launch here, here and here. Last Wednesday I was invited to Fruugo to see their service and hear their plans for the […]

  4. douglas (belgium) said

    I don’t see a lot of differences with other ecommerce sites who offer similar functionality like etsy.com.
    Looking at the screenshots I can’t see any difference between these two so I’m still waiting for a kick ass demo from these guys.

  5. Moi Janne,
    you are right – delivery logistics is taken care by the merchants at in this initial phase. More delivery logistics is in the pipeline. The development focus has been in international return logistics so far and these solutions are not yet that visible for beta-users (as they and the merchants are in Finland). We believe this is one of the most important factors in winning more cross-border consumers and making them feel confident about purchases.
    Tapio Järvenpää
    VP, Logistics and Merchant Integration

  6. Douglas,

    The big difference is not in the screenshots or look and feel.

    It’s in the process and what’s happening in the background.

    Could you imagine ordering the coolest handpainted sneakers from a small company in Malaga, Spain? Their website is in Spanish and they ask for your credit card number. You would be thinking about risks involved in not knowing the language, how the delivery really works and will you ever get the product. What if the product is faulty, how do you send it back? And the shopkeepers have no idea who you are, maybe just someone ordering stuff for fun and then denying the receival of products to the credit card company.

    Fruugo will take all that hassle away within the EU. In future you can even order reindeer skins from Lappland or pottery from Greece. In your own language, in your own currency with your local method of payment, delivered to your address. If something goes wrong, Fruugo will take care of it. I saw the area reserved for their fraud services department, they are really preparing to care of the process.

  7. Moi Tapio,

    Thanks for visiting. I can very clearly see the strenghts of Fruugo provided by heavy but essential back office processes.

    Keep up the good work! 🙂

  8. If I’m buying those handpainted sneakers from Malaga, Spain (and I do like shopping clothes in Spain!), then yes, it makes sense to have a middle man to handle the purchase, delivery, sending it back, etc. But how big of a market are we talking about here then? I buy mostly music, DVD:s and some random clothes from the internet, and I reckon that’s more than most, at least at the moment. And I am happy with Amazon’s and Apple’s services, and also the random weird clothing shops’ services so far. I may not be the target customer, but still, at the moment I see no problem in this area. I pay with a credit card (the same way I beer at the nearest small kiosk), get the products delivered the way I want, have no problems returning the items and the selection currently is way larger for any sort of items as I will ever need Amazon is doing such a great work right now that they can drive their profit margins looooow as hell. Startups competing in this particular field will stumble upon that obstacle at some point down the line. Damn, I’d like to be more excited about Fruugo as a Finn but just can’t at the moment. I hope everything best for the company, and hope they aren’t afraid to listen to negative criticism such as I have just thrown at them. After all, startups have to face all kinds of obstacles, that’s the we all want to rock’n’roll 🙂

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