Fruugo, the ambitious Finnish e-commerce startup (see our previous coverage) has announced (see Reuters' press release Tarmo Virki's interview news below) the company is on track to launch closed beta still in January, as stated previously. The service will next open in Sweden by early February. The public opening is planned for April, while the news does not specify in which countries it will be available.
Siilasmaa states in the press release interview they "are working to create a European marketplace, so that all those merchants would find all those consumers and all consumers would find all those merchants." Fruugo has said before the company wants to be the trusted 3rd party of e-commerce. Based on the latest press release news, this means Fruugo aims to unite the online shopping market by opening a "one-stop mall" for Europeans (Europe is the firm's main target market for now, as it has declared before as well). Fruugo will have hundreds of links to different online stores available in its mall. This explains why the company has been using user experience and website optimization and monetization consults. The initiative could certainly become something big if the company is able to execute the vision.
The addressable market is around EUR 60 billion ($79.50 billion), the company states, half of the total online shopping market in Europe last year. As Fruugo stated in the autumn, it targets all consumer durables and content sold in physical boxes. According to the news, there are some 30 merchants currently integrated with Fruugo, while further 100 in the process. The merchants carry brands like Lego, L'Oreal, IBM, Nokia, Adidas, Lacoste and Nike.
The big question speculated a long time has been, what is the business model? Fruugo now states it does not collect any sign-up or monthly fees from the merchants, it only charges transaction commissions. Fruugo's business model is said to mix "online retail with search and price comparison capabilities", and in addition, social networking, which allows consumers utilize their online networks when seeking the best shopping deals. There isn't more information given on the last point, but it certainly sounds interesting if Fruugo has created some way of utilizing social search (cf. Google speculations) while shopping for products, which might lead to much more relevant search results and recommendations.
Just recently, to add to Fruugo's well-known board members Nokia chairman Jorma Ollila and founder and chairman of F-Secure Risto Siilasmaa, Kim Ignatius has joined the company's board (the news in Finnish). Ignatius is Director of Finance and Administration in the Finnish international Sanoma media group, while he served before as Finance Director of TeliaSonera, the biggest mobile carrier in the Nordics. In the same General meeting the board also allowed usage of stock options. Sanoma has been very active in the past years buying internet and media startups so we will see if the corporation plays any role with Fruugo.
Apparently Fruugo's cash position is healthy after all, as the owners are reportedly not after quick profits - Siilasmaa states confidently "The day will come when this firm is cash flow positive."
See full press release interview news below.
16:41 14Jan09 -INTERVIEW-Finland's Fruugo aims to unify European web shopping
* Finnish startup aims to unify European web shopping
* Backed by Nokia chairman and board member
* Starts rollout this month from Finland
By Tarmo Virki
HELSINKI, Jan 14 (Reuters) - Fruugo, backed by a who's who of Finnish technology leaders, aims to unite the online shopping market by opening a one-stop "mall" for Europeans.
The startup -- whose top owners include Nokia <NOK1V.HE> chairman Jorma Ollila and Risto Siilasmaa, founder of security software firm F-Secure <FSC1V.HE> -- plans to link hundreds of online stores to its mall, which it will start to roll out this month.
"We are working to create a European marketplace, so that all those merchants would find all those consumers and all consumers would find all those merchants," said Siilasmaa, who is Fruugo's chairman.
The company says its addressable market is worth around 60 billion euros ($79.50 billion) -- half of the total online shopping market in Europe last year -- as it targets all things sold in boxes, excluding food and drugs.
The IT systems of the first 30 merchants have been linked to Fruugo, with a further 100 signed up and in the process of being integrated. Brands carried will include Lego, L'Oreal, IBM, Nokia, Adidas, Lacoste and Nike.
Fruugo's business model combines online retail with search and price comparison capabilities as well as social networking, allowing consumers to tap their online networks as they seek the best shopping deals.
It aims to attract merchants with low financial risks -- there are no signup or monthly fees -- and aims to grow through commissions from actual sales.
The company has been in development for more than two years and has raised wide media speculation in Finland due to its high-profile owners and reclusive media policy.
This month Fruugo will open its site to a limited number of Finns, with a test launch scheduled for Sweden by early-February and opening the store to wider public in April.
Despite the financial crisis, Fruugo's owners are not in a hurry to turn a quick profit.
"The day will come when this firm is cash flow positive," said Siilasmaa.
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