Fruugo invited a few bloggers to the company’s premises this week and demonstrated their service, also handing out beta accounts. (We’ll try to get a few shortly also for our readers – let’s see.)

Fruugo’s Janne Waltonen, VP Marketing & Communication, mentioned that they have not really figured out yet what to call Fruugo; it is not a webstore since they don’t own any products, legally you cannot call the company a webstore aggregator either, and it is not a not a search engine. We could settle for virtual marketplace for now. What Fruugo wants to do is to make it simple and safe to sell and buy things online across the Europe regardless of the country borders. The transaction participants should be able to complete the transaction just if they were in the same country, using their local currency and language.

Fruugo is developing the live beta service constantly (with around 60 own employees and 40 consults), so the UI and layout will likely be totally different after a short while . But the first screenshots give some indication of how the service is turning out (more shots in Fruugo’s Flickr stream). The priority order for UI is 1) products, 2) consumers, 3) merchants. Fruugo is trying to find the most interesting and successful consumer segments first with a broad, steady approach, and then go after the selected ones with bigger international marketing power. The company does not plan to provide mobile offering anytime soon, as the mobile market isn’t yet mature enough, Waltonen commented.

The company depends on the logistics of the merchants, and hence requires all merchants to guarantee certain levels of shipping speed and reliability, with four shipping options at the moment. Non-confirming merchants will be removed from the service. Fruugo’s including only 30k-40k products in the early phase of the beta in order to better evalute the usage patterns. Once they have figured out a working layout, gathered enough data, and fixed biggest bugs they will start adding multiple merchants offering the same products. Having none overlapping merchants is also why currently some of the products in the service are considerably pricier compared to some other stores.

Despite any rumors, Fruugo does not introduce any billing methods of its own, they will rather use existing ones. In the beginning they have just the most common credit cards and Finnish e-bank systems. PayPal will be coming only later, which is understandable, given that using credit cards and e-bank accounts is much more common in the Nordics. Fraud management is going to be a huge task to Fruugo, as Fruugo will take responsibility for all transactions, both merchant-consumer and consumer-merchant. The company has reserved the second floor of their office for most part to operational and fraud management activities. Waltonen commented due to fraud issues they have needed to also rule out some product categories due to the requirements by the credit card companies.

So far Fruugo will not introduce any deeper social shopping features, like group shopping. Rather, there are “social traces”, meaning users can review products, seek assistance from other users, and see actions of others. Interestingly, the recent product views and searches of all users appear on the front page in real time (anonymously). Registration event of new members will be be shown with the users’ real name. Fruugo isn’t planning on introducing any sellable promotion slots, rather they expect merchants to rise in the ranks and get visibility due to reliable service, popular products and good prices, and complete product information, which will generate positive reviews.

One major problem in integrating with merchants is that really few Finnish online merchants are used to providing outbound feeds (e.g. RSS), Waltonen described. In Sweden, UK, and Netherlands the situation is much better, as apparently feeding the different comparison sites is more common there. Considering Fruugo takes care of billing fees, fraud management, first line customer support, and managing the customer returns, the 10 % revenue cut the company is taking does not sound bad at all. If they can get the support for the rest of Europe up and running as per their vision, it seems Fruugo might even be the only sales channel a small webshop could need. In that case there could be clear business opportunities open to 3rd parties for helping small e-tailers setting up Fruugo-compatible shops.

Fruugo’s CEO Juha Usva did an interview with Finnish MTV3 this morning, you can watch it here (in Finnish).

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Update: Check out also Startupbin’s and Ekana Innovation’s posts.
Read also our previous coverage on Fruugo.