Retail Week speaks to Fruugo founder and executive chairman Dominic Allonby about the importance of cross-border ecommerce, setting itself apart from the likes of Amazon and why every retailer can benefit from operating in a marketplace
Originating in Finland as a marketplace aiming to link the Scandinavian countries, Allonby acquired Fruugo in 2012 and developed it into a marketplace able to create a localised shopping experience for each country it operates in with technology at its core.
Now, the global marketplace has a team of around 200 people, hosts more than 3,000 global retailers, operates in 42 countries worldwide and boosted revenue by 110% to £65m in 2022.
What progress has been made to Fruugo since its inception?
“Taking ownership of more of the technology and building a tech team has really helped. When we first acquired the business, we were running on a shoestring and now we’ve got 50-60 people working full time for us. That’s meant that everything has become so much more robust, but also we’ve been able to invest in technologies that make the process more seamless for shoppers, introduce more products more relevantly and work hard on acquisition of shoppers.
“Along the way, things that have helped the business have been the advent of online shopping, which was pushed forward, obviously, by things like the lockdown. We’ve capitalised on all the knowledge we gained and therefore the business keeps on growing.”
What does Fruugo do that might be different from the likes of Amazon?
“If you’re in Sweden and you want to buy a product, you will likely search in Swedish and look to pay in Swedish currency. With Fruugo, you can be sitting in Sweden browsing our site, but a lot of product data that you’re looking at might be from a retailer in Canada.
“As a Swedish shopper, you will automatically see things in your language, all with shipping price to your country, your currency with prevailing tax rates relevant to you – so it’s a very localised shopping experience.
If you look at Amazon in Germany, you’ll see the Amazon.de site with products typically from German retailers. Fruugo has one domain and the technology powers everything, so it’s a localised concept and always feels personal to you.”
Why is cross-border ecommerce beneficial to retailers?
“In the UK, in sports retail you’ve got JD, Frasers Group and so on. It’d be difficult to make much headway against those kinds of retailers here, so looking further afield where there may not be such strong players is very useful.
“The problem for retailers is it’s difficult to learn how to transact internationally, but coming to Fruugo means they give us their product data and we do all the heavy lifting to find shoppers for them.
“Retailers need to be looking further afield, simply because they’re often operating in very competitive local markets. A retailer in the UK may have products that there’s a market for in Italy and they wouldn’t necessarily know that. We find that shopper and find millions of little micro niches for that retailer’s database and products.
“For retailers it’s an opportunity to reach further as being in just one country these days is restricting new growth opportunities and it’s therefore a risk.”
Do you think a marketplace can benefit every type of retailer?
“It’s difficult to imagine why a retailer wouldn’t benefit from marketplaces, as it can find you shoppers you probably could not find yourself. The cost of doing so is only a relatively small proportion of a retailer’s own margin if we take our standard rate of 15% commission and many of the products that we’re selling, we know they’ll have margins way in excess of that.
“Our commission is what the retailers pay – and they’re not paying for the traffic, they’re not paying for the marketing efforts, we’re paying all of that. Marketplaces are incredibly valuable and retailers should embrace them.”
What would you say has been your biggest challenge so far?
“I think with such an opportunity ahead of us, there’s always the temptation to overspend and try everything too quickly, and quite possibly lose focus on the core value proposition and the core technology.
“We’ve moved from investment and loss-making in the early days through to solid profits and rapid growth. We don’t want to lose that. So while we’re always looking at innovations and we add all the time, in a way, oddly, the challenge is not to run away with yourself.”
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