Interview: Dominic Allonby, chairman of Fruugo
Here we talk to Dominic Allonby about his journey developing the fast growing Fruugo online marketplace.
You and Darren Naylor acquired Fruugo in 2012. Why was it an attractive proposition? What was your background prior to that?
Fruugo was founded in 2006 by Finnish technology entrepreneurs, who invested very heavily in the technology and intellectual property assets to create a platform that had significant international potential. Because they knew I had already built a successful UK-based marketplace, and they were looking to commercialise and scale the business, they asked me to run it, and so in 2010 we combined the UK and Finland operations.
Subsequently, with my business partner Darren Naylor, I acquired the whole business in 2012 – the opportunity to own a global marketplace and its incredible technology was too good to miss!
Since then, we have completed several rounds of private fundraising in the UK, and have continued to successfully develop the technology platform creating a truly global, fast growing and profitable cross-border marketplace.
You have grown the company significantly and in 2021 featured in Financial Times Europe’s 1000 Fastest Growing Companies. How has this been achieved?
Fruugo’s growth has been driven by the accelerating global customer shift towards online shopping, its diverse retailer base, extensive product catalogue, and wide geographical reach. In addition, our ongoing investment and improvements in the platform are aimed at continually driving higher traffic and sales volumes as well as improving the overall shopping experience.
2021 was a transformational year of growth and operational progress for Fruugo. Our strong performance reflects the quality and scalability of our platform and technology, market-leading data science expertise, and the continued rapid global growth in cross-border ecommerce. Full year 2021 revenues hit record levels, increasing by over 50% year-on-year and building on very strong prior year comparatives. This represented growth of over 200% on a two-year basis.
What have been your main challenges over the years?
It now seems difficult to believe, but nine years ago we found it surprisingly challenging convincing people here in the UK that our business plan was doable worldwide… it seemed that the potential scale of one single global platform for online shopping was almost too daunting for some to grasp!
What are your predictions for the ongoing development of online marketplaces and the cross-border model?
We believe that the proportion of international shopper transactions (compared to domestic transactions) will continue to grow quickly in coming years, and that the share of those transactions which are placed via marketplaces will continue to increase. It is widely thought that over 50% of all transactions will be via marketplaces in the future. The stars certainly seem to be aligned on our business model and agile global technology.
Tell us about your proprietary technology?
Uniquely, Fruugo uses technology to reduce the complexities of cross-border trade by offering a fully integrated, localised offer for retailers and shoppers around the world. For shoppers, we offer retailers’ product listings into their local language and offer purchases in their local currency. Meanwhile, retailers achieve sales and receive payment for orders in their local currency from shoppers in countries they wouldn’t otherwise be able to reach.
We also use our technology to improve the overall customer experience. Our agile technology and real-time model ensure shoppers are matched with retailers around the world who only offer products which they have in stock at the moment of order. The retailers fulfil the orders directly. Consequently, Fruugo itself never holds stock nor is it subject to logistics or supply chain shortages.
How many retailers are on the platform and what advantages and opportunities does it offer?
Fruugo is a highly diversified global online marketplace currently helping over 2,200 online retailers sell products to approaching five million shoppers a year in 42 countries, 31 currencies and 28 languages. Our mission is to enable online retailers everywhere to sell to shoppers anywhere. By localising the experience for shoppers – who, thanks to our technology, can easily purchase products regardless of where they are based – we are enabling retailers to access a truly global customer base.
To support this, we also leverage our sophisticated digital marketing, bidding and advertising strategies across multiple ecommerce shopping channels, search engines, countries and product categories to drive traffic to the retailers’ products. These factors, among others, enable retailers to look at growth opportunities outside of their domestic market.
You state that you use sophisticated digital marketing, bidding and advertising strategies to drive traffic to retailers’ products. Tell us more about that.
While not a single point of success, our marketing capability is one of the most important parts of our business and has continued to go from strength to strength in recent years.
Today, we specialise in generating traffic from ‘long-tail’ searches on popular search engines around the world. These user searches are typically unique queries with low frequency and enormous variety. Shoppers are looking for very specific products, and because of our vast product coverage (over 40 million SKUs currently) and our decade-long international online marketing expertise, we are able to match them to our retailers’ relevant products around the world.
How do you keep customers in your wide range of markets engaged?
Our proprietary technology and data science expertise, in combination with the huge range of product categories available through our platform, means that Fruugo is able to continually tap into worldwide consumer demand for sought after products and categories.
Meanwhile, and importantly, Fruugo enables retailers to access the expertise and technology required to compete for shoppers they wouldn’t otherwise be able to find internationally by:
· Providing an end-to-end ecommerce solution spanning demand generation through to order orchestration and customer service
· Translating product listings into the local language of the purchaser
· Automatically converting currencies to enable a sale in any currency with the retailer receiving payment in their local or preferred currency
· Calculating, applying, and collecting international sales tax and VAT and, where applicable, paying to the relevant government body on behalf of the retailer
· Utilising comprehensive online fraud detection services
How has the pandemic impacted your business?
The strength of our very diverse, cross-border marketplace model has been particularly profound in recent times and is reflected in our outstanding growth rates. While many traditional and ecommerce retailers and brand owners have grappled with external supply chain headwinds and stock availability, Fruugo has been able to deliver record revenues, by enabling the retailers using our “no-sale no-fee” platform to find new shoppers all over the world.
As a result, building on the group’s strong momentum in the first nine months of the year, the group achieved FY21 revenues of over £30 million and total transaction value of over £135 million. This performance was supported by a 60% year-on-year increase in the number of retailers using the group’s technology platform as well as a 60% year-on-year increase in the number of shoppers buying through Fruugo from around the world. During the year, more than 91% of all transactions completed were cross-border and 82% of transactions were cross-currency. More than 90% of Fruugo’s revenue was generated from shoppers outside of the UK.
What are your plans for 2022 and the next phase of growth?
Combining the accelerating global shift towards online shopping with Fruugo’s diverse retailer base, extensive product catalogue and wide geographical reach, we believe that there is significant potential to continue to rapidly grow the business.
As part of this growth, we will continue investing in our marketing function, expanding into new countries, and increasing the number of retailers and SKUs available to customers. By 2025, we aim to have more than 10,000 online retailers using our platform to serve customers (in their own local currencies and languages) around the world.
Now in 2022, we remain focused on further enhancing our platform, including developing the tools retailers use to join Fruugo, and continuing to develop the user experience on our websites. To support the next phase of our growth journey, we were delighted to welcome Rob McWilliam and Liz Scott to the board as independent non-executive directors late last year. Their extensive expertise across digital leadership and platform technology will add huge value to our already highly experienced senior management team and board.
Finally, we commenced our IPO process last year, with the intention to float on the London Stock Exchange’s AIM market announcement made last September. We look forward to continuing this process once the markets stabilise.