Realestate.com.au has become the number one site across Australia and now they are looking to conquer other countries. This is the nature of a publicly company, investors demand, or at last want double digit growth in companies they have invested in and realestate.com.au have delivered thus far.
But can they be toppled?
The nature of the Internet has three rules to be successful. The first being you need something someone else wants (real estate being one of Australia’s most most popular investment opportunities)- the second thing you need is a big loudspeaker so that people know about it and the third thing you need is for it to generate revenues over time and costs .
Realestate.com.au have the majority of listings, they also have the majority of residential agents across Australia, secondly they have News Limited newspapers/partners to let people know about it and with those two combined with the fact that Australians are obsessed with real estate, they have a business model that makes money.
Consumers go to realestate.com.au because they have the listings. As an example if I went to say…. www.domain.com.au and searched for property listings in Mooroolbark / Victoria and found only 5 listings. I then went to realestate.com.au and did the same search but returned 300 listings, where do you think I will go next time?
5 stars ….go to the top of your class, users go to where the information is and realestate.com.au know how to convince users to go there – through smart aggressive marketing and a pure and simple fact that they get repeat users because they have the listings.
Today we have a situation where Fairfax (domain.com.au) and News Ltd. (realestate.com.au) control the online expenditure of realestate agents across Australia. For many years traditional companies controlled print media and now they have/want total control of online real estate marketing in Australia.
So what can be done? For one – forget about real estate institutes coming to the rescue, the embarrassingly bad www.realestateview.com.au has been a lesson in how not to approach this space and the less said about www.justlisted.com.au the better.
So where does this leave us? My belief from experience is that something will come from left field and it might come sooner than expected.
This is the beauty of the Internet, you dont need to be a big boy to compete.
Sure once you get big, the big boys will pay you handsomely to sell to them – again turning the cycle in their favour. However some things cannot be purchased by big boys, simply because in global terms they are not that big and sometimes the product they may be up against will actually compete ($$$$$) against a very profitable product that they currently operate.
Some things need to happen first. We have seen major franchises come together and create portals like www.homehound.com and www.propertylook.com.au. But where does that leave poor old independent private agencies?
Time for a change of approach?
Is it time for private agents across Australia to come together into one massive buying group and start to put pressure on the big boys?
This may be a pipe dream but with a bevy of great technologies coming soon (Wimax, VOIP) that will push agents to really embrace technology I am pretty sure it could be done.
The biggest killer for agencies across Australia is a lack of understanding and knowledge by the so called stalwarts of the real estate industry, people who have been in real estate too long and don’t (don’t want to) understand technology.
How it would work (not could)
Could you imagine if 4000 private agents across Australia (secretly) all at once decided to ditch the major portals and launch their own? Not only that but invest the annual fees they would save into marketing their own portal on TV, Internet, Radio (not print). My calculations come to about a 20 million dollar war-chest! What would or could the major portals do? Stocks would tumble, portals would scramble, CEO’s (and others) would lose their jobs! This could happen, the majors continue to rise fees each and every year and agents are not al that impressed.
Remember, realestate.com.au and domain.com.au have websites that can quite easily be replicated in form and function.
If it was planned well (perhaps) perfection then it would work…….
Okay, enough of dreams… This will not happen, to get 4000 agents to actually work together on something and agree to dump portals that actually make them money… will not happen…..
So let us go back to the left field option. In the late 90’s Looksmart, AOL, MSN and Excite ruled the roost in as far as search goes. The along came two little boys with a new idea, search!
Anyone heard of Google? Some of you might not even know some of the names I have mentioned above but it was those companies that were all worth over 1 billion dollars (at least) at the time, some of these don’t exist anymore, some are just shadows of their former selves. Yet Google has gone from strength to strength and completely dominate search in just about every country and reap billions of dollars in profits from a completely new business model.
So let us recap……realestate.com.au are a good company, with a good site, and have the listings and the users. They are doing nothing wrong, it is just a pure an simple fact that every year fees will rise (10, 20, even 30%), new features are added, new ways of making money are thought up by getting agents to compete against each other more and more. This will not stop, but it may reach a ‘tipping point’ to use Macolm Gladwell’s oft’ quoted book title.
Note: I have received a comment from realestate.com.au CEO Simon Baker that has corrected the above percentage rises – and I acknowledge the mistake made in this calculation. The average rate rise per subscription has been quoted by Simon at 8% over the past 5 years and I have no reason to doubt this.
This is what big business do. The purpose of this exercise is to make you think.
Big boys dont rule the Internet forever, something may come from left field, many new ideas will fail….replicas will almost definitely fail (read justlisted. homehound) but once in a while something strikes, something works and this will happen one day.