In order to succeed, OnTheMarket will need to have at least the same number of listings as Zoopla.
And there is a warning that Zoopla could go “direct to the seller”.
The huge scale of the challenge facing the new portal has been emphasised in a blog by guru Simon Baker –who was at one time in charge of the UK portal that has since morphed into Zoopla through various acquisitions and the adoption of its all-important branding.
Baker, looking at both OnTheMarket and its Australian challenger equivalent Squiiz, concludes that neither will succeed.
He said OnTheMarket is unlikely to make much of a dent in Zoopla’s traffic – although conceding that Zoopla’s content could dwindle.
Baker’s blog talks only about challenger portals in relation to the number two portals, not the number one sites – in Australia, Domain and in the UK, Rightmove. Dislodging a number two site will be very difficult, he says.
Baker said: “Success needs to be more than just forcing the market leaders to drop their prices.
“These two new sites … need to operate profitably (or at least at a break-even level) and they must deliver results for their end customer –not the agent, but the home seller and the landlord.
“What we know is that in a mature market (such as Australia and the UK), you need to be the leader or in #2 place to operate either profitably or break even (and deliver results).
“In short, Squiiz needs to knock off Domain and OnTheMarket needs to knock off Zoopla. Can they do it?”
Baker continues: “When consumers visit a property portal, first and foremost they want to see listings.
“For either OnTheMarket or Squiiz to perform better than Zoopla and Domain, they will need to have at least the same amount of content as these two sites. Without having this same level of content, the consumer will simply look at other sites to get a full view of the market.
“OnTheMarket is taking the aggressive approach of requiring its members to only have one of Zoopla or Rightmove as a second site. Most agents are likely to select Rightmove and therefore Zoopla is likely to have a drop in content.
“Of course, Zoopla is not going to lie down and take this without a fight. It is likely that they will increase their marketing efforts and target home sellers with a message about “you are not on Zoopla and you are missing out on quality buyers for your house”.
“They may even take the hyper aggressive approach, as we did in Australia in 2002/3, and write directly to the home sellers encouraging them to talk to their agents to put their listings on the Zoopla site.
“In some cases, Zoopla could even go direct to the home seller –clearly not what the industry wants.”
It’s interesting stuff, here
Well he would say that wouldn't he?
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Property Pundit – Thanks for the comment. However I am not biased either way. I have consulted to industry owned portals and i have run a portal servicing the industry (realestate.com.au in Australia).
I have seen many attempts in many markets for the industry to take control and in inevitably fails for the reasons i outlined on Property Portal Watch.
These views are based on experience rather than bias.
Simon Baker
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Well I am delighted AM is being discussed, the more oxygen it gets the better. It won't belong before high street windows will be promoting AM, it is not all about what you see on-line.
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They (Z) have been trying "Hyper aggressive approach" for I don't know how long. ****** Phil Spencer and his "Smart Search" rubbish on the radio claiming 8 out of 10 agents are on Z why isn't yours! Looking forward to the updated version of that advert in January! …….. anyway like Yorkshire Agent says…… yet more airtime for free!
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Very interesting blog although I think he maybe kidding himself. I had further discussions last week with a very open Z rep they have lost every agent in my area apart from the corporates. And in the neighbouring towns and citys. Month end they were inundated with cancellations so much so they are not even calling agents to sway their mind. I think after Q2 in 2015 zoopla will have had to change their view on where business comes from and I think RM will be stronger than ever. be a very interesting 2015 with AM, General Elections, Stamp Duty, Tenants Fees and possible Interest Rate increases…..
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"For either OnTheMarket or Squiiz to perform better than Zoopla and Domain, they will need to have at least the same amount of content as these two sites"…I completely agree with this comment. Even those who are still unsure about the exclusivity rule must now acknowledge that such a rule is the only way that a new entrant can enter such a market.
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If you think Zoopla will sit back and let all this happen you're bonkers. Worse still if all AM succeeds in doing is drive Zoopla to become a private listings site for the public then well done AM you'll have helped us all by increasing the private sales market!!!
Rightmove must be rubbing their hands together.
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You really don't understand the FSBO market do you?
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Personally, competing with a private owner doesn't worry me. In fact I love it. And if Zoopla do start advertising private listings, doesn't that legally make them an estate agent – with all the regulations that entails. Is there any indication Zoopla WA NT to be bothered by the regulations and become an online estate agent?
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So, failed operator of portals is now a guru. Lord help us?
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Thanks for the comment however, as the writer of the underlying article, my background is the former CEO of the REA Group in Australia. If you are unaware, this is now a AUD 6 bn business. When i joined way back in 2001, it was an AUD 8 million business.
I have had extensive experience in the industry including Property Finder in the UK (not to mention sites in SE Asia, LATAM, and Europe.
Always good to have some background.
Simon Baker
http://www.propertyportalwatch.com
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You should have seen their stand and reps at EA live on Friday….the atmosphere around Zoopla was very very negative, in my view…..a real contrast to RM who were "centre stage"…….and that is before OTM starts. I caught up with a lot of very well known agencies and found that none (I spoke to) had dropped RM….all Zoopla. Those that were on the fence said that they were "getting the feeling" that they were worried about Zooplas' standing early doors next year, even though they hadn't signed up to OTM yet!
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I find it strange that for years agents have moaned and whinged about Rightmove, but when the chance comes to drop them for OTM and Zoopla, they chicken out!
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Rightmove (at present) are the better portal in the majority of the country, it is a as simple as that. This isn't about a personal vendetta against one or the other portals, or about costs either (rm much more expensive than Z)…..It certainly has nothing to do with "chickening out!… Indeed, there are a lot of agents, established and new start ups, who know their opposition agents are doing much better than them in their towns…..if they want to reach no. 1 they have to take out the other agents on the way….it makes more sense than going all out at the number one straight away. It is easier to beat no. 1 when you have made the number 2 spot.
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Spot on Elbee. Rightmove must be kicking themselves now they have realised how loyal agents are towards them. They will be thinking they should have charged us more.
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This is an absolute nonsense post, in my view…….some agents are actually paying less to Rightmove since they committed to otm and many left Zoopla because they, themselves, indicated they were increasing fees in 2015 and over the following 5 years!.
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OTM will never have the momentum again that it has and it has caused Rightmove to even limp. Quote of the day 'some agents are actually paying less to Rightmove since they committed to OTM' . Committed to who? not OTM in my book.
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Perhaps the chicken will remain a chicken Elbee for the next six months or so and then it might win its spurs and the jousting tournament begins.
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One thing is for certain, Z will not take this lying down. If Z do go direct to sellers and turn their advertising onto direct listings they will change the face of estate agency within months. The only reason why online agents have such a small % of the market is not due to a lack of demand for their service but simply a lack of awareness that it exists. How many of you 10 or even 5 years ago would have willingly bought online with your credit card? Now, millions of us book our own flights, hotel rooms and regularly buy all manner of products and services including groceries online as second nature. So why isn't the % of people selling via online agents far bigger? Simple, we are creatures of habit and with the average seller only moving every 7-10 years the last time they sold, and the times before that the automatically used a high street agent. BUT, those same sellers now use RM and Z to find their next home and it won't take much of an advertising awareness campaign by a nationally known name like Z to persuade a good % of those sellers to sell online – especially if the fee savings run into £1000s. Any of us who don't second guess this scenario and factor it into our thinking could be in for a nasty shock. AM will definitely disrupt the market, the real question is in what way and who will eventually suffer the most? It just might be AM and its agents.
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Very real possible issues highlighted – Good comment!
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"The only reason why online agents have such a small % of the market is not due to a lack of demand for their service but simply a lack of awareness that it exists."…Or it could be because the consumer don't want the service…."How many of you 10 or even 5 years ago would have willingly bought online with your credit card? Now, millions of us book our own flights, hotel rooms and regularly buy all manner of products and services including groceries online as second nature."…It appears that you have fallen in to the 'tech' trap of not identifying that agency is a people business. It cannot all be done online, not if you want to achieve the best possible price…."BUT, those same sellers now use RM and Z to find their next home and it won't take much of an advertising awareness campaign by a nationally known name like Z to persuade a good % of those sellers to sell online"…Let them do it, go on I dare them, the general public won't want it, that's why only 2% of the market is currently done through online agents, in other words agents that only use RM and Z to sell a property.
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Admire your optimism but I do think the public want it, they are just scared at the moment. You and I as agents know the benefits of using a high street agent put the public don't know what we do to justify our fee, this is why agents get in many cases a bad rep. Its the same as we don't need RM but even with AM agents will still be on RM – This might change in the future once agents have confidence in AM similar to direct to market sellers. Agency is changing and I would not be surprised if you find at some point in the future (maybe years) Joe Public listing direct to portal for a few hundred pounds and then employing a sales progressor to handle the deal for a few hundred pounds once they have more confidence.
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I haven't fallen into a tech trap – but you have fallen into a complacency gap. I can remember years ago being at a trade fair and the MD of a jewelry company said people would never buy jewelry online because it was a 'people business'. Yeh right. Apart from the valuation I reckon we never see 90% of our clients, 90% of communication is done over the phone or by email and I doubt it is much different for most agents. If you think a high % of sellers won't opt to save £1000s listing direct with Z if that option exists, think again. The public don't have a high opinion of us and the right advertising campaign will hit a home run.
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nobody (except agents) know onthemarket; everybody knows rigtmove and zoopla. OTM will need a lot of aggressive marketing to create consumer/brand awareness. then they also need to be conscious of the time it will take for them to develop consumer loyalty. ultimately that's where zoopla wins and otm fails
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Says the zoopla rep!
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Says the OTM rep!
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Crazy thought, but what if ZPG were to just let vendors listing with agents on OTM/RM pay directly for a listing on the site? Vendors likely want all the exposure they can get (and probably won't even know their listings aren't with ZPG already), and would almost certainly be willing to drop £20 or whatever ZPG asks for the increased exposure. Meanwhile ZPG obviously doesn't want to suffer from a lack of inventory…
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There is merit with this approach. Agents are basically saying that they will not advertise the vendors property on Zoopla because it is too expensive. Therefore, why cant Zoopla offer, at a premium to what agent's pay, the chance for a vendor to advertise directly on the Zoopla site. In addition, Zoopla could always say that it is cheaper if an agent advertises on the site rather than the vendor direct. A vendor is then likely to pick up the phone and call the agent to say "advertise on Zoopla". Nothing like the UK population doing the marketing for Zoopla. With a billion pounds of share holder value to protect, dont ever under estimate what Zoopla may do.
Simon Baker, http://www.propertyportalwatch.com
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Sorry to pick this up at the bottom Harree but the replies system of Ros's software makes it near impossible to find chronological replies.
Picking up on the Zoopla super online agent thing how do you think they will pull that one off? Being blunt and talking with qualifications in property valuation and experience of the difficulties of writing the software to attempt property valuation, Zoopla would be immediately behind traditional agency; their valuation tool is a flawed random number generator and nowhere near good enough to be the basis of a legal, duty of care, business which would immediately become liable for the inaccuracy of their own algorithms
The logistics and responsibility of being an agent in the proper sense of the word and the obvious requirement to have agency 3 times larger than the current largest Agency network would require something monumental in the way of a management and motivation team. I am not saying it can't happen but would be interested to hear how those who think it can happen, think it can be done.
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They can't pull it off and those that have posted to say they could are making a ridiculous statement. Apart from anything else, they would have to ditch ALL of their advertisers (because who would stay with them) and look to pitch for the 3% of the transaction that constitutes the private sale market. Then they hope to what generate £80m from private sellers?! Oh ok, "yes you can list on Zoopla but that will be £3000 each please for an advert!"
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RealAgent, two things, direct listing would only become an option if Z's revenue was so badly damaged by OTM that ditching the few remaining agents for a new approach became inevitable. Two, the only reason IMO why online has just a 3% market share is because 95% of sellers aren't aware that an online option exists. That will remain until an online agent advertises heavily on mainstream TV and if Z were to do that I bet that 3% share could increase dramatically. Nobody thought that people wanted 'cheap jewelry' until Gerald Ratner revolutionized the way it was marketed and in no time became the UK's biggest jeweler. If he hadn't blown it with his prawn sandwich gaffe Ratner's would still be going strong.
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That doesn't answer the point I made though Harree. Work it out, to make even close to £80m profit (the minimum their shareholders would require or they will sell in droves), they would need to turnover say £136m that means at a charge of even £300 per seller that would require over 50% of all of the property transactions in the UK and all these people would what see through their own sales?? …..now tell me your statement wasn't ridiculous! As for the Ratners comparison, I'm sorry but if you were an estate agent, you would understand that we sell a service not a commodity!!
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Robert, If I were in Z's shoes I would possibly look to some form of franchise or exclusive area agreement with local agents who could perform the valuation and sales progression. I bet there are plenty of smaller agents or savvy employees/valuers who would welcome the opportunity of being supported by nationwide Z branding and advertising. Z could charge agents per lead generated and essentially just become a lead generator for direct listings without involving themselves in valuations or progression admin. If they set the listing fee at £995+vat and charged £100-£200+vat a lead supplied it could work. I haven't done the maths or thought it right through but you get the idea.
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"£100-£200 per lead generated", that could turn into a commission of £995 + £5000 (for leads) + vat , you do know that Emoov charge £495 (inc vat)?
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Right, this online thing, 90 odd percent of people begin their search online, we can also assume the public are a savvy bunch and when armed with an Internet connection can find a house to buy and an estate agent to sell theirs ( online / budget or traditional ) so all this about the online offerings having 2% market share because the public aren't aware it's avaliable is daft, the public can pay upfront to a budget jobbie and get on RM and Z or use someone on their local high street, they just choose the second option because they are clever – Jonnie
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Harree…"If I was in Z's shoes…" The more you put on here the more I think you ARE in Z's shoes.
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Seems the OTM/AM advertising policy has shifted to now having 'Featured Agents' and 'Featured Properties' for an additional charge…
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I am in the fortunate position of not only doing the maths but understanding it too. There were some memorable discussions with Adam Day in Autumn 2013 where he was advised that he couldn't afford to do Estate Agency at Passive Intermediary prices, he argued long into the night that he was correct but if you notice he was back here not many days ago with the realisation that the advice he was given was damn near spot on.
Estate Agency is not a sales industry and to do the job consistently and profitably demands a level of professionalism over an extended period. The model you are suggesting has been tried and is being tried by the likes of the Europe dominating Optimhome. A quick trawl trough their area rep/ territory owners shows up that they don't have anything like the number of instructions per week to make the equivalent of an average UK wage, so what seems like a great idea doesn't work in practice.
Not very many weeks ago Zoopla caused a storm by writing to "Dear Home owner, here are the competitors to your instructed agent who are still using Zoopla" It is more likely that tactic will intensify because to run a 3500 branch or territory agency with all that goes with it is simply beyond their capabilities. What is more likely is strategic partnerships with those who can't or don't want tobe in AM, that figure based on figures gleaned from other stories on EYE is a total of 80%.
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"What is more likely is a strategic partnership with the non AM agents"….A fair assessment Robert, and this will be an obvious justification for the rate increase that those agents staying on Zoopla will have to pay to cover the cost of the agents leaving.
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I appreciate it is a bit early and I don't have the details of who has and hasn't signed up but phase one, making AM and OTM viable is done- the beach head is established! Who is working on the those Agents who ought to be AM and for whatever reason haven't committed. I refer to them as the CaT's (Copper and Tin)
Forgive my bluntness but from personal experience NFoPP aren't going to drive those members to AM, many of the Cats are old school NAEA many still resentful of the demolition job done at Arbon House. Many cats are single minded entrepreneurs who just get on with the business of selling property oblivious to most things including the existence of EYE or EAT. Exluding the Corporates and on liners the Cat population is about 13,000 branches, what is being done to form a strategic partnership with those agents? If AM don't Zoopla will and in my mind that is the battleground. And to recover/ re open an old discussion the weapon of choice is going to be fees.
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Dear Zoopla, Your website has very little traction in Scotland, that's why I don't use it, my clients don't use it and neither of us have any requirement for your website. In fact I am sitting in The Balmoral Hotel in Edinburgh just now on holiday negotiating a property sale that was on neither Zoopla or Rightmove!…. does that clarify who is actually the estate agent and who actually works in their clients best interests! My clients understand that I will do what is in their best interests…… and it is me that will make the marketing decisions as I am the property professional….. your website makes no material difference to my property sales….. is that clear enough for you and that property portal chap?
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