There must be a real sense of despair among the internet hybrid agents, who have seen their overall market share decline – despite the booming housing market.
Even though millions of pounds have been poured into ad campaigns, and one agent, Strike, even gives their service away for free, our own data – which tracks market share in the areas where we operate – shows the TOTAL share for the internet hybrid agents has fallen from 6.67% this time a year ago to 6.23% this July.
Purplebricks, the largest of the online agents, revealed in its recent annual accounts that its overall market share had slipped back from 5.1% to 4.7%.
Purplebricks, Yopa and Strike (formerly House Simple) have accumulated mega millions in losses over the years, yet investors continue to throw more money at them – despite them being such a spectacular financial flop! How can businesses losing so much money be worth so much? Wake up, investors!
Even international investment bank UBS has advised investors to sell their Purplebricks’ shares, as it is less convinced by its long-term potential. The Purplebricks’ share price is languishing at 72p as I write – plummeting from 525p in the summer of 2017.
So much for the revolution in estate agency that the tech-led hybrids had threatened; their value is diminishing by the day.
Perhaps the latest backers for Strike should have had a word with Purplebricks’ investor Axel Springer first, before stumping up £11m between them. One of them is Channel 4 Ventures, so I expect we’ll see a load of free TV ads appearing.
Among the hybrids themselves, our own data in the areas where we operate shows that Purplebricks has slipped from a 71.2% share of the online agent market a year ago to 57.8% – down 13.4%! Yopa, meanwhile, has increased from 15.8% to 16.3%.
In third place is Strike at 10.6% which, as House Simple in 2018, had just 3.2% of the market, according to our own data.
So why are the internet agents not gaining more overall market share?
Could it be that the great British public has got wise to the fact that good old traditional estate agents can generate substantially more viewings, obtain a higher price for their property and provide a better service with all the associated tech – and that going to one of these hybrids can seriously damage their wealth? They just list, they don’t sell.
So much for the 10% overall market share target that Purplebricks’ CEO Vic Darvey regularly trumpets. When he was appointed two years ago, he stated this would happen within three to five years. It’s now described as a ‘medium term’ target. The problem with making such bold assertions is that they can come back to haunt you.
I predict we’ll start to see more of a level playing field as hybrids are forced to move more into the traditional realm in order to survive. Might we even see them with branches on the High Street?
It’s still not clear what Purplebricks’ new financial model involves. Does their ‘offer’ to reimburse customers include ancillary products such as 3D tours, premium listings, EPC and home reports? Will they take any admin fee for the lack of a sale? What if there’s a lull in the market? How quickly will they hand back the upfront fee if there’s no sale?
The truth is that their market share has always been over-rated because people selling their house with them via their deferred scheme (which was separately financed) never withdraw their property otherwise they would have to pay up. Their new structure will have massive repercussions for their market share and I can see it dropping even further as vendors flock to get their money back. That’s going to be a senior management headache.
I can’t help but wonder how much this will all cost, even if their finances have started to improve, bolstered by the sale of their Canadian business. I remain puzzled as to how any of these internet hybrid agents are able to survive.
One day, their investors will wise up to the fact you can’t keep throwing good money after bad and hope their fortunes will turn. Perhaps they’ll realise the internet offering has finally hit the wall.
“Might we even see them with branches on the High Street?”
Well a number of Ewemove franchisees already have a high street presence and that seems to have worked quite well for those franchisees
Certainly Purplebricks need to pull something out of the hat to arrest plumetting inventory. I would guess they are currently doing no more than 100 lettings pcm and sales instructions are welld own
Magic yesterday on EYE gave a very interesting insightful assessment on Bricks.It was a late entry so many readers might have missed it made with refernce to Chris Beckwith
“Everyone keeps discussing the 70m that PB have, this is fake cash flow to prop up the share share price and keep it alive, If you look at the accounts in detail a large proportion of it is already distributed or tied up in other external and internal investments, they have just done well hiding it from you There is no 70m that is why share price will not rise until they either generate more revenue per listing or reduce costs. They have tried the reduce costs over the last 12 months, removing 16 RDs / Replacing quality DSDs with poor branch mangers as DSDs, cutting marketing budget by 50%. This resulted in them loosing market share whilst others increased and flourished. Chris saw what other good DSDs RDs and other leadership that have left, they see through and challenged the rubbish they say and the status quo did not like it, so they replace him with 2 yes men that would not even get a role as a branch manager in the real world. “
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Not going to say “I told you so” but someone (Russel Quirk I believe) stated 3/4 years ago that over 50% of homes would be sold by on line agents!
Not in my world
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“we’re starting a movement – an emoovment” said Russell as their investors cash was flushed down the TV advertising pan.
With such an obscure and colourless message, its hardly surprising that vendors flocked in the opposite direction. Time will tell, but PB, Yopa and Strike have adopted the very same default-dead marketing.
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RQ denied ever saying this although a quick Google search proves otherwise in multiple interviews – by 2020 the onliners would have 50% of the market he said – ha ha ha ha !
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Everyone seems to be missing the point in the great hybrid/high Street debate. It’s not about the location, or even about the people.
It’s about the message.
As yet, there is no evidence that PurpleBricks, Strike, Yopa or many of the large High-street corporates even know what their message is. They simply choose a catchy strapline and hope that attracts awareness and attention.
Other industries successfully sell high-ticket items online. They have a message that persuades.
If agencies haven’t got that crystal-clear and radically different message, they are condemned to a purgatory of endless comparison and rejection.
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Hillofwad I think you’ve been hacked. A positive statement about Ewemove – clearly not the real Hillofwad
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I was thinking the same thing! Clearly got that “Friday feeling”
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Secret
It was early!
To be fair those Ewemove franchisees with shop fronts it has generally been the case with the exception of Bournville & Harrogate who have recently thrown in the towel .
Beverley being a prime example of an extremely successsful Ewemove franchisee with a shop front as with Bexleyheath .
My main gripe with the Ewemove is their recruitment pitching for new franchisees over accentuating the positives and burying the negative
In fact that has recently got worse with daily pitches on Facebook ramping away encouraging fresh lambs on the basis that territories are fast disappearing so better get in quick
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Welcome back the real Hillofwad. I was having withdrawal symptoms there. Interested to know where you get your information from. Ewemove Harrogate is thriving as far as I can see. Perhaps your comments would have more weight if you provided comparisons with other franchise operations. Do you spend your days doing the same analysis on other franchise businesses, speaking to the owners, determining whether the franchise owner packed it in due to ill health, circumstances or basically deciding it wasn’t for them?
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Secret –
Harrogate . Correct but they are the adjoining franchisee who have absorbed the territory from the former Ewemove Harrogate franchisee Tom Lawrence T/A Ewemove Harrogate Ltd
From 2014-2020 who had branded up his High Street premises in Pateley Bridge for Ewemove throwing in the towel .If you look at his accounts he had cranked up a large debt Now rebranded as TLC Properties trading from the same premises
Sure I can add more weight but EYE doesnt allow links &writing it out wouldbe laborious
Spend most of my time analysing listed property businesses where I look to invest in More so in fact with commercial property
Certainly yet to find any franchisees with a simlar amount of failures to Ewemove and perhaps that means others are a little more choosy
Having said that failure rates have improved but my concern now is with the recnt crop where they have upped the recruitment stakes
Doesn’t it concern you?
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Presumptious Hillofwad. I’m living up to my user name because I have seen the vitriol on this forum. I am an agent of many years if that makes any difference. Just want to repeat the question as I am genuinely interested, where do you get your information from and if you do not speak to the franchise businesses, how do you know your information/assumptions are correct?
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Just basic forensics Facebook Twitter, mystery shopping , linkedin accounts company reports etc, portals local media .
Communicated with some franchisees
Not exhaustive by a long stretch but enough to get a picture
Sure there are a whole host of reasons why franchisees leave However few have sold their business and certainly none for £500k as promoted by Ewemove and far, far too many with life changing losses.
Sorry ,If I came across prickly but to add weight to comments really requires links which I am unable to do on EYE
if you want some specific questions answered by all means DM me on Twitter-hillofwad
Basic Accounts of course dont tell the true picture of a franchisee health as many will show very little profit as they have pulled out income.
However those franchisees with charges and a deficit increasing from year to year with insufficent inventory to service ceratinly gives you a clue
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Thanks for the full reply Hillofwad. Still unsure why all the Ewemove data is required vs other businesses, but each to their own. Back to our busy day. Good weekend to all.
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Well the other main listed franchisors areBelvoir and Winkworths as a comparison to Ewemove they have a very low level of failures so very little to report negatively there .
Just a handful over the last 24 months and often pass comment
“Still unsure why all the Ewemove data is required vs other businesses,”
Believe me I spend similar time on others but I would be here all day doing comparisons
Part of it was I was considering investing in TPFG v Belvoir.and also I didnt like what I found and felt it important to flag up
Its also because I ended up being a shareholder in TPFG by default (Hunters) I chose to sell and invested in Winkies
I have been watching Winkies very carefully and chose to invest in them earlier this year .
As you say each to their own.
Often refer to specific Winkies branches
If you want a comparison go and have a look on ZPL and compare Winkworths and Ewemove Putney franchisee inventories
Winkies have a staggering £100m worth of kit under offer or in sols hands
‘ Ewemove have £1m !
Polar opposite
Just for good measure Foxtons Putney office has £6m and Savills £60m i!
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This the same Paul smith who sacked hundreds at the start of the pandemic? Regurgitating the same old boring message. I wouldn’t be looking to take business advice or trust anything the man says, the only insight he has is into his own ego.
And this from someone who can’t stand Purplebricks.
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Seems like Paul is colour blind 🙂
He can only see PB/Yopa and Strike. He has no eye for 120+ other Online/hybrid agents.
100% biased report.
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AgentVX17
“He has no eye for 120+ other Online/hybrid agents.”
Maybe that’s because the “120+ other” outfits you refer to don’t have between them the listings of one of the three he does have an eye for?
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“It’s still not clear what Purplebricks’ new financial model involves. Does their ‘offer’ to reimburse customers include ancillary products such as 3D tours, premium listings, EPC and home reports? Will they take any admin fee for the lack of a sale? What if there’s a lull in the market? How quickly will they hand back the upfront fee if there’s no sale?”
Perhaps, Mr Smith, it would have been wise to read (or, as a minimum, to get someone else to read it for you…) the Ts’n’Cs of the offering prior to publishing your column inches – they are there for all to see and pretty much answer all your above questions
purplebricks.co.uk/terms/money-back-guarantee
Confused? You will be… (credit: “Soap’ – ABC Productions)
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