The big Australian real estate portals of realestate.com.au (REA) and Domain have long dominated when it comes to agent listings and being a primary resource for consumers looking to buy and sell property. These portals with their partnerships and shareholders being tied to national media companies maintain a monopoly-like grip on the market and make it almost impossible for smaller players to compete.
However, if the Australian scene were to have a fresh new player in the real estate portal space, how would they possibly challenge the colossal incumbents like REA and make their portal a viable option both for agents and consumers?
CAN REA’S DOMINANCE BE THREATENED?
It is a considerable challenge and certainly a long-term proposition, but a new player with significant backing would most certainly have the potential to impact the established Aussie real estate portal ecosystem – if they played their cards right.
So what are the steps that need to be taken in order to rattle REA’s cage and give agents and consumers greater choice and a more level playing field?
WHAT’S REQUIRED:
- Solid Domain Name
Do you remember Squiiz? Or onthehouse? What about homely? The reason you most likely don’t remember these players is because they had weak domain names that weren’t memorable and relevant to the position they occupied within the market. The first step in challenging REA is to nail a domain name that is memorable, easy for consumers to recall on the go and hard for them to mistake with other real estate apps or sites.
- Mass-Scale Listing Volumes
One of the key ways to challenge the big players is to generate greater numbers of listings. Both REA and Domain have subscription models whereby agents have to pay for each and every listing they place on either site. In order to attract a greater number of listings than these two giants, a new portal would be wise to lower listing costs – even better if they are able to offer some listings for free. This would form a very key strategic point of difference, especially from the perspective of agents.
- Production of Quality Content
Real estate portals are no longer just about listings. As can be observed across digital platforms, content is king – and in the realm of real estate this means that the agent is queen. Generating content – and content that is not necessarily regarding properties – is of paramount importance in establishing a strong and respected presence. Stacking content also assists in driving search engine rankings and increasing popularity and reach of social media initiatives.
A recent Corelogic report highlights that home ownership transactions take place every 11 years on average. For a real estate portal to be truly dominant, it must have compelling reasons for people to visit the portal even when they aren’t in the market to buy “passive buyers”. This is why a strong content and digital marketing strategy are so important in establishing a new portal as a threat to REA.
That said both REA and Domain are producing in excess of 10,000 articles/videos as part of their content marketing strategy so there is a decent amount of resources needed to compete with them in relation to content.
- Well Funded with Viable Options for Raising Additional Capital
The often quoted notion of “build it and they will come” is not realistic. Google is about the only practical iteration of this concept, and is lightning-in-a-bottle that a real estate portal is extraordinarily unlikely to replicate. Therefore, once the portal is built, having budget for marketing programs to ensure market saturation of stock (i.e. at least 80% of listings) is crucial in attracting the attention of property seekers. The more cash in the coiffeurs, the more marketing funds can be allocated to drive lead generation.
- 10 Year Plan
Any real estate portal that expects to challenge REA overnight is destined for failure. Simply listing properties is not enough to compete with the gargantuan portals that are the bouncers of the real estate industry. Any party interested in challenging the status quo must be in it for the long-play. A 10 year plan featuring successive growth phases to build clout and a depth of resources is imperative to the viability of a new portal. Having a short-term plan with the aim of “testing the waters” is a sure fire way to get swallowed whole and burn capital in an eye-wateringly quick time-frame.
- Shift the Battle-Ground
Any new real estate portal that is going to wrestle away competitive advantage must force REA into pockets of the playing-field where they can’t compete. Start-up portals that operate off the notion that their strategy and tech is better than REA’s will not last long. REA has a deep development team, so any new technology launched can be replicated by their in-house team within months at most. So, the combat zone shifts from tech to business models. This is where a much fairer battle can take place. Any new portal must defeat REA on sustainability of business model. REA have a wealth of dividend-hungry shareholders, so creating an advantage of a playing field that they can’t replicate through tech re-engineering will throw their business model into jeopardy.
- Leverage Agent Distrust of REA
The inherent distrust agents have towards REA, fostered through expensive listing prices and restrictive practices that limit individual agent growth, will be of benefit to any portal set to challenge REA. By adopting an agent-focused approach that recirculates benefits and funds back to agents who invest their time and effort, a new portal could well win the hearts and minds of the bedrock of the industry – the agents themselves. Working with the agents to push the reach of their listings and marketing programs without asking them to dip further into their pockets will carry a lot of weight, and could well see a shift in agent portal preference.
- Growth Hacking Techniques
As a business and as an entity, REA are not agile and not able to cut corners that do not add value to their operations. By its very nature, a start-up portal will be able to identify and take advantage of efficiencies that a portal the size of REA simply will not be able to capitalise on. This can be leveraged for short-term gains for a new portal, utilising similar techniques to those employed by Airbnb and Uber when they entered the market in order to disrupt the larger, slower-moving incumbents.
- Real Estate Agent Equity
Any new portal that attempts to make agent equity a founding principle must make sure it is equally available and that shares are always distributed in an equitable fashion. History is littered with examples of start-ups that got it wrong, including the likes of MyHome, Homehound, FollowIt and Squiiz, who horded equity against a select group of agencies instead of distributing the wealth across all interested agencies regardless of brand or geographic location. New portals must learn from history or they are doomed to repeat it!
- Target a niche sector or geographic location
If you want to focus on a smaller challenge that is less capital intensive, then the smart money is on launching a niche portal. This could be a niche category like Waterside Property Sales or a specific geographic area. AllHomes were successful in Canberra in competing against REA and Domain as they focussed on a geographic area made up of one city “Canberra”. This means they could more effectively reach market saturation for listings and then achieve brand awareness across Canberra with property seekers and vendors, in a cost effective way ie 1 newspaper, 1 TV station, a few radio stations, 1 bus-company etc. In my mind AllHomes have been the biggest challenger to REA who eventually sold to Domain for $50m back in 2014.
FINAL WORD:
The market is definitely ready for a disruptor and, despite their scale and market penetrations, established real estate portals like REA do have soft underbellies that are exposed for savvy newcomers to exploit. So the question is who will be the first portal since AllHomes, to make a real attempt at taking market share away from REA and Domain?