The recent announcement by Zoopla that they intend to float on the London Stock Exchange has created an excitement in the city and within the property industry. Who are going to be the winners and losers? I have heard plenty of debate and conversation about how it will perform for investors and how it will impact estate agents. Will the introduction of Agents Mutual as a competitor portal in 2015 have an impact on the future of Rightmove and Zoopla and will estate agents benefit or not?
What amazes me, but does not surprise me, is the lack of discussion and debate on how recent developments impact the customer. What can often be forgotten is the customer is the driver for everything. Without them everyone is a loser. They are a continuous priority in my business and when anyone asks me what I think of the Zoopla float or Agents Mutual, my first response is "how does it affect our customers"? So, let's include the customer at the heart of the debate.
The short to medium term future for the property industry is one where we will have a minimum of three competing property portals, Rightmove, Zoopla and Agents Mutual. The two largest will be public companies and the third will be a collective of high street estate agents financed by their investors and members. It is abundantly clear that Rightmove and Zoopla will have a significant head start over Agents Mutual and a much larger cash balance and access to a virtual, never ending cash pool from the market. Whatever the financial and marketing clout of the portals Purplebricks will always do what is best for the customer.
Rightmove and Zoopla between them capture pretty much 95% of the UK housing market. They each attract over a million people to their website every day and have simple, straightforward and effective products to help drive traffic for customers. Whether we like it or not when people think property they think Rightmove and Zoopla. Personally I think they do a good job of attracting a large audience of sellers, buyers, landlords and tenants and provided they do not get much greedier, I think they do it for a reasonable cost per customer.
Any competition can only be good for the customer. It will drive up efficiency and effectiveness and have a downward impact on cost. So where do Agents Mutual fit into the equation?
Anyone who wants to take on the success of the top two will need to have big pockets and perhaps even bigger ambitions. They will also need to compete on an equal footing and for all the right reasons. From what I hear so far I am not sure that will be the case with Agents Mutual. The basic premise appears to me to be one of a high street estate agents portal, created by high street estate agents for high street estate agents. It has been created to rival what they call an "anti-competitive duopoly" but they themselves have created what seems to be a much more anti-competitive duopoly. How and why?
I believe that in order to advertise on Agents Mutual the estate agency fees you charge the customer must be higher than a certain threshold. If you charge too little you cannot advertise. Strange, but it does keep out anyone who will compete with the high street estate agent on fees. You are also not permitted to advertise your customers' properties on Rightmove and Zoopla, you can only advertise on one of them. I believe that the reason for this is because Agents Mutual want to reduce or eliminate the strength of the top two portals.
My prediction is the winners will be Rightmove and Zoopla, and in the medium to long term you can add in the customer. The losers are likely to be Agents Mutual and in the short term the customers of those who advertise on their portal.
The customer must come first. How can it be in the interests of the customer to prevent their property having access to an additional one million people every day because Agents Mutual will not let their advertisers display properties on both portals? How can it be in the interests of the customer to prevent anyone advertising on Agents Mutual who does not charge their customer a fee higher than is necessary?
If Agents Mutual is successful it will face competition issues of its own and if it is not successful it will just make the top two portals stronger and in the meantime have limited significantly the advertising exposure for customers. Even if Purplebricks were to be invited to advertise on Agents Mutual (which I assume we will not because we don't charge our customers enough) I would not do so. Our customers must come first and we must give them access to whatever portals are going to give them the most exposure. We can only hope that Agents Mutual changes their ethos and outlook before they go live. There is room for three but only with equal rules and on terms that are in the best interests of the customer.
I have no doubt the top two will further cement their position in the meantime and our customers will continue to benefit.