Digital Transformation at Countrywide - How the UK's biggest estate agency group is reacting to Purp

SystemSystem Administrator admin
edited November 2019 in General Discussion
It’s an indisputable fact that digital transformation is occurring in real estate and changing the way people buy and sell houses. Nowhere around the world is this more evident than in the U.K., where upstart online agencies like Purplebricks have captured market share and are growing fast.

Read the full story here


  • Andrew_StantonAndrew_Stanton Member
    edited November 2019
    Two years on from the original article and by November 2019, Purplebrick's despite claiming it sells three times more stock than any other UK agent, makes a £52M trading loss for the year. Burning through £7.5M of cash a month, with £152.8M cash in April 2018, down to £62.8M cash in April 2019. The share price is flat lining at around 110p a share, having first listed on the AIM at 96p, falling from its highest position of £4.43 a share. Countrywide's fate is different, despite a multi-million pound injection last year its share price is only around 4p, down from its height of £5.36.

    What is certain is that you can not convert a corporate into an online model, as Alison Platt the former CEO has proven before her departure, if you charge a low online fee, but the cost of capture of a vendor and a sale is 43% higher than you charge your client, your 800 plus offices will make a spectacular loss.

    Regarding losses, no online agent has in the UK ever made a profit, and in the 2-years since the original article was written, the following on liners have crashed and burned, Tepilo, Emoov, Hatched, to name but a few, and Hatched is significant because it was an early bird formed in 2005, the reason that the Skipton Building society (the brand behind Connells) bought then shut Hatched down was that although it sold property the cost of capture of the client (vendor) was too high.

    Will Purplebricks be the new kid on the block? Well, it's financial model is flawed, it has relied on massive private funding to keep going, rounds and rounds of funding and although it has a great cashflow, clients pay upfront sale or no sale, the actual cost of running the company is eye wateringly high.

    Because, although there are no offices, the Local Property agents are 'self employed' the cost of running the tech, and the marketing costs, the multi-million pound adverts on all mediums eats all of the revenue and then some. The opportunity that was missed was to look at the whole selling and buying process and use tech to ease the pain, instead Purplebricks digitalized and digitised some of the traditional agency model, and then stripped out the human component, the 60% staff cost that traditional agents run on.

    That is they have Local Property Experts who list property, and no other staff, apart from HQ. Whereas old style agents have listers, sales people, sales managers, driving the sales process and sales strategy, rather than passively waiting for buyers to 'happen' on property listed on the main portals. They also have sales progressors easing the sale process along, and additional staff.

    Countrywide probably is a dinosaur and is very likely going to run out of cash very soon, and it is perhaps indicative of its stance to tech that it made 50 IT technicians redundant to help cut costs. But, Purplebricks the poster boy of the online agency world, will need, following its massive mistakes in markets outside the UK, to burn through its small 60M war chest very slowly as new investment is unlikely to come anytime soon, even if Axel Springer does take it private in the near future.
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