Purplebricks ‘must become Amazon of property world’
Proptech consultant Andrew Stanton says Purplebricks and its new owners Strike should copy Amazon's offer to customers.
Purplebricks could become the ‘Amazon’ of the property market if it invested in the necessary technology, according to a leading proptech consultant.
Andrew Stanton, founder of Proptech-PR, told The Neg that Purplebricks’ technology is “in the foothills”, and has “lagged behind”.
The troubled agency was bought this week for £1 by rival Strike pending approval by its shareholders.
Strike CEO Sam Mitchell told The Neg the combined firm would “highly likely” be called ‘Purplebricks’, as the brand was so recognisable.
He also said the new company would invest heavily in technology to make it “big, transformative and disruptive”.
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Stanton says the public would pay more for estate agency services if they “could just press a button and know they were getting a good price”.
He says Purplebricks should copy Amazon and “give customers what they want.”
“Amazon is a multi-trillion-dollar business, it sells things quickly, it has a 99% ranking in SEO and so is everywhere, its back-office functionality is beyond most other companies hence its dominance,” he said in a blog post.
It gives them another swing of the bat to make a long-lasting impact.”
City analyst David Reynolds of Davy Research told The Neg that Strike’s purchase of Purplebricks gives it an opportunity to create a very successful company.
“It gives them another swing of the bat to make a long-lasting impact on the UK estate agency arena, and establish a brand that is a disruptive force,” he says.
Coming back on the comments above, it is 2023, the digital tech natives consume services and order goods in a very different way to earlier generations. Amazon is a $1.2TRN market cap business, based on this. Residential agency in the UK is tiny just £6.5BN, so if like travel agents, anyone who thinks the local agent doing business on the high street will exist in ten years is in for a shock. As to the point of property being a people business, 200,000 plus properties each year are ‘sold’ with no agent. And on a personal level in the last year, I have not bought several properties as agents have not ever communicated with me, failed to find key intel, and two undevalued a propert asset by £75,000, even though they were the local agents. I put my money on data and software, over the slow and inefficient human any day. Yes some brilliant agents out there, but they service typically 18% of their local market, that leaves a big marketplace for those wanting fast, efficient service. And regarding the post SSTC, I am dealing with a number of legaltech providers, and yes 80% of the 4,000 conveyancers live in a pre-cloud computing world, but the 20% who are adopting tech are eating their competition. And yes the actual conveyancing process is out of date and needs reform, but in the meantime it can be digitally bundled up andspeeded up.
I rarely comment on these sorts of article, but on this one, I’ll break a long-standing habit as this is something I feel qualified to talk about.
Given current conveyancing legislation in the UK, the notion that any business can become ‘an Amazon of property’ would, I’d respectfully suggest, be a couple of decades away. Due to the complex post-offer and sales progression process, as we all know, the majority of a good agent’s work is done to ensure that a deal exchanges and doesn’t fall through. There is a lot of ‘human’ still required in the process to make it work.
That’s a million miles away from ‘pressing a button’ and a process driven by automation taking over to pick an item from a warehouse, process it for delivery and despatch to a courier. Fundamentally, the digital retail and property purchasing processes are very, very different. I know – because I’ve worked in both for over 20 years. And yes, one of those brands was Tesco.
Residential property is, in my professional, and asset like any other when it comes to interacting with the consumer online. I’ve worked in proptech since 1999, so have pretty much worked in the sector in the UK since inception. Portals, HIPs, online agencies, AVMs…you name it. I’ve worked on all of those over the last couple of decades.
Yes, a lot has changed in my experience of the last 24 years, however some elements fundamentally haven’t. Dean Harding is absolutely spot on with his thoughts above – agents who offer a good service at sustainable prices will be here for a while to come yet. I’m not saying that technology won’t change things in the future, however fundamentally it’s not just digitisation, it’s the legislation that needs to move on too in order for technology to then assist with easing the friction of the current conveyancing process for all involved, both property professionals and consumers.
There are some fantastic innovations out there today, it’s just that the legislation around the house buying and selling process does need to change, to make it better for everyone and support digitisation of the process.
Turning to Purplebricks for a moment…I’d suggest that there is a very different way to turn the fortunes of that particular business around that I don’t believe anyone has considered…yet. If anyone’s interested in my thoughts I’m always up for a virtual cuppa to chew it over!
Have a great weekend all.
There’s two problems with the online model which seems to get overlooked when commentators are talking about this;
1. The selling of property is actually a people business.
2. The cost of acquiring a valuation will, I’m some way, determine whether your business is sustainable.
In most towns and cities across the UK the most successful agents are independents as far as I’m aware. Why is this? Most of the people I see as a busy valuer each day are selling because of debt, divorce and death and require advice and guidance and sometimes a listening ear from someone they can trust. Purple bricks and Strike haven’t really made any dent in my market despite national tv campaigns and offering to sell your property for nothing. Asda and Tesco have had a go at estate agency and it’s not until someone gets to really understand the business that they realise it’s a difficult business to get established in and sustain coupled with a long cash flow lag due to the time between initial valuation and eventual completion.
It’s for all of these reasons that local estate agents who offer good service at sensible sustainable prices will be here for a while to come.