One of the world’s leading property technology experts, who at one time was head of strategy at a property portal, says investing in the soon-to-be-floated OnTheMarket is “a horrible idea.”
Mike DelPrete, the US-based entrepreneur who recently wrote a sharply-critical analysis of Jefferies investment consultancy - which has worked with Zoopla - has now turned his spotlight on OnTheMarket. That portal's parent company, Agents' Mutual, this week passed the final hurdle in its bid to float on the London Stock Exchange later this year.
To add value, DelPrete says, property portals must do one or both of two things - offer buyers access to the largest inventory of properties for sale, and for sellers advertise their properties to the largest collection of potential buyers.
“Critically, OnTheMarket is a bad investment because it doesn’t provide value to users. There is no compelling reason for consumers to use the product compared to the existing alternatives, Rightmove and Zoopla” he says on his website.
DelPrete - who was head of strategy at the property portal Trade Me in New Zealand - says there are three reasons why OTM does not add value.
Firstly it has a fraction of the total number of properties for sale that are listed on the obvious rivals. DelPrete cites research showing that OTM has lost members rather than gained them and - even prior to losing members - had only 36 per cent of the number of listings on Rightmove.
Secondly, he says, Rightmove has over 16 times the traffic - or potential buyers - of OnTheMarket. “Where would you want to advertise your home for sale?” he asks.
Thirdly, he says OnTheMarket’s user interface has no advantages over its rivals. He dismisses the oft-cited ‘cleaner appearance’ of OnTheMarket compared to most property portals by saying: “If OnTheMarket was providing a superior experience, perhaps we would expect its web traffic to be increasing?”
He concludes by saying that with no discernible advantage or differentiation over Rightmove or Zoopla: “You have to wonder who would be foolish enough to invest in the venture” adding that: “Investing in a business that serves no purpose and adds no value for its users is a horrible idea.”
It’s strong stuff and you can read his blog in full here.
This morning Ian Springett, chief executive of Agents’ Mutual, told Estate Agent Today: “We note the opinions of Mike Delprete, who is clearly entitled to his view on the property portals landscape. We note, too, the views of the overwhelming majority of our members who have supported our strategic proposals.
“We believe that by raising capital from new investors we will substantially strengthen our market position in terms of growth in both property advertisers and consumer traffic. Agents provide the main property listings content and the main revenue sources for property portals. Our members’ ownership of shares in the newly listed company will enable them to remain enfranchised, aligned and fully invested in OnTheMarket’s future success."