x
By using this website, you agree to our use of cookies to enhance your experience.

TODAY'S OTHER NEWS

PropTech Today: Rightmove fails to understand first rule of innovation

The recent announcement of a clicktopurchase partnership demonstrates some much-needed progression from Rightmove.

In doing so, however, it could be said it is attacking its loyal long-term customer-base. Is this the beginning of the end or a necessary first step to save one of the most successful global property businesses?

Greetings from Sweden! And, for a rare change, I’m not here entirely for professional purposes. I do have a couple of meetings and engagements booked throughout the week, but really I’m here with the family to support my eldest son and his teammates at the Gothia Youth Football World Cup, in Gothenburg.

I completely love watching him play, but the nature of these tournaments is that, for large portions of the day, his team are waiting their turn.

As such, I have had a fair bit of time to think about this column and the only thing I want to offer my opinion on this week is the much-debated partnership between Rightmove, clicktopurchase and Singer Veille.

I think it’s fair to say that the new relationship between the companies has been met with negativity and confusion. That includes me to a point - I am feeling both negative and confused when it comes to this new attempt at ‘innovation’ from Rightmove.

My son’s football tournament has inspired me to explain myself further by using the analogy of the sport, especially once-great clubs who find themselves tumbling down the table and having to rebuild from scratch.

The Rightmove innovation backstory

For those who haven’t yet read this news, Rightmove has announced that it will use technology from clicktopurchase in order to allow ‘buyers of commercial properties to submit offers online and digitally exchange contracts’, all via blockchain technology.

Clicktopurchase is an online property execution platform for buying and selling (mainly commercial) property, enabling the entire, legally-binding process to be completed with the click of an online button.

I like this solution very much indeed, it’s vital progress for real estate and set to be a key part of our future evolution. However, in this case, I’m not so sure…

Rightmove is planning a six-month trial which will see £23 million of Prime Central London commercial real estate sold, via Singer Veille, with the use of blockchain technology from clicktopurchase.

The first thing for me to say is that this is a no-brainer for Singer Veille and clicktopurchase.

Neil Singer, leader of both of these companies, is a man I respect very much - bright, smooth in operations and, when it comes to doing deals, incredibly adept. He would have been bonkers to decline this opportunity. But, for Rightmove, it’s far more complex.

Rightmove, as we all know, has enjoyed great success since launching, reaching a point where all UK residential agents simply have to use the platform whether they like it or not.

This is mainly because there’s no real alternative. No matter what price hikes are enforced, and regardless of how angry the agent community grows, they always keep coming back, a bit like Manchester United fans in the early post-Ferguson years.

In many ways, Rightmove is so successful that any moves to innovate were always going to be difficult. My business partner, Eddie Holmes, wrote a hefty thesis on what he calls Rightmove’s Innovator’s Dilemma.

In short, it’s a somewhat backhanded compliment which suggests Rightmove has become so successful that it can’t evolve from its existing business model for threat of damaging what it has already built.

Eddie and I have subsequently spoken about the lack of innovation wiggle room that Rightmove has given itslef and that, as time continues to pass, this lack of wiggle room will tighten to become a stranglehold.

This forecast is now beginning to come to fruition: just at the start of this month, more analysts downgraded the stock price of Rightmove. This is bad news for what has long been an analyst’s dream.

Furthermore, we have this analysis in which it is suggested that Rightmove’s ‘growth engine seems to be running out of steam...many investors are worried about the long-term prospect (sic) of the property portal business’.

Rightmove’s ‘innovation’ totally ignores its customers

So, there we go: a giant business placed under immense pressure to evolve and innovate but struggling to find a reasonable way to do so.

Again, it is akin to Man Utd, a hugely successful team hitting hard times and being forced to build something new, replacing those players who aren’t delivering results and introducing new ones who can.

They know that the first major signing is a vital one because it will, at first, rattle the rest of the organisation before forcing said organisation to form a new structure around the new player.

The new signing will become the heart of the club, pumping lifeblood throughout. With such importance placed on it, how do they ensure they sign the right player?

I would argue that Rightmove, with this new innovation, has signed the wrong player (in the long-term), certainly not the player that its customers wanted to see.

Agents are Rightmove’s lifeblood and vice versa, so the question must be asked, why is Rightmove constantly trying to frustrate and alienate agents?

We all know, or at least I would hope we all know, that the first rule of true innovation is that it must be informed by the needs and wants of your current and prospective customers.

By constantly increasing prices, Rightmove has long penalised its customers for continuing to use its services. And the reward for this loyal custom?

Well, with this most recent attempt at ‘innovation’, Rightmove’s customers are seeing only one thing: an evolving plan which could totally usurp them, cutting them out of both the picture and the profits. Where is the sense in this?

Let’s take a moment to remember Blockbuster. In its heyday, Blockbuster Video used to actively penalise its customers with late fees and no-rewind fees. In 2000, 16% of all revenue, amounting to almost $800 million, came from these fines.

As time passed and digital alternatives started to threaten the business, Blockbuster found itself in its own Innovator’s Dilemma - instead of trying to combat its rising rivals, it laughed things off, assuming that smaller, online alternatives could never compete with it.

This hubris reached a peak in 2000 when Blockbuster CEO, John Antioco, declined the chance to buy Netflix for a measly $50 million. Today, Netflix is the 38th most valuable brand in the world. Let’s all take a quiet moment for John Antioco...

This Blockbuster case study works to illustrate the risk of ignoring what your customers want and continuing to treat them poorly because their lack of viable alternative choices leads to your arrogance and overconfidence.

Instead of trying to improve their customer experience, both Blockbuster and Rightmove simply demand more money.

And so we reach today: after years of hiking prices, Rightmove introduces a trial with online, single-click, blockchain transactions for the buyers of commercial property.

While I should congratulate Rightmove for reviewing its business model and trialling something new (any attempt to innovate is better than no attempt at all), its true motive behind this move is painfully clear to all.

WrongRightmove’s true motive

This six-month trial is taking place in Rightmove’s commercial arm, far away from its dominant residential interests. Alex Solomon, Director of Rightmove, has said: “Trialling a route to this technology through Rightmove will give potential buyers the chance to do everything online, from property search to legal exchange.

“By offering this to the UK’s biggest commercial property audience, we’ll find out how much of an appetite there is for a solution like this.”

I have absolutely no doubt that Rightmove is trialling this with a view to expand it, if successful, across its entire offering, including residential.

If I were an agent and customer of Rightmove, I would not be happy right now. In this past Sunday’s PropTech Review, I said that, “from Rightmove’s view, I do see why they are thinking about this but I just think it is a crazy, knee-jerk, and ill-thought move”. I stand by this.

First, Rightmove repeatedly penalised its loyal customers by rising fees time and time again, and now it’s making moves to kill them off altogether. As a technologist and innovator, I, in part, have to applaud this.

However, as a friend to the agent, I have a huge concerns. What on earth are they thinking?  That’s not a rhetorical question, if someone can defend this move from an agent point of view, please do in the comments section.

I’m not seeing it. All I can see is a company biting the hand that feeds it, totally ignoring its customers and looking to ‘innovate’ its currently symbiotic relationship out of existence.

I did a few talks for Rightmove a couple of years back. They wanted me to speak to their customers, the agents, about innovation and so asked me to do a few 20 minute talks on the subject.

I got up and said my piece after which they got up and presented their idea of bringing out a new Automated Valuation Model (AVM).

The atmosphere in the room instantly turned to ice at all three of the events I was involved with. “That’s our job!” the agents would say, “it has nothing to do with Rightmove”.

At first, Rightmove seemed to have identified that its agents needed to be bought on the innovation journey, that’s why they wanted me to speak to them, but then, due to either ignorance or arrogance, they used the opportunity to speak about an innovation which will see the agent role diminished. And they didn’t expect the agents to even notice or care?

Fast forward a couple of years and here we are: a small commercial sector trial that Rightmove don’t think we can all see straight through?

This is an ill-fated move, a Wrongmove, if you like. I expect it will cause its fee-paying agents to stampede away from the brand. This will have huge ramifications on its income, stock valuation, customer-sentiment, and, therefore, market share.

Perhaps the most brain-numbing part of this is that despite it being a poor attempt at innovation, and despite it placing the loyal agent customer-base under threat, I still can’t be sure who is going to win this one.

Rightmove is like crack cocaine for agents. They need it and have proven time and time again that they are willing to pay through the nose for it. Getting clean, transcending their need for the drug, is not going to be easy, but now, more than ever before, it seems clear they are going to have to do so if they wish to survive and thrive in the long-term future.

This is because there is no longer any way of knowing if Rightmove will still be here. Even if it is, I doubt its target audience will be agents.

When once-mighty football clubs tumble down the leagues, there is only one way back up - rebuild and restructure. Clicktopurchase seems to be Rightmove FC’s star rebuild signing, the one that the rest of the business model will now be built around.

Man Utd did this with Paul Pogba, the brilliant but petulant French midfielder, and they paid him handsomely to play. In doing so, however, they also removed the chance for many young, energetic, and promising prospects to play, those who would be eternally proud to don the legendary United shirt.

When Pogba turned out to be a lazy, conceited talent, unwilling to fight back from a 2-0 deficit, Man Utd looked back at their bench and realised they had no one ready to replace him.

Due to poor judgement of character, they have given Pogba all of the money and all of the attention and everyone else has quite rightly departed. Seeing this, and seeing the club continue to struggle in the league, their customers, AKA their fans, will soon start departing as well, unless something changes.

*James Dearsley is a leading PropTech influencer and commentator, and is co-founder of PropTech platform Unissu. You can follow James on Twitter here.

  • icon

    It is inevitable that Rightmove will want to have the option to become a global online agency so they have somewhere to go if a portal like onthemarket chips away at their market share. If we agents all pulled out properties of Rightmove instead of disappearing the search engine could take us on as the best known and trusted portal for property and allow people to list and sell direct.

    James Dearsley

    global? Not so sure about that part

     
  • icon

    Arrogant beyond belief. Rightmove not the author!

    James Dearsley

    phew!

     
  • icon

    We, in South Kensington kicked the drug of Rightmove in February and have had no dip in either sales or lettings and life has carried on without a hitch. As James quite rightly points out, biting the hand that feeds you is no way to behave in business. Rightmove has become a form of ransomware and we will not be held to ransom. This entire scenario reminds me of Blackberry, or Crackberry as some called it, and where is that now? Perhaps all agents with this habit should join AA (Agents Anonymous) to discuss their Rightmove addiction and find a way to ween themselves off it. There is a future without Rightmove!

    icon

    'Ransomware', love it!

     
  • Christian Woodhouse

    Hi James, I do agree with you in that RM are in a very difficult position as there are only a few avenues they can go down in terms of innovating.

    I said this to Eddie and I still stand by this, albeit slightly revised but the sentiment is the same. Digital transformation is happening all around us and in so many ways. What I see is that RM are looking at where the industry will be in 5-10 years’ time. The number of estate agents is likely to reduce and real estate networks, on blockchain platforms will increase. These platforms will bring everyone involved in a property transaction together, to provide an end to end transparent solution (listings, mortgage acceptance, conveyancing, settlements, land registry & tax payment).

    Land & property data is become so much more accessible and open, plus the government are making the right noises to push the private sector to innovate and provide this data up front. Not HIPS per se but a similar concept, delivered with the consumers interest at its core. With live property data 24/7 and transparency throughout the transaction, the value of the estate agent is diminished. So, at this point we have to think about what value there is for an estate agent in this future process? Valuations, listing properties, organising & conducting viewings, negotiating offers. Some of this could be done by a machine, an AI bot, removing even more value from an estate as we think of them today.

    Having said all that, the other likely option and possibly more likely is that they trial clicktopurchase and if successful they buy the technology. RM will then roll it out to all their estate agent clients. This would save the agents a lot of money because eventually they will have to do this! End to end digital solutions like this can only benefit the industry. They will provide total transparency for every party involved, reduce the time it takes to buy/sell property and increase certainty around the sale.

    Now, I could have this totally wrong and who knows what the future holds, but I hope transaction times are significantly reduced, with low fraud risks and a much better digital experience for everyone.

  • icon

    With the amount of estate agency's shutting down in recent years directly impacting RM's customer base and bottom line (as remaining agents generally pay on a per branch basis) it is critical RM continue to find innovative ways to add value to their business model and remain the no1 medium for buyer and seller to engage. They made the process of finding a property easier they are now looking to make the process of transacting a property easier. It's a good move.

    James Dearsley

    Can't say I disagree at all from RMs perspective but there is likely only one winner hence why I am torn here in terms of loyalty.

     
  • Kristjan Byfield

    Rightmove is on our chopping block by year end. Currently planning where to invest that spend and what we are compiling is quite staggering and shows the declining value of RM compared to how they view themselves. Costs doubled in 5 years and shrinking revenue production says it all. Zoopla delivers us double the amount of revenue but RM are 50% more expensive- again, if that doesn't say it all what does?

  • icon

    While this is will certainly be disruptive for agents, that is where the industry will eventually end up. The agent model has been disrupted around the world via technology, and simply can't last forever in the UK.

    The only reason it still exists is due to the compliance and regulatory complexities that have yet to be digitized in a way that is cheaper to execute than the traditional agent model. This is just one step, but eventually, all aspects of the industry (market platform, transaction execution, mortgage, tax, asset management, etc) will be much more efficiently performed through technology.

    In this state of the world, power will be democratized away from agents and tech will act as the liaison between tenants, landowners, govts., and debt providers. Sorry to say it, but I see far fewer middle-men surviving in this reality...

    Paul Barrett

    I'm not so sure of your contentions.
    The logical outcome of what you intimate is that a houseseller instruction the all knowing one who generates a report as to what the property is worth and markets at that price.
    So basically the computer tells you how much you can sell for.
    I believe the EA on the ground had a far better understanding of his local market and will be able to generate a far more informed price to sell at.
    Consequently the vendor will still wish to trust the EA middleman man rather than one all knowing computer!
    There simply isn't a computer algorithm that can ever effectively compete with a Local EA knowledge of his particular market.

    I therefore think the predicted death of the middleman is greatly exaggerated.

     
  • Christian Woodhouse

    Paul, you may well be right that there isn't a computer algorithm that can do everything an estate agent can today, but I bet you someone is working on it as we speak!
    If your smart phone can tell you who is in the photos you take, through facial recognition, how long before it can tell you that you're looking at a 1890's Victorian terrace, with a new kitchen and bathroom? Not long, because the technology exists, it just needs training!

    I do agree that good estate agents will have a place because behaviorally and socially not everyone trusts or wants to rely on a machine. However, as generation pass and new ones emerge, technology and machines will be all that they know.

icon

Please login to comment

Zero Deposit Zero Deposit Zero Deposit
sign up