A leading analyst says Purplebricks has clearly plateaued and will not reach its own target of a 10 per cent market share.
Mike DelPrete - former head of strategy at the portal Trade Me in New Zealand and a long-standing analyst of portals and online estate agencies in the UK, the United States and elsewhere - says the fundamentals of the Purplebricks business model are sound but customer numbers as measured by "instructions to sell” has remained flat over the past two and a half years.
“Overall customer acquisition cost has remained relatively flat at around £375 per customer. This number really hasn’t changed much in over three years. The small fluctuations suggest a business model that has reached peak efficiency for customer acquisition — again highlighting a limiting factor in growing market share” says DelPrete.
And he adds: “Purplebricks’ revenue growth in the U.K. has effectively stopped. Total revenue is down from the same six month period last year, and the overall growth picture has gone from growth in 2018 to a plateau in 2019 and 2020.”
But the analyst remains an admirer of the agency, which he believes has changed how traditional estate agents are compensated “with a structure more similar to Uber than a traditional real estate brokerage”
DelPrete’s comments come as the latest figures from the TwentyCi data consultancy shows that online estate agents have taken a 10 per cent share of the lower end of the UK market for the first time.
The claim - in a quarterly market report and applying to the final three months of 2019 - defines lower end as properties for £200,000 or less.
Online agents were particularly strong amongst lower prices properties in the North West, East Midlands, West Midlands and Yorkshire & The Humber.
Meanwhile nationwide, online agent market share remained steady at 7.9 per cent for a fourth consecutive quarter.
Colin Bradshaw, chief customer officer at TwentyCi says: “This is a significant win for online agents, yet again demonstrating their appeal to the lower-value end of the housing market, however for Purplebricks to achieve their stated goal of 10 per cent market share, a significant penetration into other regions of the UK and for properties greater than £200k is essential.”