“I’m Russell Quirk, and I’ve failed” - with those words, the former chief executive of Emoov has begun to explain how his own agency collapsed and why the wider online estate agency sector has dramatically contracted in recent months.
Speaking at the FUTURE: PropTech Conference in London yesterday, Quirk described his presentation about the failure of onliners as “a weird kind of therapy”.
Although the Emoov brand has been purchased and now continues as a low-profile online agency under new ownership, Quirk’s original enterprise under the Emoov name began in 2012 with a fixed rate fee of £295; by the time it went into administration at the end of last year that figure had risen to £895.
Quirk told the audience at FUTURE: PropTech that when he launched Emoov he was “very positive about the prospects of the online agency sector”, based on the belief that onliners who charged less but did “a decent job” would create a valuable market.
However, he admitted that his original prediction of a 35 per cent market share for online agents was “completely and totally wrong” and - citing Rightmove data - their current seven per cent market share after 15 years of online operators and £150m spent on marketing was “frankly astonishing“
Quirk then outlined three reasons why market share was so low and why online agents have been perceived to have failed.
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Reason 1 – Competitor numbers: Quirk explained how in the early days of online agents there was an appetite for the service, an opportunity to operate unopposed and the chance to grow market share quickly. However, after this initial period, competition grew significantly and it became like “lots of ferrets in a box fighting over the same morsel.”
He then quoted more Rightmove figures suggesting that even after recent high-profile online agency collapses there are some 55 still operating in the UK - with them all “pushing, vying for the same growth” a healthy market has become impossible.
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Reason 2 – Cost per customer: To explain this reason, Quirk told delegates that there was a big difference between sales and lettings, with the latter offering more opportunities to onliners.
However, he said that between “money shoved into Google” by online agents and the market reality that people now move less frequently, the online proposition falters, with agencies’ spend on marketing being “completely and utterly unsustainable.”
Quirk then gave an example around the cost of Cost Per Click Google advertising for the phrase ‘online estate agent’. He said at the time of Emoov launch in 2012 it was £2 and by the time Emoov closed in late 2018 it was £50.
He revealed that online agents such as Emoov, Housesimple and Yopa have had to spend “millions a month” to acquire around 800 new customers each month.
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Reason 3 – Psychology of pricing: Quirk said one of the main issues onliners faced was the belief that they were ‘too cheap and too good to be true’, especially as consumers became more suspicious of the sector’s success rate. Even so, Quirk told the conference that he was still a strong advocate of the remaining online agents who delivered what he called “a great service.”
As for the future, the Emoov founder claimed the online sector could reach 10 per cent market share but would not exceed that - however he warned that traditional agents who wrote off PropTech as a result were simply wrong.
He told delegates that 50 per cent of traditional agents ignore PropTech and - making a thinly veiled reference to Countrywide - he claimed this group had their heads in the sand.
Quirk claimed another 40 per cent knew they should do something to add technology to their service model but were unsure what; the remaining 10 per cent were doing something.
In a question and answer session after his presentation, Quirk added that the upfront pay regardless model when it purports to be no sale, no fee promoted by some surviving online agents today, was “fundamentally wrong” but admitted that sellers wanted a payment choice which included that option.
Inevitably, Purplebricks came up via a question from the floor: Quirk insisted that the controversial agency had blown traditional agents away when it came to brand building, but at a cost - tens of millions of pounds - which could not be sustained.
* A review of the conference by our PropTech contributor James Dearsley can be read here.
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What a load of rubbish!
I honestly wouldn’t know where to start picking this to bits and it would take forever to do so!
internet, sminternet; online smonline. It's about being obsessive about customer experience and results. Agents who focus on that will gain market share, those that don't will lose it. Sure there are more and better modern methods to deploy and technology plays a role but clients only care about what is in it for them and not how we do it.
If you're good enough you will succeed whether online or not....we have been "online only" for 15 years and have out sold all local high street agents....
50% say this, 40% say that.... where do these figures come from.... sounds like spouting hot air and guess work. Why is this bloke even being given air time?
How does this idiot still get coverage?
The online sector is in fact most agents as all agents list online. Pure online agents with no 'real office' will probably as a sector grow to 12%. This is because only 12% of vendors are fee sensitive when it comes to choosing an agent. So, if an agent allows a vendor to list on all the major and many minor portals, then they will hunt out the online option.
The thing to watch is, will the big boys and they are an endangered species continue to put millions and millions into advertising the brand and utilising google? If the stop the brand stops, if they continue they may well be the last large company in the arena, but if their spend has been £50M to get and the annual profit moving forward is zero or a few million, then what is the point? As they disappear, the smaller online agents will fill the space, catering for the cheap fee crowd, who if they own property at 250K and under will probably get sold.
But, another question is would a traditional agent sell them for bigger money, less hassle and spend 60% of their time helping the sale progress post the point the sale being agreed. Thoughts?
Simply the USP of an online agent is being diluted since all agents are in theory online. with the traditional agent fee being reduced and the online fee increased all trade in the same manor where ever they sit be it high ST or in the clouds. Service is still key and a good agent giving good service be it on line or traditional will surely prevail in the same way any good business does.
Stuart Forsdike
PCS Legal
I find it intriguing that emoov managed to treble their fees since 2012 whereas my 'high street' office was obliged to reduce from 1.5% to 1- 1.25%. Also that google fees increased 25 fold in the same period.
The client has benefited by an overall reduction in costs for a similar if not better overall service since 2012.
We agents have suffered from our fees going down, our service going up ... and ironically our internet charges going up astronomically. Lets not mention how Rightmove fees keep rising .... ! In future though the number of estate agents is likely to fall as the industry is seen to be less profitable than it was and less easy to remain compliant within. I welcome a reduction in the number of agents as long as those who remain are obliged to become more professional and more accountable eg through compulsory licensing and CPD. I slightly resent operating as a licensed, compliant one branch office where so many (including the big boys) do not bother and can get away with it.
I dont understand how this bloke gets so much coverage. Its just all nonsense.
Three reasons why market share was so low?
1) Competitor numbers: "fighting for the same morsel".
Did they, or did they not have a U.S.P? Were they fighting for that very small morsel in isolation with other online agencies, or with every other agency out there? Estate agency is stuffed to the rafters with people that love nothing more than competition.
As the saying goes, if you can't stand the heat, stay out of the kitchen.
2) Cost per customer: "money shoved into google and pay per click . Emoov, House Simple and YOPA have had to spend millions a month to acquire 800 new customers each month".
No, they haven't had to. They chose to. It doesn't matter how much you spend on advertising, if the strategy is wrong you're default dead. No technology can instill faith & trust. There is ample evidence, for those interested enough to look, that advertising is almost dead. We live in a zero-attention culture. There are far, far better and much more cost-effective ways of not only gaining attention, but of creating engagement. I have yet to see any of the latter from any of the online agencies. It's the same old story: anyone with a warm pulse goes straight into the sales funnel and is spat out the other side. Transaction selling is something that for the moment persists in agency, despite all the evidence pointing to a requirement to build relationships.
Spending all that money on ill-judged promotion is simply evidence of impatience, illusion and incompetence. I could go on at length, but the days of cherry-picking clients with more & more advertising are over.
3) Psychology of Pricing - a perception of too cheap & too good to be true?
Again, there is ample evidence that higher prices are down the list of vendor requirements. Lower pricing is not wise, other than to strategically implement externality factors. It is simply trite to use that excuse when the overriding issue is one of message being poorly communicated, or even non-existent.
The reason that Emoov failed is none of the three above. It is simply that they were unable to convince enough vendors to use their services. In the rush to scale and to leave a bigger footprint, the mindset appears mostly overlooked.
Bizarrely, online still has a future if done correctly. There are too many average estate agents still in business for it not to be viable.
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