Another week and more good news for Rightmove. The company which estate agents love to hate has just announced it has grown its business even more than expected with 250 more agents joining since the beginning of the year.
But wait, it's not all good news.
Most of the new entrants are letting agents, and they tend not to spend as much on all the ‘premium’ extras. I expect you are now feeling very sympathetic, right?
The average customer spends £1431 a month with Rightmove, and they expect that to increase by about £75 this year. That’s a 5% increase. Does that reflect the recent increase you’ve seen since your Account Manager came to call?
The company is still the darling of the stock market, with a profit margin of 70%, amongst the highest. Work yours out by taking your gross profit, dividing by total revenue, and multiplying by 100. I’d say 20% is considered good in our sector thanks to pressure on fees and our businesses being saddled with high overheads. Clearly not much of an issue for Rightmove.
The recent slowdown in the market will help them too. A ‘branch’ is expected to have about 30 properties. Exceed that and you’ll pay more. The average time to sell a property is now 71 days according to data from the Homeowners Alliance. It was 52 days in ’22. So as our stock mounts up, so will our portal bills. That will of course squeeze margins even harder.
What a business model Rightmove has and they do it very well. They invest in advertising and for the consumer, the website and app are great, easy to use and adaptable. They have seen competitors arrive and they have seen them off cementing their position as the go-to website for buyers, sellers and agents alike. Quite an achievement.
They have never resorted to discounting to win our business, far from it. And yet we keep coming back for more. We know that without them enquiries would drop but more importantly, our competitors who stayed with them would clean up on valuations.
I confess, if I were selling my house I wouldn’t use an agent who wasn’t on the portal. And even if On The Market begins to grow their market share, that will not change for years, perhaps decades, perhaps never. Rightmove has managed to cement itself in the public consciousness in the same way we now order an Uber, not a taxi or we Google something rather than ‘searching online’.
Once a business reaches this pinnacle, it is almost impossible to shift it.
We shouldn’t begrudge its success. It is a business that exists to extract money from its customers—the very most it can without ‘killing the host’.
It isn’t going anywhere. We must begrudgingly accept its place in our marketing and our accounts and try to save money elsewhere if we have to.
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I believe this is known as a puff piece?
The only constant is change. In 2000 Rightmove changed agents newspaper advertising spend for a digital advertising spend model. The world moved. It's business model is built upon 'agents' listing inventory and paying for it. Around the world other property portals allow the public to list directly on to their portals, if for example OTM or Zoopla adopted this model and the revenue from the public outweighed agents licence fees, how long would the most disliked property portal in the UK stay in business?
As for large companies being unassailable, WeWork had a market cap of $47BN so a tiny bit larger than Rightmove, until it ceased trading. A better example is the Netflix and Blockbuster story, Blockbuster was the Rightmove of the video rental space, and Netflix came to them saying they were the future, even offering to sell to them - Blockbuster laughed, sitting inside their impregnable fortress with a huge moat around it, 15 years later they closed their doors and well renting videos at your local store or having them mailed to you has sort of given way to a Netflix model a $263BN market cap business.
Your point that 'you' would not use an agent without Rightmove in its mix - is well just the point - because you are a person of a certain age - not a tech savvy 18 year old who runs their life on super Apps, and would find that driving around Rightmove is like playing Pokémon (2000 version), a million miles from the beautifully crafted UX experiences they get daily.
Failure to innovate and be relevant for that 18 year old who will soon be a tenant and then a homebuyer is very much like those who poured scorn on my Times article four years ago on TikTok as a vehicle for advertising - agency. I made the point that it is the youth and the platforms they use and how they use them that determines if companies like Rightmove will have any relevance.
Rightmove may well get millions of views a month, but where is the uptick in sales and lettings in the UK, answer the needle stays the same, as I know there is an awful lot of smoke and mirrors in the proptech space and perhaps agents would do well to consider what they are actually paying for - me I would be charging the portal for listing my inventory - as without it - not one pair of eyes would be coming to the site.
Now that is an idea for a radical re-plumbing of the power base, if all Rightmove agents did not list for a month, explaining to vendors and landlords that the cost was too high, Rightmove would soon realise who has the real power and maybe the 10% ratchet of upward costs would stop the hostage situation once and for all.
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