When Australian press firm Fairfax reported its results late last week, the enhanced operation of its online property industry, seemed to violate a broadly held legislation of the electronic market which electronic produces a winner that requires all markets.
Following quite a few decades monitoring behind News Corp Australia possessed realestate.com.au (REA), domain.com seems to have narrowed the gap with its main rival and its competitive strategy of developing its consumer base is translating to improved earnings.
Closer examination however indicates this outcome could only be a temporary dip in a far more profound transformation happening for electronic in the residential property market. One that’s very likely to observe the development of a new pair of gamers.
Can There Be Only One?
It has become commonplace for observers of the electronic market to assert that electronic produces winner takes all markets. The traditional case is Google’s dominance in the research marketplace. Surveys indicate Google accounts for at least 75 percent of lookup, and nearly 90 percent of organic search traffic, using its major competitors, Microsoft’s Bing and Yahoo unable to get out of single digits.
This effectively puts Google in a monopoly position and lets it create monumental revenues through products such as paid search and adwords.
Rather, Domain Name is closing the gap on its own rival. Additionally, it indicates that domain.com’s focus on the consumer experience is starting to pay off.
Domain’s inhouse development experience has given it the capability to rapidly add new features that improve the user experience, for example its mapping operation.
While there are important lessons here for company about not giving up and continuing to concentrate on the client, seen in more perspective, it is difficult not to conclude that domain.com’s enhanced performance could only be a temporary change of a far more significant transformation happening in the national housing industry.
There could hardly be a marketplace more ripe for disturbance compared to residential property. Even though REA and domain.com have displaced the record of properties in papers, they’ve barely transformed the business. Instead they appear to supply a digital variant of conventional property listings with a few extra bells and whistles. Both are underpinned by mostly similar earnings models.
Reinventing The Market
Google transformed research by creating an algorithm based on relevancy that enhanced the outcomes consumers obtained from searching the internet and by rethinking the way that it monetised search.
Instead of attempt to keep customers on its own webpage and bombarding them with advertisements, Google guided users from the webpage and towards the webpages that they were trying to find.
It is reasonable to expect the residential property marketplace is very likely to experience a similar transformation during the upcoming few decades.
It is fascinating to compare the exact traditional way of realestate.com and domain.com using the radically different business models which are emerging in startups seeking to interrupt the residential housing marketplace.
Recognising the highly localised nature of property markets and the value of brokers, openagent.com.au takes benefit of publicly accessible data sets and consumer reviews to provide buyers and sellers with testimonials and metrics on brokers in their regional places.
Rather than try to bill users for obtaining the info, or brokers for greater listings, openagent’s earnings comes in the referral fees payable by representatives who receive listings as a consequence of the testimonials on the website. This is a far purer digital drama than REA or domain.com.
By supplying them access to information in a useable form openagent.com.au attempts to enable sellers and buyers and boost transparency in this exact opaque industry.
Probably the most significant lesson Fairfax could draw from the operation of domain.com isn’t that the winner takes all logic of electronic markets is reversible, but they ought to have the courage of their convictions and move all in on electronic, at the residential housing marketplace.
As opposed to just attempt to close the gap on REA it ought to be wanting to construct a company which will eliminate the requirement for companies like domain.com whatsoever. It may just discover that when the solution that it develops is great enough, the law winner takes will reassert itself.