Challenger to Watch: Purplebricks
For 'Commisery'
There is always a certain pleasure in seeing someone do a face plant into a cake. ‘Ah’, says the advertising voiceover that follows, ‘commisery: the misery you feel when you spent thousands on commission but got nothing more for your money’.
What a fabulously simple idea Commisery is. Anyone who has sold an apartment or house the traditional way knows that particular pain (‘What are those suspiciously charming people in suits really doing for all that money I am giving them?’); we’ve just never had a name for it – or, indeed, a cake so conveniently to hand.
There’s much to like about the way that Purplebricks, the challenger that is changing the agenda in house sales, has gone about its business as a brand.
On a mission to change the category for the better? Check. "{We believe} that there is a lack of trust and transparency within the real estate industry", commented Eric Eckhardt, the US CEO, last year. "Our mission is to break down those barriers by providing a simpler and more convenient way for buyers and sellers to conduct business while saving them thousands of dollars in the process.”
Eric Eckhardt, The Purplebricks US CEO.
Disruptive business model? Check. Purplebricks offers to sell your home for less than a third of the price of a traditional estate agent, combining an online platform with people on the ground.
Amplifying its differences and changing the criteria for choice in its favour? Check: Commisery, dammit.
Growth? Revenues were up 118% in the UK to £40m last year, with a 74% share of the online market, and Australia grew to £6.8m (cake completists can watch the Australian face plant here.)
So what’s to watch in 2018?
Two things, really. The first is whether, growing as fast as it is, Purplebricks can create a consistent experience that matches the mission. Up to now, the reality of this experience has been patchy.
On the one hand Purplebricks remain the most positively reviewed estate agent on Trustpilot; on the other it was roasted last year by the BBC TV programme Watchdog for misleading customers ( ‘we’re getting loads of complaints from your customers’, the BBC interviewer told Purplebricks’ CEO, ‘that’s why we are following it up’).
And one of the complaints the programme aired – which was about the company’s on-the-ground representatives being too thinly stretched – was echoed in the experience of one of our London team at eatbigfish, who tried to let a property last year through Purplebricks and ended up having to fire the company for persistent incompetence.
“EasyJet or Ryanair? You feel that reputation is going to be made either way in the next 18 months.”
One of its rivals called it ‘the Ryanair of estate agency’ at a conference last year – so will Purplebricks become a ‘I use it despite everything because it’s so cheap’ challenger, in the model of the Irish airline, or will it genuinely deliver on its ambition to be the champion of the seller? EasyJet or Ryanair? You feel that reputation is going to be made either way in the next 18 months.
And the second, related question is whether Purplebricks has what it takes to make a real dent in the Californian real estate market in 2018. Its focus is initially on Los Angeles, using California as its test bed for a broader launch into the US market, with a $60m fundraising behind it.
Purplebricks has had to adapt its business model to the different way the US buys and sells homes, but the business is on that. Yet very, very few British brands have ‘broken the US’ since, well, the Beatles.
Will the US and the West Coast’s consumer shift to disruptive online brands allow the British challenger to really make the early running in what is going to become a very competitive field? Or will pitching its tent in the market that places the greatest premium on good customer experience be the challenge it cannot quite answer?