The first major online agency collapse shows a deeply divided industry
Over the last few days, the cash-strapped online agency Emoov has been trying to find a buyer. Yesterday, it announced its attempts had been unsuccessful and appointed administrators. There is some hope that a rescue package can be put together, but commentators aren’t optimistic. Fifty or so of the firm’s staff are facing Christmas without a job. Vendors who have paid upfront fees of £895 could well be waving that cash goodbye. Their attempts to make the process of selling their home efficient and economical have been stymied by a business model that’s questionable, to say the least.
I’m not saying that there isn’t a role for the online or hybrid agency. It’s clear that the concept has enormous potential. It’s popular with those vendors who find the traditional high street agency model outmoded, inconvenient and expensive. But there’s no escaping the fact that, so far, none of the online providers has managed to turn a profit. The most well known is achieving success because it’s reached a critical mass and is now in the best possible position to generate returns.
Emoov, through a series of mergers and acquisitions, was hoping to challenge for the position of market leader, but it has been trading at a loss since 2009 and was not forecast to become profitable until 2020 at the earliest. Emoov’s CEO Russell Quirk has said the crisis has arisen as extra funding promised by investors has failed to materialise. But expecting investors to keep pumping money into a business on the promise of ‘jam tomorrow’ is never going to be sustainable.
The high street agencies are enjoying the tech business’s downfall. It’s a reaction to be expected given the animosity that’s been evident ever since the disruptors first started to make their mark. The view widely expressed is that the business of handling property sales is a service and that a service requires the genuine interaction and human touch that a call centre and technological wizardry could not possibly hope to emulate.
No doubt, many of these agencies will be quick to capitalise on Emoov’s miseries. They will cite their long heritage, their role in the community, the relationships they have built based on trust and real customer care. They will also be quick to mention that they’re often able to secure a higher sales value than an online agent, a differential that more than offsets the relatively small extra fee that vendors are charged.
I don’t blame them for stating their case, but I’m not sure the general public would be impressed by the vitriolic stance that some have taken. The truth is that vendors want a successful sales transaction that proceeds without undue delay and that satisfies their financial ambitions. And importantly, both traditional and online agencies can deliver this – if they are well run. Both selling approaches have their strengths; both have their weaknesses. Often it’s a matter of how the vendor prefers to do business, and although Emoov’s failure hints at problems with a tech-based solution, we should keep in mind that today’s young buyers are used to carrying out all sorts of transactions online. We may bemoan the impending demise of the high street, but we’re all happy to adopt digital technology when it simplifies and smooths our daily life.
Personally, I believe that this collapse doesn’t indicate that the online or hybrid model is unworkable. It doesn’t mean that the only way forward is the old traditional way, either. To me, it signifies that the existing online players still have work to do and problems to solve. And for all their excitement over what is, for Emoov’s staff and customers, a very worrying situation, that comment could equally apply to the high street agencies. Both sides of the industry need to nail the highest standards of customer service, and if they can do that, both may well survive and thrive.