Let’s dig deeper into this:
Will Zillow became a Monopoly?
Zillow does everything it can to make the home buying process simple and easy. Did you know that the biggest factor in a buyer seeing a home is whether or not the agent responds? Zillow has taken specific actions to alleviate that pain point for their customers. “A 2011 NAR study found that 46% of online leads go completely unanswered. An additional 23% of online leads received a response after 8 hours (or more) had passed – an eternity in today’s web-based economy.” In other words, Zillow is building extremely valuable brand loyalty by proactively providing a better consumer experience than what the rest of the market provides. In doing this, they manage to not only capture the large percentage of the market that goes unnoticed but, more importantly, become the first option for those same customers 5-10 years down the road when they are looking to move again. By being proactive about assisting interested buyers with information asap, they convert them into lifelong Zillow users.
When Amazon was trying to grow its brand and build lasting customer relationships in the early days, it did something similar. It copyrighted the “1-click” buy system and made it easier than ever for customers to use Amazon’s service. Back then, Amazon was the only e-commerce business in 1999 to store customer credentials in their servers and enable customers to buy their products with one click. That made the buying experience so easy for customers that Amazon kept coming back and associated Amazon as a great service they would keep using. In other words, they developed incredible customer loyalty by making their experience better than the rest. Those consumers kept coming back thanks to the “1-click” buy system.
While they aren’t filing for patents, Zillow is eliminating a large pain point in the home buying process and converting those customers into loyal repeat buyers. Similar to Amazon, they are reaping the rewards of that strategy. Since February of 2020, their stock has sky rocketed!
Ultimately, Zillow is going to try and maximize its control of the entire home buying and selling process. If they can be the iBuyer and seller while also growing their online traffic and brand loyalty, they could very well become a monopoly. Similar to Amazon, it could then leverage its dominance in residential to expand beyond. Wouldn’t it be funny if Zillow started doing so well that they diversified into a cloud services company to compete with AWS? Are you worried about Zillow or any other players in residential real estate becoming a monopoly? Do you agree with my comparison of Zillow to Amazon? Leave a comment!
In any case, as I continue to learn more and more about real estate, the big players, and how it all works, I hope to keep drawing parallels like what you see above. I hope you find it as interesting as I did.