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09 May 2019 Posted by 


THJE sudden demise of the Purplebricks online real estate outfit is a perfect example of starting an online business that offers nothing different to the existing market apart from the chance of a cheaper price.

The Australian real estate market is one of the most competitive and internet savvy industries anywhere in world. However its basis is the fact that it offers modern, friendly walking shop fronts on every key location.
And homeowners enjoy the personal assistance of a professional agent to walk them through the sales and marketing process and organize open homes and auctions.
Purplebricks, a success in Britain and Canada, but struggling in the USA, failed to offer a significant point of difference and a significant improvement over the existing real estate business model.
And therein lies the lesson for us all. You can’t simply bring a successful overseas business to Australia and hope it works. You have to understand the unique Australian market and what buyers expect.
Purplebricks took a confrontational approach to its marketing, claiming it could slash agents’ commission fees while offering the same service. This meant right from the start it had the might and power of the real estate industry against it.
Comes to a head
It all came to head recently when Purplebricks management announced it will exit the Australian market.
After creating a stir and much controversy since opening its doors in Australia, the fair fixed-fee network will wind up its business in this country.
Purplebricks Group CEO Vic Darvey said that, after much consideration, the business had made the “difficult decision” to close the Australian business.
“We’ve been operating here for two and half years and, unfortunately, we have been unable to make the progress in the Australian market that we’ve wanted, despite the tireless efforts of our employees.”
“Our present intention is that, over the next few months, we manage the process of closing down the Australian business in an orderly way, attempting to minimise disruption for both our people and our customers.”
Mr Darvey said that Purplebricks would take no further listings in Australia, but it intended to engage with customers to finalise all existing agreements.
“This is not a decision we have taken lightly, but with market conditions becoming increasingly challenging, we do not believe that the prospective returns in Australia are enough to justify continued investment.”
Chad Knight, leading agent for the Wisebery Group said the online business was doomed to failure because vendors were more interested in getting the maximum return for their sale property, rather than cutting agents’ fees.
“For example, a property will get a lot more exposure and will probably sell for a lot more in the hands of a top agent, rather than just listing it with an online company just to save a few dollars,” he said.
It now remains to be seen if another major player comes into the online market with a better model. The leading real estate sites in Australia are Domain.com.au and Realestate.com.au
They both complement the existing real estate market rather than disrupting it…and therein lies the key to their success.
In some industries it still pays to be a ‘constructor’ rather than a ‘disrupter’.


Publisher and editor, Michael Walls.
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Email: info@wsba.com.au
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Western Sydney Business Access (WSBA) covers the business and community issues of the Greater Western Sydney region of Australia. WSBA is the popular media source for connecting with the pulse of the region and tapping into it's vast opportunities and networks.