They maybe the largest estate agent in the UK but are Purplebricks finding themselves struggling.
The company over the years have thrown tens of millions of pounds to grow a substantial brand. Although this has been successful as the brand is a powerful one the rumours are the company has stopped growing and therefore may come under pressure from its shareholders. Sources indicate they are starting to shed staff which will in turn result in an unhappy workforce and we all know what that will lead too.
A number of employees from the online agent are given the title territory owners. Initially when these individuals were sold the concept after 5 years of hard work they would be able to sell off their territory which from the outset sounds an attractive proposal. However, the reality is that a number of them as well as Senior Managers have actually left the company through no choice of theirs after 5 years of hard work and false promises.
In Vic Darvey’s own words, CEO of the agent ‘it was necessary to ‘correct’ the business. How awful to know that your role was simply a mistake.’
It is well documented that the model failed to take off in the U.S and Australia and it is now becoming apparent this maybe the case in the UK. The share price recently dropped to 105p.
The growth of the brand has not been built on success it has been built of people with deep pockets. Any business relying on endless amounts of investment will not last because there will be a day of reckoning and that will be when the investment stops.
The initial element which attracted the public to Purplebricks was obviously the savings. Even though when they launched the fee structure was to pay 100% of the commission upfront on a no sale no fee basis. Because the alternative was to pay your local agent as much as 2% commission people were willing to take the risk.
This was pure naivety as I know these people would not pay a plumber to install a boiler before the heating was tested, so what’s the difference. Finally, people have become wise to this and realised it’s not worth the risk.
A lot of people have reverted back to the local agents and are happy to pay the higher commission as they know this is only due once the sale completes. Alternatively, people opt for another online estate agent as since the emergence of Purplebricks a number of other online estate agents have entered the market to compete. However, the majority have struggled as Purplebricks have been able to fight them off with the strength of their marketing budget.
Although the online estate agent is not operating in the US and Australia they still continue to trade in Canada.
Lets see what the future holds for the largest estate agent in the UK.