{"id":5335,"date":"2015-12-09T20:51:32","date_gmt":"2015-12-10T01:51:32","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/rightmove-helping-you-find-your-next-home-since-2000\/"},"modified":"2015-12-09T21:01:08","modified_gmt":"2015-12-10T02:01:08","slug":"rightmove-creating-value-for-property-buyers-sellers-and-agents","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/rightmove-creating-value-for-property-buyers-sellers-and-agents\/","title":{"rendered":"Rightmove \u2013 Creating value for property buyers, sellers and agents"},"content":{"rendered":"

In 2014, Rightmove clinched the coveted title of the UK\u2019s most searched for business on Google. In fact, the writing\u2019s been on the wall for a while for Rightmove\u2019s competitors in the digital space for property classifieds. The company commands a 78%[1]<\/a> share of the top four UK property classifieds websites by pages viewed and currently has ~1.1 million[2]<\/a> residential property listings (50% more than any other single portal)[3]<\/a>.<\/p>\n

\"Network<\/a>
Source: 2014 annual report.<\/em><\/figcaption><\/figure>\n

Tracing its origins to 2000, Rightmove was founded as a joint venture among the UK\u2019s 4 largest real estate agents. As the UK\u2019s largest online property portal, its business model benefits from strong network effects. To buyers, Rightmove offers an extensive inventory of free-to-view listings. The resulting consumer eyeballs drive demand from estate agents who pay monthly fees to place listings on the site, generating Rightmove\u2019s primary source of revenue. This is complemented by additional fees paid by agents for value-added advertising products that more prominently promote a given agent\u2019s brand and listings relative to those of others, or provide comprehensive market intelligence.<\/p>\n

Rightmove provides the end user with a selection of listings within his or her selected post code, ranked by proximity or price. In order for the user to follow up on a particular option, he or she can then either call the agency\u2019s number displayed alongside the listing or email them via the portal, either of which is recorded as a \u201clead\u201d generated by Rightmove. This simple metric, along with page impressions[4]<\/a>, allows Rightmove to communicate its core value proposition to estate agent customers.<\/p>\n

\"Source:<\/a>
Source: Company website.<\/figcaption><\/figure>\n

Since listing on the London Stock Exchange in March 2006, Rightmove\u2019s share price has risen at a 27% CAGR (vs. the FTSE250 Index at 6%)[5]<\/a>. Revenue has grown at a 17% CAGR over 2007-2014[6]<\/a>, aided by the migration of estate agent marketing spend from traditional to digital media channels as consumers move away from newspapers and towards web browsing to meet their home buying needs. This strong topline growth has been complemented by high operating profit margins of ~70% and cash conversion above 100%[7]<\/a>, given the company\u2019s cost management and asset-light operating model respectively. A highly fixed cost base consisting primarily of employee payroll also drives substantial operating leverage.<\/p>\n

Other key facets of Rightmove\u2019s operating model are a i) culture of openness and innovation, ii) a focus on retention of “Rightmovers” (as employees are referred to\u00a0within the firm) and iii) efficient data storage management. Firm culture is strengthened by an open plan layout, where a new employee could well be sat next to a senior executive[8]<\/a>. Employees of all levels are encouraged to voice opinions and ideas, particularly given the company\u2019s need to constantly innovate its delivery channels and product offerings for end users as well as agents. The company was quick to develop mobile\/tablet apps and today sees more than 50% of its visits conducted through these channels[9]<\/a>. An example of a product innovation for end users is the School Checker service, which provides details of all schools within a certain radius of a given property, aiding parents in their search for that perfect new family home.<\/p>\n

Employees work 24\/7 to ensure that the website and mobile\/tablet applications don\u2019t suffer from lapses in service. Retention of software engineers and sales teams is of paramount importance, with employees benefitting from regular \u201cHave Your Say\u201d surveys and ping pong tables on which to take breaks from work. System functionality is also hugely important and in 2008, Rightmove moved from having two datacenters to three[10]<\/a>. Originally, management had had to invest in four servers, given two servers need to be functioning at all times and with each datacenter housing one backup. Moving from a \u201c2n\u201d to \u201cn+1\u201d approach meant the company now only invested in one server at each of three datacenters, driving efficiencies.<\/p>\n