Strategic Gap - Hyperlocal Niche

Posted on January 22, 2008
Filed Under Getting Started | | Written by Gary Reid

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I commented on the Zoopla launch over at Techcrunch UK the other day, mainly commenting how, out of all of the Web 2.0 property sites that Zoopla may stand a chance. Here’s what I said

I think the user generated aspect of property sites here in the UK has been dismal in the past so good to see at least one adding it in a serious way, I’m just surprised it’s taken so long. The strategic gap has always been user-generated information because of RightMove.

It just makes strategic sense for any UK property start-up, otherwise RightMove will always hold it’s dominance (43% of the market - whereas Nestoria has 0.14% from RightMove’s site) as it was founded by the top 3 estate agent chains so had instant access to a huge chunk of the 1 million homes for sale and in essence could keep out competitors, although I’m not suggesting it did.

Although RightMove’s share price has tumbled since November, but January is the month for the property guys. last figures I saw they had around £30m revenue from agents.

Later on another commenter said

Estate agents better start getting together to fight the rightmove hegemony, they can do this by supporting all these start-ups

This unfortunately probably isn’t going to happen.

The reason boils down to strategy, that is opportunity and capability. The opportunity to get the big 3 estate agent chains has gone, they started RightMove. Now, if the big 3 account for a huge percentage of all property for sale then it doesn’t matter what you do.

RightMove is a cash cow, more than double the market share of anyone else in a stable market, fighting them head on will only lead to gaining tiny amounts of market share.

Zoopla are trying to change the nature of the fight by adding user generated information, a good move, they have moved away from what the others are doing and into a field RightMove doesn’t have the capability to easily and quickly follow. So, user generated property information is a good move, it is an opportunity as there is a trend for it.

However, it is still a high risk strategy and a high cost strategy and still leaves a huge strategic gap - that is the hyperlocal niche.

Hyperlocal niches have been talked about for sometime now, it is the opposite of what the web was created for, the opposite of global. There is a nice write up on it here.

In essence the strategic gap is hyperlocal, city level, town level, village level, in fact even street level.

You build a site that provides property for sale, to rent and user generated information for just one street, or a few streets. Highly targetted information managed by a person who lives on the street. Someone who can shoot videos, take photos, write stories, and add every single property that hits the market, even private sales, because they can walk the streets.

Getting this hyperlocal creates a strategic advantage, it’s a capability, if you had it, that is difficult for your competitors to gain.

The problem is revenue, the site wouldn’t get the visitor numbers a global or national site would get, but it would get highly targeted visitors. You would have someone on the ground, they could get sponsorship from local retailers and so on. But, the real opportunity is building a huge network of these sites covering the whole the country.

Linked together, supporting each other these sites would create their own long tail

can collectively make up a market share that rivals or exceeds the relatively few current

Is it possible? I don’t know, but we are going to be testing it out over the next few months, so I’ll report back. We have the application, we just need to find the local managers.

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Comments

6 Responses to “Strategic Gap - Hyperlocal Niche”

  1. Garrison on February 3rd, 2008 9:10 am

    When you say user generated content, the question I have is not so much what is UGC (cos I know what that is, but who are the users in this case?

    Would it be an estate agent? The sellers? Or regular people in that area?

    If it’s regular people in the area then good luck, I can’t see people being motivated enough to help someone else sell their house!

    Agents? Could we trust them to give us the truth in this scenario? Besides, many of them, at least the ones I’ve dealt with, aren’t too hot with digital cameras let alone a nice web 2.0 social media app, which most people still don’t really understand.

    Whilst it’s commendable to try a different approach and I agree RM lacks the capacity to quickly follow, though they do have the capability, it is a tall order because people in this situation use sites such as RM to drill down into what’s available in any given area and how much?

    The other details and nitty gritty usually come later.

    Do they want user generated content to get in the way and obscure their task in hand as described above? I would say no.

    In my own experience of moving from one part of London to another which I knew nothing about, other than it was cheaper, was I visited it over a period of time when I was looking for places to buy. That’s how I, and many others, find out about an area.

    And anyway, with the impending doom and gloom and global recession loomimg, moving house may not be something we’ll be able to afford to do so easily as the housing market becomes illiquid.

  2. Gary Reid on February 3rd, 2008 9:42 am

    @Garrison - let me try and cover some of those.

    Who - All 3 plus the area manager who would kick start local area information. The trust issue is covered by transparency, users can see who commented and respond/report.

    Usage - Hopefully web 2.0 apps are becoming more mainstream here in the UK, Facebook has opened the box for a lot of people, but yes it’s new, untried and untested.

    Obscure the task - yeah if it does this then it would be of no use, our solution tries hard to avoid that, our development beta might give a better idea of how that works, although this isn’t the finished application and still has some glitches, this is really just a proof of concept for the overall application not the strategy.

    http://locationate.com/locationmaps-search-1-Glasgow,+Lanarkshire,+United+Kingdom.htm

    I’m sure it won’t be for everyone and it would take time, it’s not something that already exists so there will be challenges and it won’t be instantly recognisable as a solution.

    Will it fail? I don’t know. Will it succeed? I don’t know.

    Hopefully some people will hate it, some will like it and some will love it, if it can create that level of passion at a local level then it stands an outside chance of success.

  3. Garrison on February 3rd, 2008 10:10 am

    @Gary, in some ways, one of the positives about Facebook which I’ve not seen being said, is that it does acclimatise people to UGC and social media and the whole notion of Web 2.0

    That said, most of the people using FB don’t read TechCrunch, Read/Write Web, 37 Signals etc etc.

    On our main site the majority of people signed up to our feed have chosen to do so via email and not RSS. Whilst that disappoints me, it tells me most people still don’t know what RSS is and how it can benefit them.

    Really though, I shouldn’t be disappointed with anyone signing up to my site, but you know what I mean ;-)

    What about creating a mashup of Google and RM with UpMyStreet and just allowing people to comment on the local listings?

    My own feeling, with the number of social media related news sites spawned by Pligg, is that it is overwhelming now.

    We’ve just started to ’socialise’ some of our eco-related content over on Hugg.com and it’s not as widely used as you’d expect (it’s owned and operated by the mighty TreeHugger.com)

    I looked at your demo and love the style and feel of it but above all, its ambition. But it’s too complicated and confusing e.g. why would I want to ad the place which is SOLD to my shortlist, and why would I want to email them?

  4. Garrison on February 3rd, 2008 10:11 am

    Also, why would I even want to know about the place which has SOLD ?

    ;-)

  5. Gary Reid on February 3rd, 2008 10:29 am

    I was the same with sold properties, but surprisingly people do want to know about sold property.

    Certainly the beta testers (people looking to buy the application) we’ve had using the system over the last few months - in fact they requested it, previously properties marked sold dropped from the system.

    We got things like - Estate agents like showing they ‘can’ sell, people who are selling like seeing what other similar properties went for and build their own mini portfolio to justify their sale price and buyers like seeing what properties have sold to get an idea of the pricing, property types etc. so as to guide them on the price of a property for sale. But it can only do this superficially as prices are not the actual ’sold’ price.

    We will be adding a filter to take them out of the main listings with a click, or more likely add them in.

    We did consider the mashup of other data but it does have some strategic problems, mainly ownership of the content, which itself can be a valuable resource, but mainly because API’s from the big guys are not something you can rely on for a business in the long term - alexaholic for example.

    They can start to charge, drop you because you make to many calls or just stop letting people use it, such as Googles SOAP API.

    Certainly the people who buy our applications like building self-sufficient sites that at some point they can flip.

  6. Garrison on February 3rd, 2008 10:51 am

    Gary, interesting stuff, appreciate your time to discuss this.

    I understand the psychology of displaying places that have sold but in the example you gave it’s just too prominent (that said, there’s no content so it’s hard to judge)

    I still don’t understand why you’d want to add it to your shortlist, or even send an email about a place sold. Little details like this need to be sorted.

    The problem is finding a balance between a site which speaks to buyers as well as sellers. An estate agent’s prime focus is finding sellers, without them there’s no buyers. They need to attract sellers first and foremost.

    But I’m more interested in it from a buyer’s perspective because these people form the bulk of the weight of people using this system.

    Which is the whole point of it, isn’t it?

    I’m not a fan of RM, I’ve used it several times, but it does work. They could improve it massively but I’m not entirely convinced that UGC is appropriate in this field and in the hands of people like estate agents, well, I shudder to think ;-)

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