It is no secret that Amazon is a once in a generation (possibly once in a century) company. Building a business that does $300 Billion in revenue and growing at ~ 30% YoY is a near impossible feat, and the Jeff Bezos lead juggernaut has managed to achieve the same.
While everyone has their own reasons to admire Amazon, there are 2 core components of their business which I find fascinating. They are –
- Owning the entire value chain: They are not just a ‘search’ platform like eBay or many other aggregators – They are a seller, logistics provider and technology owner, all wrapped into 1 company. Or ‘Full Stack’ as is the term today
- Consistent service delivery at scale: Despite servicing 100s of millions of customers across the globe, Amazon has managed to build a reputation of being customer centric in every market it operates in. People rarely have a bad experience with Amazon, and even if they do, the company manages to pacify them and win back their trust
It is little wonder that Amazon is valued at more than $1.5 Trillion today.
Is there an Amazon for Real Estate?
This brings us to the question – Is there an Amazon for the Real Estate industry?
Note: Real estate has different asset classes (Commercial, hospitality, etc.) but I will focus on the easiest to understand, which is Residential.
Real estate companies can be grouped into 3 broad categories
- Search platforms – These are aggregators and online portals (Ex. Zillow in the US, Magicbricks in India, PropertyGuru in SE Asia, Zoopla in the UK, etc.) which connect buyers/renters with sellers/landlords/agents
- Transactional platforms/Companies – These are companies which focus on enabling a transaction, which would likely happen offline (Ex. Redfin in the US, SquareYards/PropTiger in India, PurpleBricks in the UK, McMackler in Germany, etc.) . This list would also include your neighbourhood real estate agents and brokers, who do a bulk of the transactions in the industry
- Property management platforms/companies – These are more focussed on post-transaction experience of residents in properties. It can includes condo/apartment management companies, rental managers, HOA managers, etc. Examples include Greystar management in USA, Nestaway in India, and many others
- Other areas – These include companies focusing on IoT, home financing (mortgages), VR/AR/3D rendering, CRM/Work flow management software for the real estate industry, and many others.
Why isn’t there 1 single company that is able to do all 3 points mentioned above? By the looks of it, these are all portions of a deep value chain (‘Searching’ leads to ‘Transaction’ which eventually leads to help with ‘Property management’). The payday at the end of building such an end-to-end company would totally be worth it too – $5Trillion is the annual spend on real estate a year (Including rentals and sales), and $200Trillion is the total asset value of all real estate (Across the world).
Common reasons we have heard on why we don’t see an Amazon in real estate includes –
- There is enough money becoming a winner in portion of the value chain
- Real estate is complex – The rules change in every country (Even within a country, land is a state subject, so no homogeneity even within a country), so difficult to build a scalable business
- It’s an industry which has not adopted technology quickly, so scaling any business is a challenge
- It’s a high value transaction, so customers demand extra attention from businesses, making it unscalable (Although profitable on a unit basis)
While all the points noted above are fair, and real estate is a very difficult domain to operate in, these cannot be acceptable excuses for not building an internationally scalable business. All businesses have their own difficulties, and real estate is no different. Besides, retail and shopping were never an easy businesses to begin with, and no one thought a company of Amazon’s scale could be built in that domain, but here we are.
Although we don’t yet have an Amazon for the industry, a couple of them are coming close. I will write about one of them in next weeks newsletter, so stay tuned 
One thing is for sure – If someone builds an Amazon for Real Estate, it would definitely be bigger than Amazon!
This blog was originally posted by our co-founder Ajay Kumar on his personal blog here.
