As one of the largest real estate agencies in China, Lianjia has strong presence, including more than 7000 stores and 120,000 agents, in top tiers cities like Beijing, Shanghai and Shenzhen . However, as the internet has become prevalent in China, Lianjia is currently facing serious threats from the emerging online agencies like SouFun, Anjuke and Fangtx.com. Based on an internal report conducted by a Chinese local real estate agency, 85% new house buyers have used online information in the purchase process, and the importance of offline information channels have decreased. In addition, with a huge amount of investment from venture capitals and the internet industry, emerging online agencies has adopted a cutthroat strategy to attract new customers by providing super low commission fee (0.5-1%) while traditional agencies charged more than 2% commission fee on every transaction . To compete with aggressive online agencies, Lianjia has launched its digital transformation to create an online to offline omni-channel ecosystem.
Combat the fake information – Dictionary of Properties
To create the illusion of having more sources of houses on sale, online agencies generate fake information to sell houses that do not exist, are the duplicate information of existed information or are not on sale . The fake information problem has substantially increased the searching cost of customers. As a late comer in the online agency market, Lianjia has mobilized its offline stores to have a thorough investigation of all properties in their regions for 8 years and created the online Dictionary of Properties database for 30 cities (as shown in the following video). By collecting more than 60 million addresses in China and assigning a unique code to each address, Lianjia forces all agents to post the real house source information on its website, leading to significant decrease of the searching cost of customers . With the unshakable credibility in customers’ minds, Lianjia directs online users to its offline stores and helps house providers and customers to complete transaction more efficiently.
Key takeaway: in the digital era, instead of just imitating the first mover’s actions and expecting to win by existing brand equity, companies should think deeply on how to leverage its core competencies (ex: offline network and strong relationship with suppliers) to compete with emerging online competitors.
Shorten the endless matching process – Consumer Portraits
House purchase is a highly-involved decision making process, including online searching, offline information collecting, consultancy with agents and lots of property visiting; hence, the searching cost is very high to consumers. On the other hand, without deep understanding of consumer behaviors, real estate developers allocate its marketing budget inefficiently, and real estate agencies are not able to target the right consumers. To shorten the matching process, Lianjia builds up its Consumer Portraits database by inputting data from its website, mobile APP and offline transaction records . In the new house market, Lianjia provides consumer insights to real estate developers and help them allocate marketing budgets to various online and offline channels. In the used house market, Lianjia supports its agents to quickly identify customer needs and effectively offer recommendations to customers. By understanding its customers better and providing accurate information, Lianjia avoids the battle of cutting commission fee and remains profitable in the competitive industry.
Key takeaway: everyone knows that data is the new gold nowadays, but not many companies know what data they need; by reviewing the needs of both suppliers and customers, companies can identify the most valuable data to improve the overall supply chain performance
The next tipping point – virtual reality and augmented reality
In China, real estate market is heavily driven by investment, meaning that there are many international or cross-cities purchases. For example, people living in the first-tier city might fly to a second-tier city to invest in real estate properties. To reduce the transactional cost for these investors, Lianjia should start to explore the application of virtual reality and augmented reality (VR/AR). Through VR/AR, customers can experience different room types and decoration styles within short time and without travelling, leading to potential increase in transactions on the Lianjia platform . Lianjia can also provide the VR/AR service to real estate developers to test on end-customers’ preference before construction. In addition, Lianjia needs to review its offline store operating model – should they put VR/AR equipment in offline stores with agents’ support in time? Should they set up small VR/AR spots in popular areas to increase the interaction with potential customers? By introducing VR/AR, Lianjia will write the history of the most disruptive change in the real estate agency industry.
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