Lianjia, is China’s one of the biggest chain of offline real estate stores, with a widespread global reach online as well. However, unlike regular models, Lianjia owes its success to its ability to leverage the dual presence and technology advancements to its advantage.
The company was founded by Zou Hui in 2001 as Beijing Chain Home Real Estate Brokerage Co. Ltd. with its first offline store opening in Anzhen. Seven years later, the firm opened its online platform under the name Chain Home Online, which was later changed to Chain Home Network.
In these 17 years, the company has shown tremendous growth, with a backing of multiple fundings from giants like China Vanke, Sunac China Capital, Tencent, Baidu, and Fosun; as well as multiple acquisitions to enable physical as well as vertical expansion. Today, it has over 8000 offline stores within the country and has enrolled manpower of over 150,000 brokers to carry out its deals on the native grounds.
With the last funding by China Vanke in April 2017, the company was valued at $6.04 billion, according to a report by Reuters. However, as per a January 2018 report by VCCircle, the company controls 40 per cent of transactions in the rent and sale market across China and is valued at $8 billion.
Apart from China, the company has businesses stationed in 10 other countries like US, Australia, and New Zealand among others.
Started as a property agent, the company is now a full-stack real estate agent which provides multiple services like second-hand housing, new housing, renting, residential real estate, overseas real estate, internet platform, wealth management, post-real estate market etc.
The company now operates a portfolio of 500,000 rental apartments in nine Chinese cities, worth about 600 billion yuan.
The Mechanism of Growth
The mechanism for growth in the company lies in its business model as well as various practices that the Lianjia adheres to.
Unlike most real estate and/or property agents that collect data and provide it to the onlooking customers/sellers, charging money for a closed deal, Lianjia proposed the concept of ‘exclusive listing’ (or ‘selling room’), where the owner singularly entrusts their property to the company on receiving the promise of a sale within a certain period of time. If the company fails to deliver the sale within that period, it returns the property to the seller along with the payment of liquidated damages.
Before going online, in approximately 7 years of its operations Lianjia created a ‘property dictionary’ of over 110 million houses in more than 160 cities. This dictionary is more of a data centre where the information is identified and assessed for authentication. This is a move made by the company to avoid duplicate listings on its platform, a problem faces on almost all real estate websites which try to show an increased number of listings by the method of duplication.
Apart from this, the company uses big data analysis and application to enable smart recommendations. This is done by analysing the properties that the reviews over the platform to analyse their preferences and create a User Portrait and recommend properties that match the filtered data. It also leverages data to predict housing trends and help users and owners in decision making.
Property Dictionary and Big Data analysis are two of the measures adopted by the company to create a transparent model for users. After the creation of this credibility, the website or application connects the user with the appropriate offline store for a more efficient completion of the transaction.
On the other hand, Lianjia applies virtual reality and augmented reality (VR/AR) and uses the appropriate tools, especially for the sake of investors, so as to decrease the cost of travelling and increase the number of transactions over the platform. It also provided the VR/AR service to real estate developers to test on end-customers’ preference before construction.
Overall, the company had set up the ground level operations, created a brand for itself in the market, and collected enormous data in the 8 years before it went online, and later used all of it along with technology, to leverage its growth in the industry.
Indian online real estate firms: The Need for Change
While looking at the Indian real estate startup ecosystem, the names of 99acres, Magicbricks, Sulekha Properties, Nestaway, NoBroker, do come to notice, but none of the platforms are making a notable growth, and at times they simply fail to alleviate house hunting process.
The online model of real estate marketplace and agent services is not providing feasible solutions to the consumers anymore, and the unhappiness of the customers with all these platforms go on to illustrate the fact.
The problems faced by the customers on these platforms are the ones that Lianjia set up successful measures against. There is a lack of trustworthy agent that keeps track of the authenticity in the properties and takes care of post real estate services, the user interface is poor on the websites and most infuriatingly, there are multiple duplicate listings on these platforms to create a facade of listing volume.
Sometimes the listings do not even have pictures of the property for the reference of the consumers.
It is important to realize that the company will not grow and become profitable if the customer satisfaction is not taken care of, no matter what numbers the traffic or transactions represent. To work on this customer satisfaction, the websites could borrow from the Lianjia model to create an offline presence, work to remove the duplicate listings, and provide reliable information in the first place, meanwhile working on the user interface and efficiency in the transactions.