British online real estate agency Hatched.co.uk has been closed by its owner the Connells Group. In a statement, Connells said the online/hybrid agency model is “fundamentally flawed” and affirmed its commitment to bricks-and-mortar agencies.
The Connells Group acquired Hatched in 2015. It ran the site as a separate business, doubling its staff and investing “significant resource,” Connells’ CEO David Plumtree (LinkedIn profile) said. Hatched staff will be redeployed in the Connell Group.
“We have thoroughly tested the hybrid model and have reached the conclusion that it does not produce a viable economic result — evidenced by the results of those operating in this sector,” Plumtree added.
He cited the cost of customer acquisition as one of the main barriers to profitability. Market leader PurpleBricks.co.uk‘s FY2018 report shows this reality; its marketing costs rose 49 percent and ate through 27 percent of its revenue.
Plumtree made his feelings about the model clear in the press release: “There is much talk of ‘disruption’ from hybrid estate agents, but from our experience, we have found it significantly lacking when compared with the level of customer service, support, and expertise that our high street operations provide. Ultimately, an upfront fee obligation — payable irrespective of whether a property sells or not — is not the right solution for the customer.”