Author | Liu Gongchang
On May 19, Shell announced its financial report for the first quarter of 2021.
The financial report shows that as of March 31, Beike’s operating income was 20.7 billion yuan, a year-on-year increase of 190.7%, net profit was 1.059 billion yuan, and adjusted net profit was 1.502 billion yuan. In terms of housing transactions, Beike’s total transaction volume (GTV) in the first quarter was 1.0696 billion yuan, a year-on-year increase of 224.2%, of which second-hand housing was 673.4 billion yuan, a year-on-year increase of 244.2%, first-hand housing was 343.4 billion yuan, a year-on-year increase of 194.9%, and other businesses 52.7 billion yuan, a year-on-year increase of 197.3%.
Based on the 2020 full-year financial report, the total transaction volume was 3.4991 billion yuan, the net income was 70.5 billion yuan, an increase of more than 50% compared with 2019, and the adjusted net profit was 5.720 billion yuan, a year-on-year increase of 245.4%.
This means that Beike has been in a state of rapid growth in performance since last year. Looking at the entire industry, based on the national housing transaction volume, Beike's market share in 2019 was 9.5%, while the market shares of mainstream brokerage companies represented by its main competitors, Centaline Real Estate, I Love My Home, and Le Youjia, were only 4.3% respectively. , 1.9%, 1.3%, the gap with shells has widened.
How did shells come from today?
Beike as a company name has only officially appeared for 7 years, but the birth of Lianjia, the carrier behind it, has a not too short history.
Zuo Hui graduated from Beijing University of Chemical Technology in 1992 with a major in computer science. He worked in software sales in Beijing, and later became an insurance company and had some savings. In August 2000, Zuo Hui established the Beijing Lianjia Real Estate Exhibition Center, the first individual home purchase exhibition. On November 12, 2001, Zuo Hui established Lianjia Real Estate. In the following years, Lianjia's development has been tepid.
In 2005, the promulgation of the "eight national regulations" caused the real estate industry to become colder for the first time, causing the housing agencies in the middle sales class to close down. However, Zuo Hui's Lianjia took the opportunity to expand against the trend and quickly became one of the Among mainstream intermediary companies.
Building industry standards with a real estate dictionary
In 2008, Zuo Hui hired hundreds of people to count houses in communities in more than 30 cities regardless of cost.
In 2012, when false information flooded the market, Zuo Hui made a high-profile proposal for “100% real housing”: real properties, real properties for sale, and real prices.
However, this "retrograde" caused Lianjia to lose three consecutive months. But as Zuo Hui determined, "These customers will come back after 100 days. The question is, can you persist and endure 100 days.
Beike has launched a simultaneous campaign in hundreds of cities across the country The "National Authenticity Plan" rewards the reporter with 100 yuan for reporting and verifying false housing listings. Since then, Beike announced that the rate of real housing listings in Tianjin, Ningbo and other places has reached 96%. Beike has provided real estate listings through VR and real estate dictionaries. Establishing an “ID card” to ensure housing information.
Why does Lianjia pursue “100% real housing” in such a vigorous manner?
Zuo Hui and others realized that “ As the Internet transforms traditional enterprises, the underlying conflict exists between the spirit of the Internet and the order of traditional enterprises. The essence of ‘real housing’ is information symmetry. When this is achieved, power is transferred from traditional organizations to systems and data. "
As a result, the concept of "real estate dictionary" was launched and continuously upgraded within Lianjia. Peng Yongdong, who joined in 2020, explained the logic behind it well, "In this industry, there are houses, customers , the three parties of broker. All data must have an initial carrier, and the best carrier is a physically immovable house. ”
“This is not an accidental action, but a strategic judgment. Lianjia’s goal at that time was to build a basic database of Chinese real estate, which included room numbers, standard floor plans, and attributes. Information, supporting facility information, historical business data and other multi-dimensional information. "According to people familiar with the matter.
In June 2014, Lianjia established a special data center to provide real estate transaction services such as second-hand houses, new houses, rental houses, residential properties, overseas properties, etc., and has a unique industry-specific Housing data, crowd data, transaction data, and data technology drive the improvement of service quality and industry efficiency. Since then, the "Real Estate Dictionary" has been continuously upgraded. On February 28, 2018, Beike Housing Search, which took several years of preparation, was quietly launched. The "Real Estate Dictionary", the housing information database with the largest amount of data, the widest coverage, and the most comprehensive dimensions in China, as well as the ACN mechanism that has been verified within Lianjia, is open to the entire industry.
In 2019, Peng Yongdong participated. China Development High-Level Forum.
He pointed out at the meeting: "The evolution of the industry is the evolution of standards. For the real estate service industry, it is the advancement of material standards, service standards and human standards." He defined goods, services and people as the residential service industry. Three major elements.
By the beginning of 2019, Lianjia recorded more than 185 million real houses in its inventory, covering 450,000 communities in 325 cities in China. In the 4.0 era of Shell House Search in 2020, the company has further ensured the authenticity of the "Real Estate Dictionary" through the "Ant Nest" intelligent centralized procurement system. The richness of the corresponding real estate data has expanded from more than 100 fields to 433 fields to define a property. A house. At the same time, the identity ID of each property also ensures the unity and authenticity of the information.
The "Real Estate Dictionary" launched by Lianjia solves the standard of things - authenticity, and the authenticity of housing information. Lianjia believes that this should be the basis for real estate transactions.
The rules behind creating standards
For Beike, if the "Real Estate Dictionary" solves the problem of property standards, then ACN (Agent Cooperation Network) solves the problem of services. standards and the rules behind human standards.
In 2007, Lianjia introduced the SE system (SaleEfficiency) to ensure that agents complete all links from listing entry, process management to transaction cancellation, allowing the company to supervise and manage risks throughout the process.
The Broker Cooperation Network (ACN) is a typical case. Its core logic is to break down processes, divide interests, and establish rules. Specifically, Lianjia splits the various links of the house transaction. Each link corresponds to the person who entered the house, the holder of the key, the person who showed the house, the person who made the transaction, etc. Each role will be based on different contributions. Receive corresponding profit sharing under the ACN system.
“Essentially, ACN’s cooperation mechanism divides the signing process of helping customers into 10 links. Basically, behind every transaction, there are four or five brokers who share this role. 10 links of work, and receive respective incomes according to different contributions. ”
If we say that establishing real housing as the trading standard is Lianjia’s injection of fresh water into the mixed real estate industry. , a real estate trading platform that adopts the ACN broker cooperation network system, Beike stipulates the roles, rights and obligations of brokers in the housing cooperative trading center through a commission distribution mechanism, and the working model of real estate brokers is divided according to industrialized standard procedures. This is also regarded by the outside world as the biggest change that Zuo Hui has brought to the industry since he founded Beike. In other words, it injects clearly quantifiable industrial standards into the chaotic real estate transaction model.
It took Lianjia 18 years to go from non-standard to reorganizing the process, dividing links, and achieving segmented standardization, so people say that Beike is the combination of "18 years of Lianjia + 2 years of Beike". "Digital technology is not difficult, but what is difficult is using digital technology to reconstruct rules. This is experience that non-trading platforms do not have, and it is also the moat that Beike spent 20 years building." Analysts said.
How does Lianjia make money?
In 2010, Peng Yongdong joined Shell as a member of the IBM consulting team. According to people familiar with the matter, IBM summarized 8 business models for Lianjia at that time, one of which was the "toll station model", which centered on transactions and then extended upstream and downstream.
Beike holds two major weapons: the dictionary of real estate listings and ACN, which enables it to try its best to meet the industrial standards in real estate transactions full of subjective wishes. Specifically, under the platform rules, the real estate transaction process is split into multiple links, and brokers are encouraged to cooperate with each other, participate in different links, and share profits; the brokerage brands on the platform can enjoy all real properties without distinction. source information.
Beike is now composed of new house + second-hand house business. The commission for new house jumps, and the total commission for second-hand house is 8% + 800 handling fee (300 for bank approval + 500 for transfer)
Beike Our slogan is cooperation to win. A property is composed of multiple roles, including the entry person, the maintenance person (within three kilometers), the surveyor (cameraman), the key person, and the client (ID card, A copy of the real estate certificate) and the transaction person, and the ratio is 5-10-5-5-10-65, and the commission can be discounted to a minimum of 60%. After the commission is collected, it will be handed over to the Shell headquarters, and the corresponding commission amount will be refunded after 2 working days.
Lianjia’s second-hand housing agency rates:
Judging from the second-hand housing agency rates, Lianjia’s second-hand housing agency rates are higher than those of other brands.
On the Shell platform in 2020, in addition to Lianjia, which completed a second-hand housing transaction volume of 1,011.9 billion yuan, other brands completed a second-hand housing transaction volume of 928.1 billion yuan.
From 2019 to 2020, the service rates charged by the Beike platform for second-hand housing transactions of other brokerage brands are 0.34% and 0.32%.
Internet + broker, new house + second-hand house, self-operated + platform are the keywords of the real estate brokerage industry. Currently on the market, the best combination of these six keywords is Beike. The fundamental reason for this is profit distribution. Beike's brokers have better interest links.
Generally speaking, Lianjia.com imitates the business model of Zillow, a famous real estate information query network in the United States. It buys original real estate data from the American real estate agency MLS, and then provides customers with Based on the premise of convincing data, the agency rights of the website area are sold to brokers, and commissions are collected from the brokers.
So the logic of this matter is that ① Zillow buys house data from MLS, and through analysis and calculation, accurately tells consumers how much the house is worth. ②The broker purchases Zillow's regional agent or advertising space, and even clicks, to achieve accurate customer acquisition. ③The agent obtains the listings according to the MLS system and helps to see the transaction.
Shell is now equivalent to a combination of Zillow and MLS. The current MLS system integrates more than 90% of second-hand housing listings in the United States. However, its listings mainly rely on money to buy. In the early days, Beike mainly relied on people to count them. Now it does not publicly announce the source of listing information. It is estimated that most of them rely on Buy, from this point on, Shell and MLS are gradually converging.
The existence value of MLS is more like a lawyer. The property owner can entrust the agent to list and sell the house, and the buying agent will also help show the house and negotiate the price. Each one has its own master. This is the core of MLS.
In the future, if Beike wants to expand its sources of profits, it will not be enough to simply rely on price differences and advertising. It must also, like MLS, get a share of the real estate transaction itself in order to maximize its profits. . In this sense, it makes sense for you to say that the shell eats the plaintiff and eats the defendant.
However, China currently does not have a unified housing supply. Each real estate company only sells its own houses, or exchanges housing listings with a small number of peers with good relationships, but this has strong limitations. It is precisely because of this situation that consumers get half the result with twice the effort in real estate transactions, and it also leads to a lack of information circulation, resulting in irregular real estate markets due to opacity, a decline in transaction quality, and customers spending money but not being able to buy. to a satisfactory house.
Lianjia dares to open up all its genes. The Lianjia operation system, which has served 150,000 brokers and 8,000 stores, will be open to major merchants and brokerage companies that join Beike. This itself requires great courage. .
Lianjia’s approach is to empower the industry, giving peers exactly the same Lianjia genes to help them operate soundly. The quality of online traffic should be improved across the entire network so that we, real consumers, can believe it. The establishment of rules. In today's industry, if a broker harms the interests of his clients or the company, he will at most be fired. Behave yourself. Change the gaming relationship between brokers and clients, and use mechanisms to gain trust from clients instead of using words to deceive each other. Platformization should also protect the rights and interests of brokers, and an organization is needed to safeguard the interests of brokers.
"We are building a stadium. We hope that more and more people will play here and the rules will get better and better." Zuo Hui once used football to describe shells. In his opinion, the nature of the industry is changing. Change, what Beike is doing is to rebuild the entire industry ecosystem with store managers and brokers as the center.
Beike is making rapid progress
In 2015, Lianjia successively merged Yicheng Real Estate, Deyou Real Estate, and Yi in different ways in first- and second-tier developed cities such as Chengdu, Shanghai, Beijing, Shenzhen, and Hangzhou. There are a total of 11 real estate intermediary companies, including Home, China United (Real Estate) Group, and Beijing Gaoce. After the acquisition, the number of Lianjia’s brokers surged from 50,000 to nearly 100,000.
In just two years, Beike.com has become China’s largest real estate transaction and service platform.
Everything is ready for listing in the United States. On August 13, 2020, Beike House Search rang the bell on the New York Stock Exchange. The prospectus shows that Beike Housing achieved a GTV (total transaction volume) of 2.13 trillion yuan in 2019, a year-on-year increase of 84.5%. Among all commercial platforms in China, its size is second only to Alibaba. In 2020, its total revenue reached 70.5 billion yuan, a year-on-year increase of 53.2%, and the full-year net profit was 2.778 billion yuan.
The prospectus disclosed that before this IPO, all executives and directors of Shell Group held 51% of the company’s shares, of which Zuo Hui held 28.9% of the shares through PropitiousGlobal Holdings Limited. However, it holds 46.8% of the voting rights and is the company's largest shareholder.
In addition, Tencent and its related entities, SoftBank’s investment company SVFII Shell Subco (Singapore) Pte. Ltd., Hillhouse Capital and its related entities hold 12.3%, 10.2% and 5.3% of the shares of Shell respectively. .
From the current point of view, all indicators of Beike are at an excellent level in the real estate industry. Determining the key cash flow in the real estate industry, Beike's cash and cash equivalent reserves from 2017 to 2019 were 8.2 billion yuan, 12.8 billion yuan, and 31.9 billion yuan respectively.
On the first day of listing, the opening price of Beike Zhaofang reached US$35.06 per share, a surge of 75% from the issue price; it finally closed at US$37.44 per share, an increase of over 87%, and the total market value reached US$42.2 billion.
About three months after its listing, the share price of Beikezhuanghuang increased by about 200 times. On November 25, 2020, Beike Zhaofang announced the completion of an additional issuance of US$2.05 billion.
After Beike went public, its stock price peaked at US$79.4 per share, with a market value of US$94 billion, approximately RMB 600 billion, which is almost equivalent to the combined market value of China’s leading real estate companies Country Garden, Vanke, and Evergrande.
The shadow of monopoly has not been eliminated
On April 10, former 58 Group CEO Yao Jinbo publicly questioned Beike’s “choose-one” approach to house hunting and called on the state to punish him. At the same time, Yao Jinbo also attached two pictures. One is the "Exclusive" mark clearly marked under the housing information in the Shell House Search APP; the second is a page of photos of the agreement. The content of the photo shows that Shell requires in the contract. Party B "voluntarily" chooses to cooperate exclusively with Shell.
In response to this matter, Shell responded that since its establishment, Shell has insisted on operating in accordance with the law, improving the compliance system, and using technology to drive the healthy development of the industry.
In fact, with the development of Beike in recent years, this is not the first time that doubts about monopoly have arisen. Peng Yongdong, CEO of Beike Housing, once said that Beike is working on the infrastructure and rules of the industry and does not compete with anyone. Therefore, there is no monopoly problem.
Screenshot from Weibo
On April 14, the State Administration for Market Regulation announced the "Commitment to Legally Compliant Operations" (the third batch) of Internet platform companies. iQiyi, Beike.com, Dangdang, Duodian, Qunar, Sogou, 58.com, Ele.me, China Literature, Alibaba, Beibei.com (third batch)
There is no doubt that Beike It has indeed entered the highest list of supervision by the General Administration, and is the only real estate agency platform among the 34 national Internet platforms that have been "named". Many people believe that Beike operates both a platform website and a brokerage business, which is equivalent to "being both a referee and an athlete."
On May 8, some media reported that the Beike House Searching platform is currently cooperating with the regulatory authorities for self-examination. As for whether Beike House Search is suspected of monopoly, detailed data investigation is needed. Nowadays, the spear of regulation of local governments is increasingly directed at Shell. Beijing, Shanghai, Hangzhou, Chengdu, Shenzhen, Suzhou, Wuhan, Dongguan... have all set their sights on Beike, either removing listings from the market, or proposing second-hand housing regulation targets.
Earlier, in September 2019, hundreds of real estate agencies in Jinhua, Zhejiang Province signed the "Anti-Shell Alliance Treaty" on behalf of ***, and 530 stores in the alliance shouted "Oppose Monopoly, Boycott "Unhealthy competition"; in April 2020, hundreds of intermediary companies in Yancheng, Jiangsu Province also resisted the Shell System on the grounds of "resisting unhealthy competition".
On the afternoon of May 25, Reuters suddenly released a news at the same time. Sources said that in recent weeks, the State Administration for Market Regulation has been formally investigating whether Beike Housing is forcing real estate developers to only sell in its properties. Housing information is listed on the platform, including Lianjia and Beike, which is the so-called "choose one from two". The investigation has not been publicly announced. It's not yet known when the investigation will be concluded or what impact it might have on Shell's housing search.
According to the Anti-Monopoly Law, if an operator’s market share in the relevant market reaches one-half, it can be presumed that the operator has a dominant market position. Since the real estate industry is basically a local transaction, various intermediary platforms will compete with each other in different cities.
Nationally, the proportion of shells currently accounts for less than 10%. Peng Yongdong, CEO of Beike Housing, said in response to the topic of monopoly, "Our market share in 2018 was only 5.3%, reaching 9.1% in 2019, and probably reached 12%-13% this year."
But in In a single city, such as Beijing, Zuo Hui told the media in 2015 that Lianjia’s market share in Beijing is about 55%-60%. This undoubtedly qualifies as a monopoly.
Beike owns many brands including Lianjia, Ziroom, Deyou, Zhonghuan, Zhushang, and 21st Century Real Estate.
Offline, Beike has 456,000 agents and 42,000 brokerage stores; online, Beike has formed a real estate dictionary of 226 million house source information, standardizing transactions and services. Real estate dictionary + agent, Shell has built its commercial moat.
Relying on the encirclement of online and offline, few house buyers can escape the hands of Beike.
Despite Beike’s strong defense, people still found the monopoly factor from Beike’s behavior.
Some people believe that Beike uses its advantageous position to increase second-hand housing transaction commissions in some cities, which is very "powerful". According to previous media reports, at the beginning of this year, Beike raised the agency fee from 2% to 3% in many hot cities such as Shenzhen, Guangzhou, Chengdu, Zhengzhou, and Chongqing, of which buyers bear 2% and sellers bear 1%.
Not only consumers, but also developers are not spared. Among Shell’s 206 projects in Tianjin, there are 122 projects with channel fees above 3%, and 18 projects with channel fees exceeding 5%.
It is said that at a forum in 2017, a Tsinghua University professor said to Peng Yongdong, CEO of Lianjia.com: "Your model is to cheat both sides, defrauding the landlord and then defrauding the home buyer."
< p> CITIC Securities pointed out in a research report published in July last year that in the long term, can Beike truly define the infrastructure for housing transactions? This is not only a competition issue in the commercial field, but also a market supervision issue.Zuo Hui once said that the agency fee in China is not high, about 2.5%, compared with 6% in the United States and Japan, 8% in South Africa, and 2% in Hong Kong, but there is an advance fee.
The implication is that Beike’s ambitions are only scratching the surface, and there is still room for agency fees to rise.
In April 2021, Beijing suspended 6 stores, including Lianjia and Iaiwojia, for allegedly speculating on housing in school districts. Illegal behaviors include: luring consumers into transactions through concealment and other improper methods, and releasing housing information to the public without authorization. Beijing has listed the behaviors that it will crack down on, including real estate agencies creating tension, speculating on housing in school districts, and driving up housing prices. Earlier, Lianjia had implemented an "exclusive agency" model in Shanghai and Beijing to push up housing prices, but was stopped by the Housing and Urban-Rural Development Committee.
Let me say something here. As we said before, the second-hand house commission here is borne by both sellers and buyers. This is actually a trend in the Beike business model to get rid of losses and move towards a positive financial cycle. In essence, Beike It is unavoidable to choose such a business model and reach this point, but whether it is additionally taking advantage of its monopoly position in certain areas of business dominance requires further observation.
The glory is not unlimited forever
Shell is so famous that it cannot help but arouse the high vigilance of industry giants.
If Yao Jinbo’s 58 fellow players are no longer a concern in the eyes of Beike, the entry of the other two giants should arouse enough vigilance from Beike.
First of all, E-House has just joined forces with Alibaba Tmall Haofang to become a wholly-owned subsidiary of E-House. Zhou Xin, chairman of the board of directors of E-House, confidently shouted at the press conference, "Real estate transactions are made simple because of us." ” slogan, indicating that in the future, the platform will achieve the goals of 3 million daily active users, annual transaction volume exceeding 2 trillion, and annual revenue of 50 billion.
The second is the RV Bao launched by Evergrande.
According to Evergrande management’s disclosure at this year’s performance meeting, RVB currently has 43,000 stores, and its transaction size (GTV) last year was 1.2 trillion yuan. It is expected that the GTV will reach 22,000 yuan by the end of 2021. billion, getting closer to the shell.
In comparison, as of the end of 2020, Beike Zhaofang had approximately 46,900 stores and a transaction scale of 3.5 trillion yuan. From this point of view, the scale of RV Bao is approaching that of Shell.
More importantly, Evergrande has provided sufficient "ammunition" for RV Bao to conduct larger-scale mergers and acquisitions this year. On March 29, Evergrande officially announced that RVB has introduced 17 strategic investors, raising a financing amount of HK$16.35 billion. This year, Evergrande plans to list “RV Bao” on the capital market.
At present, most of the listings on RV Bao are from Evergrande. It is not yet known whether it will become an open platform in the future. However, there is still a lot of market space left for RV Bao.
According to CIC report estimates, the total national real estate transaction volume will reach 30.7 trillion yuan in 2024, and the compound growth rate from 2019 to 2024 will reach 6.6%. Shell currently accounts for less than a quarter of the market.
With the entire market still in a blue ocean state, no one can say whether the 20-year moat built by Beike by relying on the authenticity of real estate listings and standardization of brokers can withstand the strong impact of subsequent giants.
Just as Zuo Hui said, there is still a long way to go for the "difficult and correct" things that Beike does. Now his departure has undoubtedly added greater uncertainty to this unfinished business.