Carrots vs. Sticks: Hemnet, Zillow, and The Global Battle Over Exclusive Inventory

Carrots vs. Sticks: Hemnet, Zillow, and The Global Battle Over Exclusive Inventory When listings go off-platform, what's the right response — incentives or enforcement? Carrots vs. Sticks: Hemnet, Zillow, and The Global Battle Over Exclusive Inventory As the popularity of pre-market listings grows in Sweden, leading portal Hemnet is evolving its strategy to compete – revealing an interesting comparison to Zillow and the U.S. market.Why it matters: The Hemnet and Zillow case studies raise an interesting question: when listings go off-platform, what's the right response — incentives or enforcement? And Hemnet's answer may contain a blueprint for the deal Zillow and Compass could make. In Sweden, the rise of pre-market listings are having an adverse effect on Hemnet. “In the current market environment, a larger share of the sales cycle takes place on the pre-market, with more properties being sold before reaching Hemnet.” The risk is clear: a larger share of the sales cycle is occurring pre-market, before a listing reaches Hemnet. Less listings mean less monetization opportunities for Hemnet; as I discussed in my previous article, this has caused revenue growth to grind to a halt.   And fewer listings on Hemnet means more of the sales cycle occurs somewhere else, potentially eroding Hemnet’s position as the best place to look for houses for sale. The key pillar of Hemnet’s response to the threat of pre-market inventory is strategic partnerships with brokerages. Hemnet will pay brokerages up to five percent of net revenues for driving pre-market listings to the platform.   The more pre-market listings that go to Hemnet, the more money the brokerage makes. In addition to financial incentives, Hemnet is offering product and branding incentives to partner agents. These include increased agent branding on listings, a “first on Hemnet” badge, a branding area on listings for agent USPs, and higher exposure in the "My Home" valuation tool. These are notably similar to Zillow’s Showcase Listing product. The Showcase product includes more prominent agent branding, listings highlights on search page, and enhanced listing media – plus leads go directly to the listing agent.   Zillow sells this product to agents for around $500 per listing (pricing varies by market – read my detailed analysis). The second part of Hemnet’s strategy is a new Sell First, Pay Later product, which allows homeowners to do exactly what the name suggests. This product is only available through agents that agree to list on Hemnet within two days of publishing — making it both a seller incentive and a listing capture mechanism. There are striking similarities between Hemnet’s listing incentives and Zillow’s Listing Access Standards. To qualify for Sell First, Pay Later, agents must list on Hemnet within two days of the listing going public.   And for Zillow, a listing must be entered into the MLS within one business day of any public marketing – if not, the listing is in violation and could be banned.   Hemnet is offering a financial reward (carrots) and Zillow is using a punishment-based compliance model (sticks). Interestingly, Hemnet’s partnership model contains the bones of what a potential deal between Zillow and Compass could look like. Compass would agree to share a certain percentage of pre-market listings with Zillow within days of publishing – perhaps for a financial incentive.   And in exchange, those listings (and agents) would receive prominence on Zillow (Showcase Listings) with leads going to the listing agent. The bottom line: Hemnet and Zillow are running opposite experiments on the same problem, with Hemnet incentivizing partners to bring listings in, and Zillow threatening to shut listings out. It's instructive that two portals on opposite sides of the Atlantic, facing the same threat, arrived at mirror-image strategies — one betting brokers will respond to money, the other betting they'll respond to fear.   Both approaches reveal the same thing: exclusive inventory is one of the biggest threats to portal dominance, and every major portal should have a playbook for it. Hemnet: Trouble in ARPA Paradise is my previous analysis of revenue growth at Hemnet grinding to a halt – revealing the limits of its past "pricing power" strategy. Smart, data-driven insights — I publish actionable intelligence that is clear, timely, and informs real estate industry leaders. To see more, check out my website, my podcast, or join my mailing list. Contextually yours, Mike Research | Consulting | Podcast | The Hubwww.mikedp.comUnsubscribe