Three logics to understand the chain home model

Chain home is an O2O company based on real estate, and there are about three basic logics to understand real estate O2O, which constitute a closed loop and are indispensable.

the first one is the scale logic.

This logic can be called a logical paradox. For example, brokerage companies, small companies in general, have better profitability, and mom-and-pop stores in a community may have better financial situation than small companies, because of its small scale.

but once your scale exceeds 111 and reaches 211 or 511 stores, with the expansion of your scale, the scale trap will appear. After reaching a certain scale, your financial indicators will deteriorate, which shows that in this industry, traditional brokerage companies have no or lack of scale effect.

The emergence of the Internet gives us a chance to get out of the curse of scale. Because of the intervention of the Internet, the proportion of capital and labor in this housing brokerage industry has changed.

In the past development stage of Chain Home, there was an IT stage, the core of which was the investment in capital, technology research and development and websites, as well as some SE systems and TE systems. All the investment in technology systems changed the production structure or cost structure of our traditional brokerage companies. Therefore, the current chain home is based on a production structure completely different from the traditional brokerage company, which enables them to break the traditional scale trap, thus enabling the chain home to achieve better financial indicators on a larger scale.

This is the meaning of Zuo Hui's famous saying. He said that slow is fast. In the past, the chain has done a lot of technology research and development and storage of the underlying platform. Now, the chain is eating this slow dividend.

in traditional brokerage companies, there are no core fixed costs except stores. However, it is precisely because Chain Home has invested in many systematic services, including network investment, especially in real estate dictionaries, basic data, basic technologies and applications, that the fixed cost of technology accounts for a relatively high proportion of the production cost of chain home as an enterprise. Therefore, Chain Home can break the scale trap faced by brokerage companies in traditional labor-intensive industries, or such a dilemma as lack of scale effect.

Therefore, Chain Home can achieve better expansion and better profit on the basis of a larger scale-71,111 brokers and 5,111 stores.

the second is the logic of scope economy.

In the past, what I earned as a broker was the broker's money, and what I earned as a tenant was the rental money. What I earned as an apartment was the price difference. When talking about chain home today, we are talking about chain home from the perspective of housing circulation. The so-called circulation includes a series of services such as lease, new house transaction, second-hand house transaction, ordinary lease, apartment, finance and decoration.

the so-called scope economy means that providing two services is more valuable and profitable than providing one service. Now, the apartment products that the chain home is doing are freely related to their second-hand housing brokerage business to some extent, because the chain home will help them do a lot of things freely in the process of taking and leaving the house, as well as their finance.

It is only by mastering the trading scene that Chain Home can provide some services such as renting a house loan, down payment loan and wealth management around the trading scene. It is these services that make the profit source of Chain Home break through the commission income of traditional brokerage companies and make the structure of income and profit more diversified.

Therefore, the proportion of derivative income and derivative profit of chain home transactions is gradually increasing. It is estimated that this year, the financial income will account for 15% of the total revenue of the chain home, and the financial penetration rate is very high.

the third is the logic of network effect.

if the first two logics are offline business logics, then the third logic is online pure internet logic.

what is the network effect? We can talk about it from two simple cases. Chain home is now nearly 71,111 brokers. One more broker may bring more internal games, because one more broker will naturally have more fierce competition, and there will be many games and competitions.

Every time a person comes, he is not just a clue. He has many guests and houses, and there are 11,111 more links because of his arrival. This is the typical effect of having one more person. However, whether to increase the effectiveness of the link and improve the matching efficiency or increase the game cost depends on management. Poor management is a game, and good management is the improvement of transaction efficiency.

we believe that the chain home has passed such a stage. Through the logic of the Internet and the underlying platform, the chain home can provide valuable guidance to the offline behavior of brokers, and it can be traced. After all, every broker's behavior always produces some tracks, which are well documented and each track has data.

among the above three logics, economies of scale and economies of scope have existed in the objective world for many years, and the network effect has existed alone for many years. But today, it is the first time to combine these three logics through the logic of real estate O2O.

The network effect we are talking about refers to the network effect of offline services. In the real estate field, what the chain family does is to logically integrate the network effect, economies of scale and economies of scope. This is the source and foundation for us to talk about the chain family's valuation, business model and future expansion, and it is also the correct observation posture that the chain family should have. ;