Businessmodel of Zillow

Customer Segments

Zillow has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:

• Consumers: Individuals assess their home values, research home listings, and contact agents.
• Real Estate Agents: Professionals advertise their services and connect with consumers. ### Value Proposition

Zillow offers three primary value propositions: accessibility, customization, and brand/status.

The company offices one of the most comprehensive real estate databases on the market, covering the full cycle of home living, including buying, selling, renting, financing, and remodeling. The system has more than 110 million U.S. homes, and features a wide breadth of property facts, listing information, and purchase/sales data. Its vast size gives visitors access to more types of content than they would normally be able to get.

The database gives customers a personalized experience. They can save home listings as “Favorites“ on both the website and the firm’s mobile app. They can also sign up for monthly e-mail updates on changes in these homes’ values, price changes, listing status, and other data. Users also have the option of creating “Saved Searches“ for a given zip code or neighborhood and obtaining daily e-mail updates on new homes listed for rent or sale, as well as price changes for already-listed homes.

Zillow’s brand name is powerful due to its success. Most of the website’s traffic come from direct look-ups rather than through general queries on search engines. In the quarter ended December 2015, site traffic rose to 123.7 million average monthly unique users, an increase of 61% compared to the quarter ended December 2014

Channels

Zillow’s main channel is its website, through which it markets and enables usage of its services. The company also engages in large-scale national TV advertising. Further, it has its staff of real estate industry experts provide commentary in national broadcast and print media outlets, as well as write blog posts and guest opinion pieces.

Lastly, it communicates with customers through social media.

Customer Relationships

Zillow’s customer relationship is primarily of a self-service, automated nature. Customers utilize the company’s database while having limited interaction with its employees. Also, its website has a detailed Help Center that provides answers to many potential questions and a forum for receiving assistance from other users.

However, there is also a personal assistance component as its website features contact information (addresses) for Zillow locations.

Key Activities

The company’s business model involves maintaining a common platform between two parties: consumers and real estate agents.

The platform consists of the main website and its suite of mobile real estate apps.

Key Partners

Zillow maintains partnerships through the following programs:

• Affiliate Program: This program recruits website owners with a real estate focus to promote the company on their platforms. Partners receiveaccess to a customized dashboard which they can use to monitor traffic to Zillow through their sites. The more visits, the more they get paid.
• Zillow Pro for Brokers: Zillow makes companies establish a direct feed to Zillow; afterwards their logos and an outbound link to their websites are included on their listings, making it simple to for buyers and sellers to connect with them. Zillow puts the firms‘ listing agents first in buyers‘ contact options so they can start receiving leads right away.
• Zillow Partnership Program (ZPP): This is an alliance between Zillow and MLS (a real estate property listings company) that improves listing accuracy and accessibility through a direct listings feed to Zillow. The collaboration gives buyers the latest information, gives sellers timely exposure for their homes, and provides agents with relevant outreach on properties. ### Key Resources

Zillow’s main resource is intellectual property – its proprietary algorithm that enables the calculation of home values (“Zestimates”). It has 18 patents covering techniques for this purpose. The company also relies heavily on its technology platform that provides customers with powerful online tools to carry out their customizable database searches.

Lastly, its sales team is an important resource, marketing its services to consumers and real estate agents alike.

Cost Structure

Zillow has a cost-driven structure. It tries to keep expenses low through heavy automation on its website. Its biggest cost driver is sales/marketing expenses, as it utilizes a variety of advertising channels. Other major drivers are technology/development and administrative expenses.

Revenue Streams

Zillow has two main revenue streams, which are as follows:

• Subscription Revenue:  The company generates revenue from the sale of subscription packages that allow real estate and mortgage industry professionals to promote their services on its site.
• Display Revenue:  The company obtains revenue from the sale of display advertising packages to companies of all kinds who desire to promote their brands on its website, its partner websites, and its mobile applications. The packages are sold on a cost per thousand impressions (“CPM”) or cost-per-click (“CPC”) basis, and pricing is based on ad positon and size.