Beike: From Running a Brokerage to Building the Track for Its Peers

#Beike #BecomeTheTrack Turn yourself into the industry itself, building the track for all your peers. Beike chair Zuo Hui's approach to competition was: if I cannot stop other players entering my industry, I might as well become the industry itself. This thinking also explains Lianjia's evolution into the property platform Beike. ---- The article “How Did Lianjia Become Beike?” offers a good account of Zuo Hui's decision-making. Here are some highlights. As early as 2014, while other brokers were asking how to take customers and listings from each other, Zuo Hui and the Lianjia team were considering a more fundamental question: would an online platform like Didi or Meituan emerge in property brokerage and integrate all offline brokers, including Lianjia? For an ambitious team, this question can be reframed: if we were to become that disruptor, which fundamental industry tensions would we need to solve to succeed? Through extensive discussion, Zuo Hui and his team identified five deep-seated tensions across the property-brokerage industry. First is the tension between service providers and consumers: is the listing information we are discussing real? Are you deceiving me? Second is competition between agents: every additional home you sell is one fewer sale and one less commission for me. Third is cyclical industry risk. Brokerage runs on a three-year cycle. Economic downturns or housing-policy changes disrupt the industry and drive people out, forcing it to train people again in the next cycle. Fourth is the tension between front and back offices. Front-line agents earn generous commissions from sales, while administration and IT do not. So when front-line staff request support, the back office is unenthusiastic. Fifth is the tension between agents and their company. Agents have limited identification with the company brand and, once experienced, want to set up independently. With the tensions listed, try resolving them one by one. Doubts about listing authenticity? Create verified listings shared across the industry. Conflicts between competitors? Split transactions into stages so everyone can collaborate on the same deal. Cyclical risks? Develop related businesses too. When homes are hard to sell, there can still be renovation, moving, used-car sales, and parcel collection and delivery. Unresponsive back-office services? Build a star service team and have the front office pay for its capabilities. Agents want independence? Incubate them, provide resources, and let them contribute back to the group network. ---- Lianjia had an Agent Cooperation Network, usually called ACN by Beike's internal team. It breaks a property transaction into more than ten stages: listing entry, listing maintenance, customer sourcing, deal matching, and so forth. When a deal closes, agents who contributed at different stages each receive a corresponding share of the commission. Lianjia began building ACN in 2014 for sharing among its own agents. Initially called Lianjia's network, it let the company's 80,000 agents collaborate and earn money together. In May 2018, Lianjia decided to upgrade ACN into Beike and make it available to the entire industry. At that point, it completely revised its development strategy into three business areas. The first, still called Lianjia, was direct operations. The second, Deyou, was franchised brokerage. The third was the property-information platform developed from Lianjia's network: Beike, taking the model across the industry. Beike bypassed the large brokers and initially worked with smaller ones. They were hesitant at first, but as some connected to ACN, they discovered genuine opportunities for collaboration. Previously, agents from two brokerages encountering each other at the same property might almost come to blows. Within ACN, if someone else sells a listing you uploaded, you still receive a share. If you showed a customer a property and the customer bought it through someone else two months later, you still receive a commission. There is no need to fight. If I am good at finding listings, I focus on that; if I am good at transactions, I focus on matching and closing. Specialization and cooperation send efficiency soaring. As the industry saw the benefits, Beike gained momentum. One property transaction involved 13 agents working together, all receiving a commission share. This was not exceptional: on average, seven out of every ten Beike transactions involved collaboration between two or more brokerage stores. ---- Beike is now China's second-largest e-commerce transaction platform, behind only Alibaba. In 2019, its total transaction value exceeded RMB2.13 trillion, above JD.com and equivalent to two Pinduoduos or three Meituans. So, to the question “How do we stop new players disrupting our industry?”, Zuo Hui and Beike's answer is: become the industry and build the track for all your peers. But the thinking and execution were not nearly as simple as this account makes them sound. Lianjia did not become Beike overnight. It accumulated hands-on experience through its own brokerage operations while taking a wider view of industry pain points. First it took brokerage from one to many, then returned to building an industry network from zero to one. The process actually took more than a decade. Looking back today, Zuo Hui was someone who set the table and built the stage for an industry. The market value of more than 60 billion achieved today rewards strategic thinking that went beyond a single company and created industry-wide value.