Online retailer Amazon is entering into a partnership with real estate company Realogy Holdings in a bid to be the first to refer their customers over to Realogy brands such as Coldwell Banker and Century 21. The partnership, according to the Wall Street Journal, doesn't mean that the retail giant is entering real estate.
The press was lit up as Amazon's partnership with Realogy was revealed and it immediately painted pictures of Amazon taking on Redfin and Zillow Group. In clarification, however, the partnership helps new homeowners through the TurnKey program, where they can avail up to $5,000 in Amazon home equipment and services through Realogy.
Realogy gains the benefit of Amazon's customer base, which is of a significant number. The company primarily provided traditional brokerage services and the number of retail company's customers will be a big boost to it. Realogy has gone through hard times; where it once boasted a market capitalization of $7 billion, it has shed three-fourths of its market value in just 2019.
The partnership with Amazon may have done more than Realogy realized. CNBC reported that on Tuesday's premarket, Realogy's stock made a 25% surge after the announcement went public. It is a good move for a company which has experienced stiff competition from such brands like Compass, which is a newcomer in the industry. Redfin and Compass, however, has the benefit of relying on "high-tech, online platforms."
Realogy fixed that problem with its partnership with Amazon. CEO Ryan Schneider also explained that their move was intended to make them remain as the "market leaders" in the property industry. Innovation was natural to stay ahead, and they also were willing to "to do all the things" which a big, successful company such as theirs needed to do to stay at the top.
The TurnKey program is set to launch in 15 major metropolitan housing markets. Some key client neighborhoods included Atlanta, Chicago, Dallas, Los Angeles, San Francisco, Seattle, and Washington, D.C. Schneider said that expansion is within the plans of Realogy.
He declined to comment on how it could become a "stepping stone" for Realogy brokerages' listings to appear on Amazon, saying that it wasn't part of the conversations they had with Amazon.
Amazon was a part of all online product searches last year, accounting for about half of all online searches done. This was in stark contrast to 2015, where a majority of the searches started on Google.