Summary of “Zillow, Aggregation, and Integration – Stratechery by Ben Thompson”

With Zillow’s new program, announced on Thursday, home sellers in the test markets of Phoenix and Las Vegas will be able to use Zillow’s platform to compare offers from potential buyers – and Zillow.
Where does Zillow fit? It certainly has the hallmarks of an Aggregator: users go to Zillow directly to look for homes, Zillow incurs zero marginal costs to serve those users, and the company has created a two-sided market where its suppliers are incentivized to come onto the platform on Zillow’s terms in order to reach Zillow’s end users, thus making the platform more attractive to those end users.
Redfin got access to those listings by becoming a broker itself, but Zillow, at least at the beginning, relied on brokers uploading listings themselves – which they were willing to do, thanks to the userbase Zillow had already built up thanks in part to its Zestimate house valuation tool.
The first sentence in Zillow’s S-1 was its mission statement: “Our mission is to build the most trusted and vibrant home-related marketplace to empower consumers with information and tools to make intelligent decisions about homes.” In 2014 the company coined a new description for itself: a “Real-estate media company.”
More broadly – and this really gets at why Zillow is different – Aggregators that change industries integrate the customer relationship with however it is their industry generates revenue; Zillow, on the other hand, was completely divorced from the home selling-and-buying process.
Again, not all companies need to be Aggregators, and as I noted at the beginning, Zillow has become a very successful company by getting half-way there.
Zillow did well to capture a portion of that 6% for itself through its realtor ad model, but that only meant that Zillow was as dependent on the status quo as the realtors.
Zillow is embracing a model that, should it be successful, tears down the status quo: this will not only enrage Zillow’s customers, but also endanger Zillow’s primary revenue stream.

The orginal article.