Amazon's Next Big Bet-- Unbundling Residential Real Estate?
A seismic change in home real estate could be the next bold move for Amazon
The Digital Leader Newsletter — Strategies and Techniques for Change Agents, Strategists, and Innovators.
When you stop growing you start dying —William S. Burroughs
Amazon’s recent return-to-office policy has been making headlines, but let’s be honest—whether Jeff Bezos wears a Hawaiian shirt to the office or works from a Blue Origin rocket, the world keeps spinning, and Amazon keeps delivering (next day of course).
Amazon CEO Andy Jassy is trying to avoid the “ABC’s of Corporate Decay — Arrogance, Bureaucracy, Complacency” with this seemingly unpopular move. Expect more delayering, team restructuring, and cost reduction. These are tactical moves to speed the organization up and reclaim the culture of customer-obsessed builders.
Here’s what we should be focused on — What’s Amazon’s next Big Bet?
Seismic Changes
In March 2024, the National Association of Realtors (NAR) agreed to pay $418 million over approximately four years to resolve claims alleging that the organization’s policies unfairly inflated real estate broker commissions (CBS News). This settlement, which took effect on August 17, 2024, is poised to significantly alter the real estate industry by reducing the standard 6% commission typically split between buyer and seller agents.
As a result, homeowners may experience substantial savings when selling their properties.
The settlement also introduces changes to how real estate transactions are conducted. Buyers are now required to negotiate and sign agreements with their agents upfront, clearly outlining the services provided and the associated compensation (The Wall Street Journal).
Additionally, sellers are no longer obligated to offer a commission to the buyer's agent, granting them more flexibility in negotiations. These reforms aim to enhance transparency and foster more direct negotiations between parties, potentially leading to more competitive pricing and a shift in the traditional dynamics of real estate transactions.
This ~$120B annual service revenue industry is going to change. What might the opportunities be for Amazon?
I’ve been thinking about what Amazon’s next big bet might be. They have several currently going on, including Project Kuiper, a portfolio of healthcare-related investments and AI across everything.
At this moment, six-page narratives are likely being drafted at Amazon, focused on how they can revolutionize the customer experience and capture a significant share of this industry. The market is too vast, too rife with friction, and too closely aligned with Amazon’s customer base for them to ignore. Here’s what their approach might look like.
The Amazon Prime Real Estate Marketplace: A Transparent, Trusted, Digital Platform
Amazon has an unparalleled ability to aggregate supply and demand, and a marketplace model fits perfectly into the emerging real estate ecosystem. With the new commission structure, buyers and sellers are now more incentivized to find innovative ways to improve results, improve service and lower prices.
Amazon could create an open and integrated services and solutions marketplace creating integrated transparency for the entire transaction —
Home listing services — Amazon loves “catalogs”, and the MLS is nothing more than a catalog service.
Agent and Advertising — Let agents bid for your listing. Help customers discover your home.
Tours and Inspections — Let Amazon smart home services such as Nest and Alexa help manage agent and shopper access to tour the property.
Mortgages — Who has unique insights into customer financial health? Create an easy and low-cost mortgage experience.
Title services, title insurance, and closing — Digitize and reduce the ridiculous legal red tape and expenses.
But don’t stop!
Then comes moving services, furnishing, and home insurance to name a few.
What Did I Miss?
This is a genuine unbundling opportunity for a large, tradition-bound industry. Much like healthcare, the real estate industry isn’t likely to disrupt itself—existing models are deeply entrenched in its favor. Amazon, however, holds several unique advantages it can leverage as assets, fueling an extended flywheel of innovation.
Will Amazon move into the US home real estate market? I’d love to hear your thoughts and ideas!
While it’s intriguing and a great excercise to speculate on Amazon’s next Big Bet, the more valuable question is this: what will your next Big Bet be?
In the News
Big Bet Leadership has had some great press recently. Here’s a couple of recent items:
Big Bet Leadership AI Boosts High-Stakes Business Decision-Making
New AI-powered digital advisor accelerates digital transformation and value creation by integrating AI with proven business frameworks as published in Big Bet Leadership: Your Transformational Playbook for Winning in the Hyper-Digital Era by John Rossman
— Read the Press Release HERE
‘What sucks?’: John Rossman on Starbucks’ tough road to brand redemption
— Read the article at Retail Insight Network HERE
Would you help me reach new readers? Share with your team and network.
Onward!
John
About The Digital Leader Newsletter
John Rossman is a keynote speaker, innovation coach, and strategy advisor. The Digital Leader Newsletter is a weekly coaching session focused on customer-centricity, innovation, and strategy. We deliver practical theory, examples, tools, and techniques to help you build better strategies, plans, and solutions—but most of all, to think and communicate better.