Christopher Joye

In The Australian Financial Review I argue that the private equity buyers circling Fairfax should consider the embedded optionality inherent in the development of what I call the "Financial Amazon" business model that could be worth multiples Domain and transform the way banks compete to provide their products to customers (click on that link to read the column for free via Twitter or AFR subs can read here). Excerpt below:

"If you started with a blank sheet of paper, the last thing you would sell on the internet are tangible products like houses, people and cars. Yet these have curiously been the most successful markets for listings hubs as represented by, Domain, SEEK and There is, however, a critical commercial distinction between these websites and Whereas the former simply list products that you go and physically inspect and then buy offline, Amazon internalises the entire end-to-end process. That is to say, Amazon both lists products and facilitates their immediate sale, on which it earns commissions. By contrast, the property, jobs and vehicle portals have never really enabled online transactions and consequently miss out on what is the most lucrative part of the value chain — ie, sales. Consider the lazy real estate agents earning 2 per cent on every single trade. Or the recruiters that take 15 per cent plus of the salary of the employees they place. Everything discussed  so far resides in the physical domain. The best possible products to sell on the internet are "intangibles" — things that you cannot touch or feel, and which can be distributed digitally in unlimited quantities with no marginal cost. Think about streaming the latest TV series on Netflix or purchasing your favourite album on iTunes. The internet is the perfect medium through which to purvey these products instantaneously to consumers around the globe. Arguably the most valuable of all intangibles is financial services. You cannot physically wrap your hands around a deposit, home loan, share, managed fund, bond or your super. And once we move to digital identification verification, there is nothing in theory preventing the sale of these products migrating to an exclusively online forum as we have seen with videos and music.    My "financial Amazon" idea, which I first articulated in 2014, is the wealth equivalent of Domain with transaction processing plugged-in: a singular listings site where you can review all home loans, deposits, super funds, shares and so on. Unlike RateCity or Mozo, this will not be merely a ratings business that sends you away to a company's site. Just as with its namesake Amazon, this will enable you to first review all the best products and then choose the one you want to buy or switch to there and then. In doing so, it will become the central sales hub for all financial products, stealing distribution power away from its bricks and mortar rivals (ie, branches and brokers). It would command listings and advertising revenues like and Domain, but also sales commissions on what will be many trillions of dollars of transactions annually (potentially orders of magnitude bigger than the annual value of property and car sales)." 


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