Realtor.com gets hitched
|August 28, 2002|
Welcome Wagon will 'factor into' new Web site, product line
Inman News Features
Good ole Welcome Wagon may not be such a tired business model after all. Or at least that's a fair guess judging by Homestore CEO Mike Long's recent remarks to investors and Welcome Wagon's new prominence on Homestore.com's home page.
Indeed, Welcome Wagon, the once print and now online service that promotes local merchants to new homeowners, may become a strategic asset in the new Realtor.com, which should be premiered later this year.
Long said Welcome Wagon will "factor into" Realtor.com, but the details of the relationship between the two entities won't be announced until later this year.
"We are making a strategic commitment to Welcome Wagon. We believe it offers a unique opportunity to deliver a post-mover media service in conjunction with the real estate professional service. (It's) a service that delivers economic benefit to the real estate professionals who want to maintain that relationship with post-movers," Long said.
Welcome Wagon generates about $40 million in annual revenue and operates in more than 500 markets throughout the country. But the company has had four owners in the last five years or so and in Long's view consequently has not been well managed. The company still operates fundamentally the same way that it has operated for decades.
The Homestore CEO last week told investors that the company has "focused heavily" on Welcome Wagon in the past year "to address a series of structural and operational challenges that contributed to unacceptable results in recent quarters."
Cost savings have been netted by switching from paper-bound monthly invoices to automatic credit-card charges, altering the printing process, cutting postage costs and setting up an incentive plan that gives sales reps more responsibility for collecting on overdue merchant accounts.
Long said Welcome Wagon still faces "several significant challenges," but is "on the right track." He said Homestore can "take much better advantage of the opportunity that Welcome Wagon represents in the post-mover media market."
Homestore executives have been tight lipped about the new Realtor.com that is expected to be unveiled around the time of the National Association of Realtors' convention in November. But the inclusion of Welcome Wagon in the plan presents some intriguing possibilities.
The original Welcome Wagon sent thousands of individual representatives into the homes of new homeowners armed with gifts and coupons from local merchants, who paid for the door-to-door "welcome" marketing effort.
One of the recent owners was Cendant Corp., which in 1999 let go most of the reps, who were knocking on the doors of no-one-at-home two-income and single homeowner households. Cendant the next year reinvigorated Welcome Wagon as part of its Move.com real estate Web portal, but then in February 2001 sold the whole works to Homestore.
WelcomeWagon.com today includes ZIP code-generated directories of local advertisers, complete with maps and online coupons and a function that enables new homeowners to request a free Welcome Wagon address book and coupons for neighborhood merchants.
Some Homestore watchers expected the company to dispose of Welcome Wagon earlier this year when Long was selling off assets to raise cash and refocus the company. But Homestore repeatedly declared that Welcome Wagon wasn't on the block. It now seems the potential synergy with Realtor.com may have been on Long's mind at that time.
Allan Merrill, EVP of Homestore's corporate development group, recently told Inman News that Homestore today may be in a position to acquire other companies.
"We're definitely not shopping, but what might surprise people is that we have the wherewithal to invest in the business. We don't have any plans to go on a buying binge, but we are in a growth business mode and we will be opportunistic," he said.
Copyright: Inman News Service