As someone who studies new models that change the way we buy and sell houses, I'm naturally interested in the online agents in the U.K. Late last year, two raised significant money: eMoov raised £9 million in August and Yopa raised £27.6 million in September -- and it's having a noticeable effect on the market.

Mo Money Mo Listings

The charts below look at the total number of new listings for the top online agents, as recorded by Rightmove (and confirmed with data from Zoopla).

A few facts stand out:

• Purplebricks is very much in a dominant market position.
• Both Yopa and eMoov have seen strong gains, followed by Tepilo.
• HouseSimple is going backwards.

If we strip away Purplebricks' numbers for a moment, the "Battle of the Rest" becomes more clear.

Yopa and eMoov raised a lot of new capital and are deploying it in sustained marketing campaigns. While Tepilo hasn't raised money, it has significantly increased its marketing spend. And HouseSimple's new CEO pulled its marketing spend before a product relaunch.

The correlation here is clear: the more money spent on marketing, the more new listings. It's not rocket science, but that's the point with this model.

If we assume the inverse is also true (the less money spent on marketing, the fewer listings), it leads to a sobering conclusion: the various propositions are undifferentiated with little organic, word-of-mouth growth, or network effects. There are no repeat customers, and the models don't "pick up steam" with more people using them (think Uber or Airbnb).

Online agents -- like traditional real estate agencies and brokerages around the world -- are expensive businesses. Investors take note: there's no secret sauce in this model that changes that equation.

Market share winners and losers

While the online agents are clearly competing with each other, the real loser in this fight is the traditional estate agent. 

The chart below shows the top online agents (Purplebricks, Yopa, Tepilo, eMoov, and HouseSimple) gaining impressive new listing volumes (up 32% from January) while also growing their collective market share of the entire market. They're not taking market share from each other; they're taking it from the incumbents.

Overall new listings market share for the online agents is up from 5.7% in January to 7.1% in April. In that same period of time, the leader Purplebricks increased its market share from 4% to 4.5%.

The time period is small -- four months -- so take it with a grain of salt. Plus these figures are based on new listings, not sales. But the story is clear: the online agent market segment is growing.

Strategic implications

There are a few salient points to consider:

• Purplebricks is dominant. In April, it had 6.7 times the number of new listings of its nearest online competitor, and a massive 3.3 times the number of new listings of its top 4 online competitors combined.
• Relative to the point above, scale equals efficiency (and profits). The low-cost model only works at a certain scale. Purplebricks' lead means lower expenses on a per customer basis, likely making it the only profitable online agent.
• Money, money, money. If you want to compete in this space, you need to spend a lot on marketing. The various models are otherwise undifferentiated.
• The market is shifting. The online players are all gaining market share, and the loser is the traditional estate agent.

The race for second place is on, with several players raising and spending tens-of-millions of pounds in the market. And there is clearly room to grow market share at the expense of traditional agents. But can they make money, or is it an expensive race to the bottom?