SouFun's coupon business is still growing YoY while its new direct sales business is growing much faster. For earnings contribution, however, the take rate of the coupon business model is stable at around 50%. For the direct sales model, the commission rate has been steady at 2%, but SouFun still needs to pay out to third-party cooperators or end customers to attract more transactions. The rebate to end customers is now around 60% (vs. 80% in 2014) for internally generated transactions. For transactions generated by third-party partners, SouFun normally pays out 80% of the revenue to them in order to retain and attract new users. Management believes that competition from new business models such as Fang Duo Duo is likely to continue and the competition is not likely to stop any time soon
In the secondary transaction model, SouFun is making good progress by charging a lower commission rate (0.5%) than traditional offline agents (~2.5%). Management expects to keep the 0.5% commission rate in the next two years. Traditionally the lack of available-for-sale secondary property information has been a weakness for SouFun. However, now SouFun has over 600K unique and real available-for-sale secondary property information points. Home owners in Beijing actually add 5,000 new secondary property information points to SouFun?s database on a daily basis. As such, SouFun can utilize this database for both internal sales people and
franchisees.
