The difficulty of selling new homes remains Shell's pain point, and as the company's core business, Shell is still striving to find the optimal solution.

Author/DeepSea

Produced by/Xinzhai Business Review

Not long ago, Shell, the first Chinese residential service platform, released its financial results for the fourth quarter and full year of 2023. From the data, it is a decent performance.

The financial report showed that in 2023, Shell's total transaction volume reached 3.14 trillion yuan, up 20.4% year-on-year; net income was 77.8 billion yuan, a year-on-year increase of 28.2%; net profit was 5.89 billion yuan, and adjusted net profit was 9.798 billion yuan.

Source: Shell's official WeChat

Specifically in terms of business, Shell's revenue comes from four major segments: existing homes (second-hand homes), new homes, home decoration and furnishings, and emerging businesses, accounting for 36%, 39%, 14%, and 11% respectively. All four businesses achieved growth during the reporting period.

The four businesses play different roles within the company.

Existing home business and new home business are Shell's core business, collectively referred to as real estate brokerage business. The combined revenue of the two major businesses was 58.5 billion yuan, accounting for 75% of total revenue. Driven by the real estate brokerage business, Shell's total transaction volume reached 3.14 trillion yuan, up 20.4% year-on-year, driving the company's revenue growth.

However, the real estate market has not been robust in the past two years, and Shell's new home business, as its core, has performed poorly. After taking a series of measures, its revenue still only achieved single-digit growth.

Home decoration and furnishing, as well as emerging businesses, are seen as the second growth curve by the company. The revenue growth of these two businesses is rapid, and there is significant market space in the future, especially home decoration and furnishing. But currently, they still cannot be the backbone of Shell, with a combined revenue share of only 25%.

The sluggish growth of the new home business, along with the developing stage of home decoration and emerging businesses, has become a difficult challenge for Shell.

I. "One Body, Three Wings," with Mixed Results

In July 2023, Shell launched a strategic upgrade of "One Body, Three Wings." "One Body" refers to real estate brokerage, while "Three Wings" refer to holistic decoration, affordable housing (rentals), and Beihaojia (real estate development), emphasizing "efficiency" and "quality" as the strategic core.

From Shell's financial results, the development of "One Body, Three Wings" varies. Over the past year, the real estate brokerage business, known as "One Body," has faced pressure in terms of growth, mainly due to the difficulty of selling new homes.

In 2023, the transaction volume of existing homes was 2.028 trillion yuan, an increase of 28.6% year-on-year, while the transaction volume of new homes was 1.003 trillion yuan, with a year-on-year increase of only 6.7%. This led to Shell's new home business revenue of only 30.6 billion yuan, a year-on-year increase of only 6.7%; while existing home business revenue was 28 billion yuan, an increase of 15.9% to 28 billion yuan.

From the current market environment, existing homes have a