Walmart has it down to a science. You can get your oil changed while you shop for an iPad and bananas. Kmart and Sears thought they had it down pat too. Have you been in a location of either of those stores recently and not felt like you were taken back to WWII Berlin as their model continues to evaporate? For those of us that remember Woolworths and their gradual decline may not be aware that they are now Foot Locker. They revitalized because they specialized.
Even the big players online, outside of automotive, don't diversify well. How many shuttered Google products are there? Google Wave, Google Video, Google Knol, iGoogle, Google Reader, Keyword Tool and many more. Why did they stop supporting these services? Because they took away from their core business and revenue model and they were a drain on recourses.
Trying to be all things to everyone does not allow you to do any one thing really well. The only perceived advantage you have is you're able to compete on price (although there's not really any savings in the automotive space) thus causing you to ignore important things like value, customer service and innovation.
When you fragment resources to serve the masses you wind up with mediocrity and layers that don't serve the company that created or the customers using them them well. You can't evolve to better meet the demand of the market. Bigger is not always better it is the antithesis.
In automotive the move to "one stop" solutions is creating an environment where dealers cannot differentiate from their competitors. OEM deals with technology providers really doesn't help dealers; it provides oversight and Tier One brand alignment. It doesn't allow dealers to establish their own identity and process to aid them in outpacing the same brand competitor down the road. They could care less which dealer sells their brand as long as it's their brand being sold.
Diversity is awesome in certain academic arenas and your stock portfolio as it creates well rounded people and investments. Serving the masses is a great way to profit if you don't have to provide excellence. Providing value and innovation requires dedication and singleness of purpose, you can't get that from one size fits all.
If you have a website, SEO services, SEM services, inventory, DMS and CRM all managed by one provider it makes accountings job easier (because it's so difficult to sign a check) and it's easier for the unmotivated and complacent individual who doesn't see the real value of each of the services but views them as "necessary evils." If the same provider does all the same things for the same brand dealer 20 miles away, who gets better service? What about the store across the street that's competing for the same customers? Is it the dealer that pays the most? Is it the one that signed up first? Who knows...
It makes the job tougher for the people who rely on these tools to make the dealership profitable when they have to sacrifice quality of services to be in the same bucket as everyone who uses the same provider. They don't get best in class at any level, they may get close on one but not all.
Real diversification comes from using providers that are not diversified and have a vested interest in providing best in class in the one thing they do extremely well.
Paul Rushing is the Search Marketing Manager for iMagicLab. He brings over 15 years of automotive experience to iMagicLab and stays ahead of the curve on search marketing and social media marketing.