No One is Going to 'Win' Parking
'Winner takes all.'
In the economic sense, it’s when one business manages to capture nearly all of the revenue in a particular market. Think of a sports franchise that’s limited to one per city or a blockbuster tentpole that earns more money than the next ten films combined.
The term is increasingly relevant in our tech-soaked economy, which is dominated by companies that leverage network effects (and enormous rounds of fundraising) to maintain market share, freeze out the competition and stay on top.
In these markets, it’s highly lucrative to be the winner. But it’s exceedingly rare. Few industries have a clear winner - or at least a clear winner that manages to maintain its top spot over the long term. Parking is one of those industries. It’s just not going to be an industry that’s dominated from gate to garage by just one or two firms. We, as an industry, must recognize this fact and learn how to use that structural reality to our advantage.
Fragmentation, siloed data, and low switching costs.
Parking is a very fragmented industry, both within the geographic reach of parking providers and within the industry itself. Think about it: the parking industry has four core components:
Parking Aggregators. These are the B2C platforms that pull together parking from third parties in a single interface. (You've probably heard of Spot Hero, Parkwhiz, Parkopedia and others.)
Parking Management companies. These are the companies that own and operate a portfolio of parking lots, dealing with day-to-day operations.
Self-management. Then some self-manage their own parking portfolios. Think of the universities, cities, and other entities that take care of their own parking operations, mostly without assistance from third parties.
In addition to the parking industry’s inherent structure, two other factors prevent a 'winner takes all' scenario.
First, data is siloed among the four sub-sectors of the industry. As we’ve all witnessed firsthand, companies that operate in a winner takes all market often have access to reams of data. These insights can then be used to optimize revenues and further prevent new entrants from gaining a toehold.
Second, there are no switching costs or lock-ins that prevent users from choosing another parking provider. That’s perhaps one of the biggest reasons why parking won’t ever be winner takes all: drivers will always have a choice on where to park. Even if massive consolidation across geographies created just a few vertically integrated parking operators, there would still be plenty of parking.
So, without a 'winner takes all' dynamic, where does that leave the industry?
How to win in parking.
'Co-opetition' is just a fancy way of saying frenemies. The idea is that two companies that compete in certain domains may find more value in forming a strategic alliance. In the right situations, the sum is indeed greater than its parts.
But, when misguided, co-opetition actually benefits one party more than the other - and can ultimately backfire, pushing one business ahead of another.
What’s really at stake here is the ability to know the difference between collaborative competition and straight-up competition. Resilient organizations must figure out how to be flexible enough to understand when competition is truly competition and when the competition may actually be the best partner.
With such widespread fragmentations, the parking industry is likely going to continue to see consolidation. Economies of scale are powerful, especially at the local and regional levels.
So we’ll see fewer local small operators or see them specializing and providing a smaller amount of what they do now within the stack. And we’ll also see situations where players in the technology and management space crossover and provide cross-functionality, with technology chops to be a value-added parking partner.
This evolution means that many of us are going to be frenemies. We’re going to need to recognize when we’re better solo or when we can add value by working together. It’s in this spirit of co-opetition that we’ll find not only growth but a dramatically improved parking industry that puts our customers and clients at the center of everything we do.