One-Stop-Shop: Definition, Example, History, Pros and Cons

What Is a One-Stop Shop?

A one-stop shop is a firm that offers a multitude of products or services to its customers, all under one roof, so to speak. A one-stop shop can refer to a literal roof—a specific physical location where all the business a client has can be carried out—or it can refer to a company that handles a variety of goods or services.

For example, a bank may be able to offer you not only accounts and loans, but also investment advice, in addition to investment vehicles (like Certificates of Deposit) and insurance policies. Compared to visiting a separate institution for each area of need, the one-stop shop saves the consumer a lot of time and effort.

The terms "full service," as in full-service broker, and "turnkey operation" is sometimes synonymous with the term "one-stop shop."

Understanding a One-Stop Shop

The concept of a one-stop shop dates back to early 20th-century America when a shopping trip could mean going all over town to pick up meat from the butchers, vegetables from the Haymarket, bread from the bakery—and that was just for foodstuffs. Hardware supplies, cleaning supplies, and other household items required even more visits to even more places.

Then, as now, people wanted to save time, so stores responded by stocking a wider range of products so that customers only had to come to their location to check off the majority of their shopping lists.

Piggly Wiggly, credited as being the first self-service grocery store, opened in 1916. The Great Atlantic & Pacific Tea Company, better known as A&P, became common in American cities in the 1920s. King Kullen opened a 6,000 square foot store in 1930—the first supermarket. Chain stores like Woolworth and J.C. Penney, which carried all sorts of articles of daily use, mushroomed as well.

The actual term "one-stop shop" may have first been in conjunction with businesses that did all the work for that new staple of American life, the car—from sales to repairs to parts. One such firm was the Western Auto Supply Co.

Eventually, the concept of the one-stop shop expanded over time to include business services. The nuance also shifted from a wide product offering to capture more of the customer's grocery purchase to one of offering all the complementary products and services to a client in a particular area. For example, the 1980s saw the rise of "financial supermarkets"—brokerages like Merrill Lynch that began expanding into retail banking, insurance products, credit cards, and even real-estate services.

The business strategy behind the modernized concept of a one-stop shop is to provide convenient and efficient service that will create the opportunity for the company to sell more to customers. This way a company can grow revenue by selling more to existing customers in addition to growth from new customers. 

Pros and Cons of a One-Stop Shop

There are some obvious advantages to a one-stop shop for consumers as well as the businesses operating them. As mentioned, convenience is a big one. If the firm who does your taxes can also help you with your estate planning and investing strategy, it saves you having to deal with multiple companies. From the firm's perspective, seeing all those aspects of your life also allows it to better tailor services in all areas to you. If the firm sees that your tax bill is going up, they can suggest strategies to minimize the taxes coming from your investments.

A high level of trust grows over time when a consumer uses a particular business more and builds a personal connection with it. There may be loyalty perks for the consumer, and the business gains a higher degree of confidence that the customer won't fly to another provider based on price alone.

The downside of the one-stop shop is embodied in the saying, "Jack of all trades, master of none." While various services and abilities offered at a single institution are probably competent, they may not be as expert or as inventive as those offered by professionals specializing in different fields of tax, law, or investing.

A client's options and choices may be limited not only to certain people—the firm's employees—but also to its proprietary products and services. Dealing with a one-stop shop may save money, thanks to the firm's economies of scale, but then again, it may not. The convenience of the one-stop usually comes with a cost.

From the shop's point of view, there are natural limitations on how many products and services one company can offer to a customer while maintaining superior quality. Some companies expand their suite of services too broadly, eroding the core services that made them outstanding to that customer in the first place.