Will 3D Printing Disrupt Ecommerce?
Invented in the mid-eighties, 3D printing was once restricted to the B-to-B market. Now as prices for 3D printers come down, the technology is making its way into the consumer arena. Wohlers Associates, a consulting firm that has followed the 3D printing industry for over 20 years, reports that the market for 3D printing, for all products and services worldwide, grew to $3.07 billion in 2013. The 2014 Wohlers Report estimates the compound annual growth rate for years 2011 to 2013 at 32.3 percent. Rapid product development at a low cost has made the technology popular in the automotive, aerospace, and medical device industries.
How Does 3D Printing Work?
The 3D printing process starts with a digital model of an object and creates a 3D solid object reproduction. A 3D printer uses rapid prototyping to create a geometric model using computer-aided design or modeling software. The solid object is created using layers of various materials such as plastic, metal, liquid, powder, or wood pulp that form a series of cross sections that become fused in the manufacturing process.
3D Printing and Ecommerce
As the price of 3D printers continues to fall, new opportunities are emerging, especially for ecommerce vendors. Several dedicated online stores sell 3D printers, materials, and finished products, while others see marketplaces for finished products as the best business model. Last year, eBay rolled out an iPhone application, eBay Exact, that allows customers to buy customizable printed merchandise from three 3D printing companies. Walmart also has a 3D printing service pilot program. Etsy has 13 pages of 3D-printed objects for sale.
Certainly the bigger ecommerce players are looking beyond just selling physical products, taking the 3D printing concept into the service arena. If successful, this approach could radically change ecommerce, with merchants selling designs that allow consumers to manufacture their own customized products.
Earlier this year, Amazon established a 3D product store with a partner, 3DLT, which now offers 73 products on Amazon — mostly jewelry and accessories for electronic goods. Amazon also sells 3D printers and supplies. While 3D printers used to cost several thousand dollars, several models now sell for under $600, making it feasible for people to buy them for home use. 3DLT is also a 3D printing template marketplace. It partners with independent designers who create the 3D printable files that 3DLT sells on its website to customers who download them and print products on their home 3D printers. For those without a home 3D printer, 3DLT has a partner network of over five hundred 3D retail printers where individuals can bring the files to be printed.
Several online marketplaces devoted exclusively to 3D printed goods (versus templates sold by 3DLT) also exist. Shapeways operates the world’s largest marketplace for 3D printed products. Designers, and hobbyists send their designs to Shapeways, which uses its in-house printers to create physical products. If the customer wishes to sell products in addition to creating just one, Shapeways adds the product to its online marketplace, where others can buy the goods. Shapeways handles payment processing and shipping.
A Disruptive Future?
3D printing technology poses both an opportunity and a threat to retailers because consumers may turn to DIY product manufacturing, especially for crafts and small replacement parts or hard to find items for products no longer manufactured. It can alter the supply side of ecommerce as well. Amazon and Walmart could reduce inventory by adopting the technology to print low-value or hard-to-find parts on demand. Walmart CEO Doug McMillon stated at the Code Conference in May that the company may acquire a 3D printing company and that Walmart was exploring using the technology to make replacement parts.
As for consumers, the current business model allows them to buy “off-the-shelf” 3D printed products from marketplaces or an individual with design expertise can send a design to a 3D printing service bureau and get a truly customized product back. Amazon may be contemplating something even more radical. The company, which is obsessed with shortening delivery time for products, even exploring delivery by drones, could move away from physical products and offer a service instead. After purchasing the necessary materials, customers could download a design file and manufacture their own products on their own home 3D printer (purchased from Amazon, presumably) within a few hours.
With this new model, the customer receives immediate gratification and Amazon, which is struggling with profitability, cuts back on warehouse and inventory costs. Some products may never lend themselves to 3D printing but plastic toys, jewelry, and small parts are a good fit for just-in-time, DIY manufacturing.
Any large-scale shift to DIY 3D printing would have consequences for other downstream players. Shipping companies such as FedEx and UPS could suffer a downturn in the number of packages they deliver, but they could easily set up their local offices as 3D printing hubs to counter revenue losses.
Implications for Ecommerce Merchants
3D printing offers ecommerce merchants an alternative to buying goods from manufacturers. For a fee or share of sales, designers are available to create templates for products. 3D-printed jewelry, for instance, has become a fashion trend. 3D printed goods can supplement or replace regular inventory. Merchants can differentiate themselves by offering unique products, usually at lower cost.
At some point merchants can sell designs to customers who are interested in DIY manufacturing, but until 3D printers are more commonplace in homes, selling actual products is likely a safer bet.