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Impact on Retailers of a 3D Printing Revolution

Published June 17, 2016 in Technology - 0 Comments
Impact of 3D printing technology on retail

Introduction

3D printing is slowly but surely bringing about a quiet but dramatic revolution to retailing on our high streets.

I have 23 years retail experience and for the last three of those sat on the Board of a £1.5billion UK retailer with over 400 stores around the UK as the director for their digital presence.

For years, we've heard that the internet would sound the death knell for the retail shop as we’ve known it for decades but I believe this was only half true.

In the internet world, we still need the physical presence of the products we want to buy so that we can go and see just how big they are, what exactly the colour is and whether they feel right for us.

Imagine a world though where, in the comfort of your own living room, pretty much instantaneously and for fractions of a penny you could mock up a full-size replica of the product you wanted to buy and, if you are happy with it, you can then go ahead and download the detailed file (for a price) and have it printed whilst you work / work out / cook / watch tv / play with the kids / etc?

This truth is partly here, but the full reality of it is heading our way... and fast.

The compelling question then becomes, just what is the role of a retail store or brand, if you can order the digital file and print the product in your own home straight from the designer.

In the rest of this article, I’m going to examine exactly what that answer could be.

3D Printing History

3D printing has had a short but dramatic history since it began in the 1980s, as this very helpful timeline from ZDnet shows.

Originally the concept began as a rapid prototyping technology, designed by Charles ‘Chuck’ Hull in 1983. He also designed the files which allow the design software (e.g. CAD) to talk to the 3D printing hardware. These .sti files are still in use today for commercial 3D printing.

Since then 3D printing has moved on at pace, you have probably heard about printed body parts, aeroplane parts 3D printed and even NASA printing tools for the international space station.

These are all fascinating examples of power 3D printing has to change the world we know, but they are distant from us as consumers and so I have been more interested to know what the 3D printed world looks like for the average man on the street today.

3D Printing at Home - Today

There are two types of 3D printer available today: Fused Filament Manufacturing (FFM), which takes a coil of plastic, feeds it through a nozzle and the nozzle both melts the plastic and ‘draws’ with it in 3D space to make a model.

This is the simpler and so cheaper technology but does have limitations on size and accuracy.

The alternative method is Stereo Lithography (SLA) which uses a resin as the source of the model which is solidified by an ultraviolet laser shining on it.

Both types of printer are readily available from traditional retailers such as Maplin as well (of course) from Amazon.

At the time of writing, an FFM model is already available for below $300, readily in the reach of a typical mid-earning household.

Whilst affordable and fun, the technology still has many limitations:

  • ​Speed - it takes far too long (think hours/days) in a consumer market to produce even small artefacts
  • Material - Today’s printers typically only work with one material. Period. Where the tech does allow multiple materials, they are generally not interchangeable within the same piece.
  • Colour - Printers are available today that can print in multiple colours, but like the material above, they are one at a time.
  • Size - Printers have a very small cubic size meaning only small pieces can be printed

Whilst there is potential, today’s variants are certainly not disruptive technology.

3D printing is not unheard of in retail - there are a number of examples where it is being trialled - but it is in moving to the consumer market where that may prove to be most interesting.​

The Future of 3D Printing

3D Printing tech is moving on rapidly, and all of the listed limitations are being improved upon.

Take speed first.

This video from a TedX talk last year readily shows how the speed and accuracy of the SLA method is progressing.

This report from PWC highlights the challenges around using multiple materials, and how the way to get around that may be to rely more on the FFM method and have different printheads for different materials working in concert with each other on the same piece.

The challenge of colours is, in many respects, one also of materials, and is already being dealt with, as you can see with this piece of technology (called ‘the palette’) which enables a standard FFM printer to deliver multiple colours in the same piece.

Finally, printer sizes are increasing, but so does the cost and until the technology changes from cartesian to delta positioning there will continue to be natural limitations as to what we’d find acceptable to have in the home.

And, whilst I haven’t really touched on cost as an issue, the rule of thumb with all technology which improves to the point of being desirable to the average person (rather than just hobbyists or the bleeding-edge tech fans), the price of a unit will inevitably fall substantially with time.

A Thought Experiment for Retailers

Let’s play a game of ‘what if’.

What if the major problems of today’s 3D printing are solved?

What if 3D printers were quick, accurate, multi-material and multi-coloured?

What if they compacted down when not in use, but could scale up to print a dining chair, spade or dog basket when needed.

What if they became so cheap that as many of us have a 3D printer at home as have a microwave, TV or mobile phone?

Finally, what if we all carry an app on our phones and smart TVs that make downloading a 3D printing scheme as easy as a fingerprint on an Apple Pay button?

If all of those things are true - and there’s no reason to suppose they won’t be by 2025 - what does that mean for the current retail landscape?

Positive Impacts of 3D Printing on Retail

Holding stock in multiple locations is perhaps the most expensive thing that a retail business has to pay for.

The cost of goods themselves, transporting them between distribution centres, shops and customers, and paying rent for big boxes to hold them in easily outweigh the costs of staff and other overheads.

The positive side then of 3D printing (and I’m assuming here that a retailer will have a bigger, better quality and faster printer than you do at home) is that retailers will not have to hold as much stock - which is a win for working capital investments and shop rents.

And, if they’re not holding the stock, they no longer need to transport it from one location to another, so they win on logistics costs too (and the planet and other road users benefit from substantially less fleet on the road).

Instead, the retail offer becomes one of genuine showrooming - a gallery of goods for sale, which can be browsed at your leisure and purchased to print in store for taking home, or downloaded to your device of choice for printing out at home later.

The result: significantly lower operating costs, higher profit margins - or lower retail prices - and much calmer, more relaxed shopping environments.

Great - so retailers should be pushing hard for the 3D revolution then?

Well, no.

None of them will be.

For whilst all of these positive results from the ‘what if’ scenario may be accurate, they entirely miss the point of the true impact on a retail business of a 3D printing revolution.

Negative Impacts of 3D Printing on Retail

The retail industry exists to consolidate products from many different manufacturers into one location that a consumer can rely upon to visit and source the thing they are looking for.

The range of products sold becomes edited so that, as shoppers, we know where to go to buy clothes, baked beans, lawn mowers and pencils.

It also works for product manufacturers as a system because they can’t afford the processes needed to sell individual units to individual people. It makes much more commercial sense to sell great volumes a single product to a retailer and let them take the strain of distributing it to the public at large.

In a world where bringing a physical product from the place of manufacture the hands of a buyer is hard, this setup makes perfect sense.

Online Disruption of the Retail Model

Online retailing has been disrupting this model to a degree for some years now.

Amazon is the global superstar in removing the bit of the process where you as a shopper have to go to a physical building to get the thing you want to buy.

Instead, you select the thing you want to buy from a screen, pay for it on a screen, and they figure out the process of getting the thing you bought into your hands.

But this still involves moving lots of products expensively around the country using very expensive, sophisticated supply chains.

And the truth is, we still like to see and touch things before we buy them and we love the instant gratification of having our hands on the product we just bought as soon as money has changed hands.

Amazon (and plenty of traditional retailers) are making great strides in reducing the time between purchase and receipt, but it will likely never be enough to stop shopping being a physical activity.

Manufacturers themselves are using online to disrupt the retail model.

If we can order a pair of Nike trainers by clicking a button Amazon, Nike figured we can do the same by clicking a button on their own website.

They can also offer levels of personalisation that can’t be bought through Amazon and, perhaps the biggest benefit of this model, the manufacturer owns the direct customer data which they will never do when a third party is dealing with their customer.

Online + 3D Printing = An End to the Current Retail Model

Returning to our ‘what if’ game.

We have an even more evolved online retail space and we’ve just added to that mix the ability to get the product made in your home the very second you press ‘purchase’.

Let’s add one more ‘what if’ to see where that takes us:

What if Amazon et al allowed you to print a grey version of the product for free, so you could get a feel for its size and dimensions before buying the real thing?

Where does that leave the current retail model?

If anyone can get a product file shipped to your home digitally, instantaneously and for free (grey version), then what - frankly - is the point of a retail shop?

You see, I would argue that the impact of this combination of online shopping and 3D printing is so fundamental that it will actually sound the death knell for many retail shops and, consequently their retail owners.

From the manufacturers perspective, there is no longer a need for the middle man (or materials, or logistics - they become R&D specialists, but that’s an article on its own) it’s better for them to sell the 3D printing file direct to the consumer.

For the consumer, there’s no longer a need to visit a shop - the goods can be with them as quickly as paying for them with no need to make the expensive and crowded journey to Main Street for the privilege.

So with traditional shops losing badly in this scenario, who are the winners in this 3D shopping world?

Who Wins in a 3D Printed World?

I think it is essential to be clear at this point: I am not saying shopping is dead.

Consumerism is alive and well and is definitely not going to end just because of printing technology.

There are three groups of winners I can see from this world.

Winner #1 - Market Places

The reality (probably) is that we still want collators and curators of product types - if I’m looking to buy a new door handle, I’m going to go to a marketplace for door handles rather than spend hours trawling every solitary, niche producer of door handles.

So perhaps it’s the market places like Etsy that succeed in the future; certainly there is space for Amazon and more niche marketplaces.

But, and this is significant, there is only a need for so many marketplaces, and that number is not huge.

There is no differentiation between one marketplace selling a manufacturer's product and another marketplace selling that same product. If I’m buying it and printing it at home, the only thing I’m interested in is cost and low cost means low margin; the only way to make that model work well is volume - which means a huge marketplace.

Winner #2 - Quality Own Brand Producers

Assuming today’s high street retailers have already missed the boat for forming a market, this is the first of two places they can win in the ‘what if’ future we’ve imagined.

They have to become designers of great products which they intellectually own.

Sure, they could then sell them in the marketplace, but with a big enough base of such products, they become an exclusive ‘go to’ place in their own right.

It’s easy to imagine a gardening manufacturer that produces the most desirable garden tools - outdoing anything available on Amazon or Etsy for the price and design. That is a market that can be won.

Winner #3 - Movements that sell

Traditional retailers can also win by creating movements that sell.

This demands the biggest shift away from the traditional role of a retailer as just someone that sells stuff.

This is doing well what the smartest retailers should be doing in today’ internet-enabled world anyway: forming relationships with their consumers through adding value to their lives.

Sticking with the gardening example: in the future where physical shops full of physical products just add no value, what’s needed is for the retailer to be where the shoppers already are.

If you want gardeners to buy from you, you need gardeners to trust that you know what you’re talking about and value the help you provide them in their world of gardening.

If you have a relationship where gardeners are coming to your digital properties regularly (website, social channels, ebooks, etc) to hear what you have to say, then you can be sure when they need to buy a spade, they’d rather buy yours than your competitors!

Does Anything Really Change?

We’ve seen that 3D printing has the potential to be an incredibly disruptive technology in the retail world, especially if it delivers on the promises of flexibility and versatility.

The fundamental change to our retail model is inescapable, we just will not visit stores to buy goods anymore, and manufacturers can be incredibly selective about the marketplaces they sell through or even sell direct.

What falls out of this new world order is one very clear loser: retail shops and those retailers who refuse to see that their world is (already) something greater than that.

But there are three very clear winners: online marketplaces, brands that stand for great quality, unique products and retailers who understand that the only way they will make a sale in the future (especially if they don’t fall into the first two groups) is by being very clear about who they are for and then relentlessly striving to add value to those people without constantly seeking financial reward.

In that last respect, arguably, nothing has changed from today.

The winning retailers in 2016 will be those that realise the days of big box retailing chasing lower prices on branded fast moving consumer goods are rapidly coming to an end.

A retailer’s choices are: i) become a huge marketplace with massive appeal,ii) produce amazing, unique products or iii) be the ‘go to’ place for ‘your people’... or iv) Die!

The only thing 3D printing truly brings is a speedier route to death for those that ignore the warning signs all around them.


If you enjoyed reading this and would like me to research and write something similar for your business, then please reach out to me at: Adam@AdamKirkWriter.com

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