Successful resellers are always on the lookout for new product lines to complement their offerings and fuel growth. It’s not surprising, then, that many of them are partnering with 3D printer OEMs. Estimates for growth of the 3D market vary widely, but annual growth has been projected at 20% to 45% CAGR through 2020. That’s probably a little better than the hardcopy market is expected to do.
While 3D overlaps little with the 2D hardcopy business in terms of technology and consumables, the similarities in the way 3D systems are sold, supplied, and serviced make them a sensible option for 2D resellers. Also for that reason, some OEMs prefer partnering with 2D resellers. Resellers who work in both markets report that their customers like having a single provider.
That doesn’t mean it’s a slam-dunk for every 2D reseller, however. To understand why, let me give a quick overview of how the 3D market differs from hardcopy.
The most important difference is that 3D is not really about printing. It’s a manufacturing technology. In fact, you might see usage of the term “3D printing” fade in favor of its other more accurate name, “additive manufacturing.” It builds objects for a nearly limitless range of applications—casting molds, toys, engineering prototypes, replacement parts, fabrics, and tools to name a few. 3D printing is bringing manufacturing capability to everyone, just as personal computers and printers did for printing.
On the consumables side, you have to think in terms of bulk volume. Consumables are sold in many forms including filaments, powders, and resins. The material itself can be just about anything depending on the application. Plastic is by far the most common material, but also common are metal, wood/paper, ceramics, and gypsum.
Because of the volume, the cost of consumables will be a much higher expense for 3D customers than for 2D customers. According to data aggregated by Statista (www.statista.com), consumables accounted for nearly 40% of an estimated $4 billion spent on 3D printing in 2014, more than on 3D printers (35.5%) or maintenance and services (25%).
Because 3D is a manufacturing technology, the people who buy and use it within an organization are probably not those to whom you sell 2D equipment. 3D printing is rarely used in actual production, so you are most likely to find 3D printers with design or engineering teams. These are the people who see 3D printing as a way to quickly put their ideas into physical form.
Another key difference is that the 3D market and technology are rapidly evolving. The market is highly competitive and the technology is much less mature than hardcopy. OEMs are competing on build speed, finish quality and cost, and we are seeing each new generation of products eclipsing the previous in one or more of these areas.
Adding to the complexity that rapid change brings are the options for software and hardware that might be required. Most traditional CAD packages can produce files that a 3D printer understands, for example, but they typically must be processed further using splicing software that enables an object to be built in layers.
To make copies of an existing object, you need a 3D scanner, which come in a number of sizes and formats. Nearly all have a turntable that rotates the object so it can be scanned as a 3D object.
These differences require hardcopy resellers to do their homework carefully before jumping into 3D. By homework, I mean you have to understand not just the 3D market and technology, but how well your own assets position you for the 3D market. You might find that you have little leverage in the 3D space.
Below I’ve outlined attributes you should have before leaping into the 3D space as well as challenges for which you need to prepare.
Customer Base
The first place to look when considering the 3D market is your current customer base. Are the industries that are most likely to use 3D printers well represented? Many schools with STEM (Science, Technology, Engineering, and Math) programs are incorporating 3D printers into their curriculum, and this is currently a hot area. Manufacturing has long been using 3D printers for rapid modeling, and now some are starting to use the technology in production as well. Architectural/engineering/design firms are starting to rely on 3D printing to produce scale models or proofs of concept. Dental and healthcare are also emerging as markets for 3D. The dental market for 3D alone is expected to reach $3.1 billion by 2020 according to SmarTech.
Market size projection by industry through 2023 Source: SmarTech Markets Publishing (www.smarttechpublishing.com)
OEMs of 3D systems typically look for resellers who have existing relationships with one or more of these verticals. It’s not just about having a foot in the door; it’s also about understanding the customers’ business. You will have a steep learning curve if you are not already selling into verticals that use 3D.
It’s worth repeating that even though you might already sell into the right verticals, you probably do not know the decision makers for 3D at those customers. Hardcopy sales tend to happen through IT or the CIO’s office. An engineering or design department often makes the purchase decisions for 3D. You will have to leverage your existing contacts within your existing customers to find the best contacts for 3D sales.
Target Market
Once you’ve assessed your customer base, you need to decide which 3D market segment makes sense for you. This is important, because it will determine the financial investment you will need to make. Commercial 3D systems range from as little as a few thousand dollars at the low end to $500K or more at the high end. If your customers are on the high end of the market, then the investment you will need to make in 3D will be much higher and it will take longer to turn a profit.
At the low end, the investment can be as small as $10,000 (excluding overhead expenses such as additional staff). Here, your customers are likely to be schools, architects, engineers, and small manufacturers. It’s not unusual for resellers to see a profit within the first year at the low end. Large manufacturers make up the bulk of the high end, where your initial investment could be $100 thousand or more.
The make-up of your customer base and local industry will tell you where you need to be. If you sell to schools or small firms, then low-end desktop models are probably what you should be selling. A large manufacturing base means a bigger investment and a little research to match performance, materials, and quality requirements with the right equipment provider.
Service and Support
Most of the 3D OEMs are young companies, and their service and support capabilities have not matured to those of, say, a Hewlett-Packard or Konica-Minolta in the hardcopy world. Whereas those vendors might respond to a factory service request within 24 hours, a 3D OEM might take 48 hours or longer. And as I noted earlier, support and maintenance represents a significant portion of total revenue (25%).
So, you should be prepared to provide good service and support if you believe it’s necessary to meet the expectations of your customer base. Service technicians who have worked with printers, copiers, or other office equipment can easily pick up skills needed to service 3D printers. Many OEMs provide service training to resellers, and in larger markets, you can hire people with 3D service experience from the local talent pool.
Training
Your customers’ learning curve for 3D systems will be significantly steeper than for your typical office printer or copier. They might be unsure of how they might apply 3D printing in their business and may be confused by the range of options. Making a 3D sale often depends on instilling a sense of confidence in the customer that the technology fits with their business and they can use it effectively. This is why many 3D resellers offer training to their customers.
That training can take several forms including classes at your site or theirs, one-on-one training, or downloadable or streaming training videos. The better 3D OEMs will provide support to help resellers set up training programs.
Prototyping and Samples
Customers will want to see a proof of concept before committing to a purchase. For this reason, it’s not unusual for a reseller to offer prototyping services using the 3D equipment they sell. This allows the prospect to see exactly what output to expect before making a purchase.
Prototyping/modeling fees for common projects Source: 3D Hubs (www.3dhubs.com)
A prototype service requires overhead in terms of materials, equipment, and staff time, but it has several advantages in addition to showing off the capabilities of your offerings to your prospects. It is a revenue stream. Fees for prototyping projects range from $20 to $60 or more depending on the complexity of the project and materials required.
Perhaps the most important benefit is that it will help build a sales pipeline. Not everyone who uses the prototyping service will be a prospect because they don’t have the volume of work to justify the expense or they don’t yet understand what the technology can do. As they grow and learn more about 3D, some users of your prototyping service will want 3D systems of their own.
If you don’t want to offer full prototyping services, then you will need the capability to produce samples to help close sales. The overhead will be small—mainly time, materials, and having a machine available to create the samples—but you should factor this into the cost of sale.
Technical and Domain Expertise
As I said earlier, the 3D market is changing rapidly. Many of the OEMs you could partner with today might not be around in a few years because they misjudged the market or simply failed to keep pace. You want to place your bet on the OEM that has the right technology for your customers today and a product roadmap to meet their future needs.
The best way to hedge that bet is to become an expert on the technology and how your target industries use that technology, before you go shopping for an OEM partner. This will allow you to ask informed questions and uncover weaknesses in the OEMs’ offerings.
Reasons why companies invest in 3D printing Source: Gartner (www.gartner.com)
Ability to Be Patient
Most of the established hardcopy vendors are a year or more from introducing their own 3D printers. Early adopters of 3D technology have mostly made their big purchases. Big OEMs like Stratasys already have established reseller networks and are taking on few new resellers.
My point here is that you should not jump into the 3D printing market if you expect a big pay-off quickly. The value of getting in now is to establish yourself with an OEM built for the future so that you are well positioned for the market explosion that many analysts (this one included) expect to happen.
Here’s why I think that explosion will happen. First, the big brands from the 2D world are either just entering the market or will do so within a year. That will further validate the market once they unleash the power of their channel, sales, and marketing machines. The rising tide will lift all boats.
Second, improvements in technology will dramatically boost performance and quality to new levels within the next couple of years. Those improvements will make 3D printing competitive with or better than existing manufacturing methods for applications where 3D is currently little used.
Finally, there is always a lag time between a technology’s readiness for a market and the market’s readiness for it. As companies and professionals learn more about what 3D printing is and what it can do, adoption rates will rise significantly.
