Emerging opportunities in 3D printing
Context's Chris Connery highlights a growing revenue stream for distributors
The channel is currently showing a great deal interest in the 3D printer market, and it is easy to see why. Total market printer shipments during the first half of 2017 increased by an impressive 38 per cent year-on-year, and the global market — including materials and services as well as printer hardware — is on track to be worth $5.6bn this year, an increase of 14 per cent from 2016. The entrance of new channel-centric manufacturers like HP has also done much to stimulate excitement among distributors. However, challenges remain — not least the fact that vertically focused, single-tier resellers still abound.
Why is the channel interested? To understand the 3D printer market, we must first differentiate between the personal/desktop space and industrial/professional category. Although a new professional sub-category recently identified by CONTEXT straddles the line between the two, covering products priced between $2,500 and $20,000, the categories are largely defined by small systems selling for less than $5,000 and large systems selling for more than $5K.
Channel interest in the 3D printer market was initially stimulated a couple of years ago, mostly by better-known vendors like Stratasys and 3D Systems who started playing in the desktop printer category. Interest fell away, and players became disillusioned, when these devices failed to lead to the development of a mass consumer market. With strategies realigned against this current reality, manufacturers began to discontinue or de-feature their desktop 3D printers in 2016. Nonetheless, the sector continued to soar, and new vendors entering the market thrived on sales of devices to hobbyists, educational institutions, engineers, architects, dentists and many other non-consumer markets. Many of the new brands had no experience of indirect distribution channels, favouring direct sales or single-tier distribution models.
Continued growth in this desktop printer space - unit shipments increased by 40% year-on-year in the first half of 2017 - means that distributors are showing renewed interest, especially as the smaller physical size of the products plays well into one of their key advantages: the ability to break bulk. XYZprinting, and some of the other "new" leaders in the global 3D desktop printing market, have recognised the logistical strength of the distribution channel (as well as its ability to take on financial risks of smaller resellers), but many other new vendors are still strangers to distributors - and vice versa.
HP now leads the way This mini-renaissance of channel interest is not confined to desktop printers but, this time, extends to the industrial/professional market, largely driven by the entry of HP into the space. The tech giant is working only in this category and brings with it a highly channel- and distributor-centric approach that others may want to mirror: HP has quickly risen into the top five in terms of global 3D printer revenues, highlighting the potential rewards on offer for rival manufacturers who follow suit and rely more heavily on the channel. The nature of this sector means that printers are larger and heavier and so what makes the channel attractive is not so much its logistical advantages but its reach. Manufacturers like HP also recognise the ability of distributors to take on the financial risks associated with smaller, disparate resellers. These factors make a compelling case for the use of this go-to-market strategy.
Distributors wanting to steal a march on their rivals would do well to start now by courting long-time top players, like EOS and EnvisionTEC, looking again at the markets(s) with long time players like Stratasys, and/or partnering with new players like Carbon, Formlabs, Markforged and others. It would also be worth paying attention to metal 3D printers: although this segment is dominated by "million-dollar machines", there are smaller, lower-priced models which could help drive sales.