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3D Printing's New Best Friends: Wal-Mart and Amazon

20 June 2014 in Trading Ideas

As lesser-known 3D printing companies battle for market share supremacy, it may be household regulars Wal-Mart and Amazon that ultimately delivers the sector a much needed boost in the fledgling consumer market.

Analysts at Pacific Crest Securities recently reported that both retailers have pilot programs in place involving 3D printing objects.1

“We see the entrance of retail giants into 3-D printing as positive,” Pacific Crest analyst Weston Twigg said in a note earlier this month. “If large retailers embrace it, printer sales and materials usage should increase and awareness improve, benefitting companies like 3D Systems and Stratasys.”

 

Those two companies happen to make up 28%, in weighting, of the 3D Printing motif, which has gained 10% in the past month and 16.6% over the past 12 months.

The S&P 500, in those same time frames, is up 4% and 21%, respectively.

In March, Amazon launched a pilot program to allow service providers to sell 3D-printed objects on its website. Last October, Wal-Mart started its own pilot test, offering 3D imaging and printing-services programs. The two programs lay a foundation for future growth, according to Twigg.

“Over the next few years, we anticipate that retail giants like Amazon and Wal-Mart could begin to drive an evolution in 3-D printing by adopting the technology to print low-value or hard-to-find parts on demand, expanding on current service-bureau platforms,” Twigg said.

“We also envision a scenario where consumers may be able to download printable files to print their own parts. Imagine printing an oven knob replacement at a local FedEx using a file that was downloaded from Amazon.”

Twigg projected that the 3D printing-services market could reach $7 billion by 2019 “with upside possible if large retailers embrace the technology,” he said. The services market is expected to generate $2 billion in revenue this year, with industrial customers making up 80% of sales.

That opportunity, however, could be two-to-three years down the road, or more, Twigg wrote, and in the near term, some established 3D printer makers will likely face headwinds from new, low-cost entrants in the market and lower operating profit margins.

1Patrick Seitz, “3D printer sales could get boost from Amazon, Wal-Mart,” investors.com, June 4, 2014, http://news.investors.com/technology-click/060414-703361-3d-systems-stratasys-could-benefit-from-amzn-wmt-programs.htm, (accessed June 18, 2014).

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