For a long time, having the best supply chain was enough. This is how Walmart became the powerhouse retailer it is: by building the largest, broadest, most efficient system for moving products across the United States. Then along came advanced analytics, which allowed companies to determine what products to suggest next to the product you were already buying, or to provide add-ons that any specific buyer might want, such as free shipping or free bonus products. Amazon mastered this strategy.
Now those techniques have timed out, too. We already know that 3D printing and robotic manufacturing technology can overtake centralized production. But the difference here is that a single company might not emerge to capitalize on these technologies the way singular brands like Walmart and Amazon have in the past. Instead, we are now entering the primacy of design.
From a consumer perspective, this means more products to choose from at better prices, faster delivery, and with greater personalization. But from a retail perspective this is nothing short of revolutionary: the bottom is dropping out of the middle of retailers’ entire business—the part where they produce and provide customers with products.
3D printing, together with steady advances in robotics, is making it increasingly plausible to create smaller, more nimble production houses, which are more widely distributed closer to buyers. This shift in the distribution of manufacture means that those giant supply chains Walmart invested so heavily in are suddenly becoming obsolete.
Ponoko, a platform connecting 3D designs with shops to produce them, is a great example of this trend. By connecting a variety of design platforms with small manufacturers who have laser cutters and 3D printers, anyone can order a design from its catalogue and have it locally manufactured and delivered. All of a sudden, ordering a chair, a table, or a vital component for your stroller is as easy as hitting “buy.” This cuts shipping costs and labor costs as everyone in the distribution process makes more efficient choices. It’s a kind of inverse instance of the laws Ronald Coase described as part of his 1991 Nobel-prize winning work, which stated that large corporations exist to utilize advantages of scale in transaction costs.
The same effect is happening to the marketing side of retail, where word of mouth is replacing nearly every aspect of traditional advertising. Instead, individuals are relying more and more on each other to make purchasing decisions. The rise in ready-access communication platforms like Facebook and Twitter only aid in this. The result is that the primary value of a physical good increasingly lies in its design, which can now be infinitely represented and reproduced, instantly communicated, semi-automatically assembled … and shared between friends as easily as pictures of cats.
This has led to platforms like Thingiverse.com, which hosts a nearly-infinite array of 3D designs, most of which are freely available for download. With Thingiverse, almost any physical object you’re after can be freely modified, shipped, or manufactured according to your specifications. What’s more, because the designs are so readily available, you can use Ponoko or any local equivelent to produce it.
This gets much more exciting when you consider that improving machine vision and visual manipulation technologies means that increasingly you can rely on just a picture of a thing to convert it into a 3D design you can later produce. Like that chair you saw in the lobby of your hotel on vacation this spring? Take a snapshot, automatically convert it to a 3D model, tweak the color to match your curtains and have it delivered by the time you get home.
The upshot of this is the very beginning of exponential growth in which design creates rapid-adoption online meritocracies, with the most popular designs enjoying widespread appeal and ready mimicry. That’s actually a good thing as it will support the streamlining of a nascent 3D printing and robotics industry, which hasn’t yet found its Amazon or Walmart. Taken together, we may be looking at the start of a merit-based cycle in which production and distribution prices continue to go down, while at the same time the value of design continues to go up, spawning more competition and better products.