OEM Executive’s Advice for Breaking in as 3D Reseller

Lower margins, mediocre support from OEMs, a rapidly changing market, and a confused and uncertain customer base—that’s the current state of the 3D printing reseller channel. Such a scenario is enough to scare away most 2D hardcopy resellers, but maybe those challenges mean it’s the right time to enter the 3D market.

While it seems more logical to wait until these issues sort themselves out, establishing yourself early as a 3D reseller could be a competitive advantage once the market matures. That is, if you take a smart and well-planned approach that includes researching the market and OEMs.

You also should be prepared to ask pointed questions about how prospective OEM partners plan to support you. “[3D OEMs] don’t understand the value of the reseller channel,” says Mark Mathews, president of Airwolf 3D. “They are still learning how to leverage and support resellers.” 3D OEMs as a group are still young companies, he adds, which means they are more cash-flow sensitive and don’t have the financial resources that 2D vendors have.

Mr. Mathews came to Airwolf 3D, a three-year-old OEM of desktop 3D printers, from Toshiba where he was president and CEO of Toshiba America Business Solutions. Airwolf brought Mr. Mathews into the fold in part to build a reseller channel. When he arrived, Airwolf had two resellers, one of which had never placed an order for equipment. Now, Airwolf 3D has more than 50 resellers, 25 percent of which are outside the United States. That group is an eclectic mix that includes machining and tooling firms, pure-play 3D resellers, and office-equipment resellers.

Resellers of traditional hardcopy equipment looking to enter the 3D market have a number of advantages they can leverage with OEM vendors, says Mr. Mathews. First, they know their customer base. “If your customers are primarily in finance or legal, then it’s probably not a smart move,” he says. ”“But if you have a good base in education or manufacturing, then you probably have the connections [to sell 3D systems to those customers].”

The ability to provide training to those customers will also be a plus, and for all these reasons, Airwolf 3D usually prefers established resellers over what Mr. Mathews refers to as “start-up resellers.” “We have had much better success with established companies who have the customer base and infrastructure [sales and service]to sell,” he says. “The start-ups struggle with establishing a business while also learning the technology.”

Mr. Mathews believes that the expertise to sell, service, and train for 3D systems is readily available for hire in many areas. He notes that service techs in other fields are able to come up to speed quickly on 3D technology.

And for the desktop 3D market, the cost of entry can be low—as little as $10,000 assuming you have sales and support infrastructure in place. At the higher end such as in the industrial 3D market, the cost of entry is much more, as much as $100,000 according to Mr. Mathews. That’s manageable for larger resellers, but Mr. Mathews warns that the sales process is much more sophisticated and takes longer. It could take a year or two to be profitable, whereas on the lower end you could be seeing profits within a year.

Once a reseller decides to enter the 3D market, that company needs to take a hard look at what each OEM offers in terms of product and support. The technology is changing rapidly, and no reseller wants to be committed to a product line that is destined to be obsolete in a year. Mr. Mathews recommends looking for an OEM with a solid product roadmap. “A good company will have a product pipeline,” he says. “You want to avoid companies that are just out of Kickstarter.”

Other factors to consider:

• Service agreements: Mr. Mathews says there is a difference among OEMs in terms of how fast they respond to service calls on their equipment. It could be a couple of days before a customer sees a service tech. That’s a concern for resellers with limited ability to do service calls.
• Pricing history: Has the OEM been consistently holding prices/value, or is it dropping prices? A vendor that can maintain or raise prices successfully has products with a high perceived value in the market, and that helps with resellers’ margins.
• Leasing option: OEMs that offer a leasing option give the resellers’ customers one more way to acquire the product. It also removes customer concern over equipment obsolescence.

Perhaps the most important quality to look for in an OEM is a willingness to listen. Current 3D resellers often complain about margins and quality of support, and this is to be expected given the youth of the industry. There are OEMs that are actively working with resellers to improve the situation. “We try to always learn from our customers,” says Mr. Mathews. “My advice is to have a conversation with the OEM. This is the most effective way to better understand each other’s needs and how you can better work together.”

Michael Nadeau has made a career of explaining emerging technology to business and IT professionals. He is the founding publisher of Data Informed and a veteran editor and publisher of IT publications. Michael has held senior-level positions at BYTE magazine and IDG. He currently helps IT companies and publishers master content- and data-driven marketing and social media practices. You may contact Michael at menadeau99@gmail.com.