3D Printing Retail Investing
Is UPS The Next Kinko's?
What you're going to learn about below may quite possibly be the single greatest catalyst to materialize the commercial 3D printing industry.
Earlier this week, we learned that the United Parcel Service (NYSE: UPS) has selected 3D printing company Stratasys (NASDAQ: SSYS) for a pilot program that could potentially bring industrial-quality printers to a UPS Store near you.
The program is aimed at making 3D printing available to small businesses, retail customers, and entrepreneurs. And while this is just a test program, it represents a truly monumental shift in the 3D printing industry – UPS is the first national retailer to make industrial-quality 3D printing accessible to the public.
Commercial retailers Staples Inc. (NASDAQ: SPLS) and Amazon (NASDAQ: AMZN) have already begun selling consumer-grade 3D printers, but these models are effectively the Matchbox cars of the 3D printing industry. At their current stage, consumer level 3D printers are not much more than toys reserved for enthusiastic techies.
The fact is, consumer-grade 3D printing will always lag behind industrial 3D printing in terms of quality. In-home printers will always be slower, smaller, and less reliable than their bigger siblings. And, as is the case with any other industry, the higher quality product will be reserved for entities with the most capital.
UPS will be rolling out Stratasys's uPrint Plus SE in 6 pilot locations, starting in San Diego. The product currently runs for about $18,900, a price tag that any small business or basic consumer would want to avoid.
Additionally, these printers are fairly large and would not have a place in the average home:
The ability to rent out higher grade 3D printers to small businesses and retail customers finally provides a practical use for the technology outside of the industrial sector. And what is happening here with UPS and Stratasys is drastically similar to what happened with the commercialization of standard 2D printing.
Well before we had our own personal printers, the printing press was operated on an industrial scale. There were printing houses with large and expensive machines that needed to be run by experts such as master-printers, pressmen, and compositors. It took about 200 years before 2D printing and photocopying finally became accessible to the public. And before we received efficient 2D printers and copiers in our homes, we had to travel to a retail store for our basic printing needs.
You no doubt remember Kinko's, which was acquired by FedEx Corp (NYSE:FDX) in 2004. And while the name has been replaced with "FedEx Office", Kinko's will forever be known to us as that place where we made our copies.
At a time when a basic inkjet printer cost several hundred dollars, took 45 seconds to complete a single page, and paper-jammed every other print, Kinko's offered a highly valued service. Right now, UPS is the first in line to offer that kind of service for 3D printing, and if this pilot program takes off, Stratasys is going to get a major revenue bump.
There are currently 4,700 UPS Store locations in the U.S., Puerto Rico, and North America. If each of these stores were to adopt just one uPrint Plus SE, Stratasys would be looking at $88.83 million in revenue.
Now, there are plenty of investors who are afraid 3D printing is in a bubble right now, and frankly, I can't blame them. The fact is, the recent rate of increase in the valuation of 3D printing companies is simply not sustainable forever. And while we may not have hit the ceiling just yet, the 5,634 percent gains that were brought directly through major 3D printing companies are well behind us.
At this point, the most profitable opportunities for 3D printing investing are far more obscure than they once were, which is why we are currently digging very deep to pin down several back door plays to this booming industry. I already have a few key companies in my sights, but you'll have to stay tuned a little longer before I am ready to talk about those.
For now, it is definitely worth keeping an eye on UPS's pilot program. If demand proves high enough, this could be a great source of recurring income for the package delivery company.
Turning progress to profits,
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