Retailing with 3D Printing

Abstract

Given the promise of three‐dimensional (3D) printing, also known as additive manufacturing, some innovative consumer goods companies have started to experiment with such a technology for on‐demand production. In this study, we consider two adoption cases of 3D printing in a dual‐channel (i.e., online and in‐store) retail setting, and evaluate its impact on a firm’s product offering, pricing, and inventory decisions. Our analysis uncovers the following effects of 3D printing. First, 3D printing at the factory has the substitution effect of technological innovation for online demands, as 3D printing replaces the traditional mode of production. Such technology substitution not only leads to increased product variety offered online, which allows the firm to charge a price premium for online customers, but also induces the firm to offer a smaller product variety and a reduced price in‐store. There is an additional environmental benefit when more customers are steered from the in‐store channel to the online channel. Second, when 3D printing is used in‐store as well, in addition to the substitution effect, the firm also achieves a structural effect due to the fundamental change in the supply chain structure. Since the in‐store demand is served in a build‐to‐order fashion, the firm achieves postponement benefits in inventory management. The environmental benefit is the most significant in this case. Moreover, using 3D printing in‐store will require a new supplier–retailer relationship. We find that cost‐sharing contracts can coordinate the supply chains where 3D printing is used in‐store and the supplier controls the raw material inventory.

How will artificial intelligence and Industry 4.0 emerging technologies transform operations management?

“…In most cases, the cost of 3D printers is still too high to adopt AM in demand locations such as stores; however, mass Production and Operations Management customization could occur in stores once this cost is low enough. Chen et al (2021) study scenarios in which both factories and stores utilize AM. They investigate the impact of AM on product offering, pricing, and inventory decisions under the two scenarios.…”

Customized Investment Decisions for New and Remanufactured Products Supply Chain Based on 3D Printing Technology

“…Sun et al (2020) analyzed the optimal pricing strategy for 3D printing platforms selling standard and customized products and found that the price of customized products produced by 3D printing increases with their own quality and decreases with the quality of standard products [20]. Chen et al (2021) studied the impact of 3D printing on firms' product supply, pricing, and inventory decisions under dual channels and found that 3D printing replaced the traditional production model, prompting an increase in the variety of products offered online, enabling firms to charge a price premium to online customers; when 3D printing was used in store, firms realized deferred gains in inventory management [21]. Arbabian and Wagner (2021) consider the impact of 3D printing on a supply chain consisting of a manufacturer and a retailer, and conclude that both manufacturers and retailers are likely to earn more profit than they would have if they had not produced using 3D printing [22].…”

“…Wang et al (2019) studied the factors influencing the level of customization effort of designers of 3D printing platforms, but only analyzed the effect of consumer customization sensitivity on effort levels [19]. With the development of 3D printing technology, scholars have also studied the impact of 3D printing on the supply chain and linked 3D printing with customization [20][21][22]. In order to answer the research questions posed above and to fill these research gaps, we establish a manufacturer-led Stackelberg game model in which the OEM or the retailer independently complete the 3D printing customization process to find out the optimal pricing and optimal revenue of 3D printed customized products for manufacturers and retailers, and focus on analyzing the factors influencing the level of customization effort in the remanufacturing supply chain, then give the relevant companies suggestions on whether to adopt 3D printing for product customization and product differential pricing by comparing the two models.…”

Distributed 3D Printing of Spare Parts via IP Licensing

“…Recent years have seen an increase in literature at the interface of 3D printing and operations management, for example, in manufacturing (Dong et al 2021), consumer retail (Hedenstierna et al 2019, Chen et al 2021, Sethuraman et al 2021, and spare parts inventory management (Heinen and Hoberg 2019, Song and Zhang 2020, Westerweel et al 2021. The only work that includes any IP licensing related elements is that by Sethuraman et al (2021), who investigate a personal fabrication (PF) strategy by which a firm sells a product design directly to individual consumers, who may subsequently alter the design and print the product according to their personal preferences.…”