What is needed to become an “Amazon of manufacturing”?

Engineering and manufacturing software companies have a dream to become an “Amazon of Manufacturing”. The idea is not new and has some legs. In simple words, if you’re an individual consumer I bet you’re buying at least something on Amazon these days. And the Amazon business model and value proposition are fascinating. I will come back to this later.

I read Kenneth Wong article – Aiming to be the Amazon of On-Demand Manufacturing which speaks about the aspirations of some companies to transform the industrial world sector in the same way Amazon transformed the retail business.

On the list of the companies, Kenneth Wong mentioned in his article companies that focus on providing on-demand manufacturing services Protolab, Fictiv, Xometry and few others. Kenneth speaks about matchmaking and manufacturing services, additive manufacturing and large CAD/PLM vendors establishing marketplace portal services like 3DEXPERIENCE marketplace and some others and others, like Autodesk not running to create on-demand manufacturing portals.

Check the article and draw your opinion. Kenneth’s conclusions are that a broad spectrum of services is needed to become the Amazon of on-demand manufacturing is an interesting one. Read it.

Portals and vendor-operated networks offer value as a convenient means to compare prices and order parts from a trusted pool of providers, eliminating the need for businesses to individually investigate local and overseas machine shops to identify the most suitable partners. They empower an underserved segment—inventors, hobbyists, small shops and even divisions within larger enterprises—that have creative concepts but previously didn’t have the means to turn them into tangible products.

But to become the Amazon of on-demand manufacturing, one has to offer a broad spectrum of services and choices that far exceeds one’s rivals and independent operators. Currently, there’s no such clear leader in the segment. In time, consolidations, partnerships, and acquisitions may lead to one clear dominant player.

Kenneth’s article made me think about what is needed to become an Amazon of manufacturing. I turned to the roots of Amazon creation. Jeff Bezos revealed key tenets of his plan to take over the world in 1997 in that letter. Here is the most important insight from that letter :

This is Day 1 for the Internet and, if we execute well, for Amazon.com. Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. Amazon.com uses the internet to create real value for its customers and, by doing so, hopes to create an enduring franchise, even in established and large markets.

Amazon’s unique value is to be also cheaper and better than competitors. Amazon unique value allowed to enable value that was not available before and at the same time use the scale to provide an unbeatable price. Shopping experience and price together created a unique value proposition. The technological infrastructure and logistic network enabled Amazon’s scale. It created the solution for peoples’ problem – how to buy unique products for an unbeatable price and have a unique shopping experience.

Getting back to matchmaking of marketplaces and additive manufacturing services, I’d like to see the unique value proposition. Most of them are selling a trade-offs of buying services online via machine time-sharing (it is like Wall-Mart) or providing special services (for example expensive time of 3D printers) that hobbyist and small manufacturing companies cannot afford. Some others are providing go to market for companies selling parts. Each of these solutions is extremely valuable, but still in my view, don’t provide a unique value proposition in both value and price.

What is my conclusion? The unique value proposition can be built via a deep understanding of manufacturing businesses in a similar way Amazon business understand and model retail and consumer business behaviors. It can be similar to the way Google understands and invented an online advertising model. Where is that model? I don’t see it in an additive manufacturing portal selling valuable services, but still not making an attempt to change the manufacturing business model. Something else needed, but we are not there yet. Just my thoughts…

Best, Oleg

Disclaimer: I’m co-founder and CEO of OpenBOM developing cloud-based bill of materials and inventory management tool for manufacturing companies, hardware startups, and supply chain. My opinion can be unintentionally biased.