How Import Tariffs May Accelerate 3D Printed Consumer Goods with Steve Crimi

There are several markets now that are very viable for 3D printing, and that’s what Steve Crimi, CEO of Goldsol, Inc., is looking at right now. Steve, along with his business partner and wife, Brenda, sells lots of different products on Amazon in particular. He has spent his lifetime owning and operating successful businesses in the industries of electrical, energy efficiency, and LED lighting. Steve recognizes that 3D-printed end use products, not just prototyping, are here to stay, and it’s a very big market in and of itself. Very recently, the US government is charging product importers a tariff of 10% percent, increasing to 25% at the beginning of next year. The vast majority of products purchased in the United States being imported, Steve knows importation may just not be cost effective anymore. Steve takes a look at how import tariffs may accelerate 3D-printed consumer goods.

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How Import Tariffs May Accelerate 3D Printed Consumer Goods with Steve Crimi

I have a special guest that we’re going to talk with. A lot of times you’ve had me and Tracy as co-hosts on the show. Now I’m bringing in someone, not as a typical guest interview, but someone we would like you to get to know. I think we’re going to be having him on the show periodically here on WTFFF?! His name is Steve Crimi. He is someone who has been a business owner his entire career. He has a lot of experience in the electrical and lighting design and construction markets originally. He got into LEDs. I will let Steve tell you a little bit about that, but I also wanted him to come on the show because he’s had a lot of experience and is an expert in eCommerce. His current company, Goldsol Inc., sells lots of different products on Amazon in particular. He and his business partner, who is also his wife, Brenda, do a tremendous job with that. They have a great business and they had seen the eCommerce side of things that tie in and relate to the things that we talk about here in WTFFF?! and the 3D printing market. Steve, welcome to the show.

Tom, thanks for having me.

We’ve known each other for several years and we’re spending a lot more time together. I thoroughly enjoyed getting to know you. We spend a lot of time talking about 3D printing, don’t we?

Yes, we do.

We both share a common excitement and interest about the entire market, but your interest comes from a completely different perspective. You’ve been involved in exciting markets and technology shifts in the past in particular with LED lighting. Maybe you could just share a little bit about that with the audience, and how you’ve come through your eCommerce expertise to be quite interested in 3D printing.

I understand that this is a 3D printing podcast, so I will do my best to be succinct in regard to my history with LEDs. However, I see tremendous parallels in the market adoption. What I mean by that is, is that I was fortunate to get involved with LED lighting. A lot of people know it in the industry of solid-state lighting very early on at about 2002. At that point, very few people, unless they were in the industry, were even understanding what LEDs were or if they did, they just looked at it as a little red light that blinks at them from the digital clock. They were never thinking in the terms of what we see now. Over the course of sixteen years, what has happened is tremendous, if you think about it from a technological standpoint.

There were many factors involved in that and many parallels. What I recognized and what you and I have talked about is the idea of how 3D printing has evolved. Clearly, what we’re seeing is we went through the whole process where the adoption into the home market and then looking at the materials getting better and the machines getting better. We’re seeing glimpses in many different facets of the technology becoming a viable way to manufacture certain products, especially if we’re dealing with prototyping. I think we know that it’s even beyond prototyping. It’s very likely that we’re going to start to see more and more of that. It certainly is not going to be ready for prime time. You and I talked about this. There are several markets that I’ve identified that I believe are very viable for 3D printing and that’s what where we’re looking at.

What you mean by that, I just want to make sure it’s clear to the audience, is you’re talking about viable for the 3D printed end-use product. Prototyping, we all recognize that’s here to stay. It’s a very big market in and of itself. I think that’s pretty well-known. To get to a consumer level of potentially tipping 3D printing in a consumer market, I’ve been talking about this in a few recent episodes, what’s it going to take to get it to tip. There maybe are many potential things that could get it to tip, but eCommerce is I think is a natural great fit for 3D printed end-use products. Before we dive too deep into our thoughts on that and maybe predictions if you will, I’d like to talk a little bit more about the evolution of eCommerce with Amazon. You are an Amazon selling expert. You are in the trenches. This is your primary business, is it not?

I have to say, a lot of times I do write on my wife’s coattails, but we do make a good team. I certainly know facets of the industry from the supply and demand side of things. That’s my core competency in what we do. Brenda is very good at doing the listings and getting ranked and whatnot. However, what’s interesting about this is there’s a process that’s involved where it’s very different than what we’ve seen in the past with manufacturing. What we do best and what we work on helping our clients do is and also ourselves is starting with finding out if the market is receptive to what we want to introduce to it before we put a ton of money into the production of thousands of units of something. That’s where 3D printing is very exciting. You know all too well, and I’m sure you’ve talked about this in the past with your show that coming from the design background and traditional manufacturing, you do your market tests, you go out there. Before you actually have a viable product to sell, you’re usually spending tens of thousands of dollars.

I think I mentioned it on the show in the past, but I don’t think it’s been very recently and there are probably many audience who haven’t heard this. Certainly, most of my experience has been at mass market retail. They also would sell on eCommerce, but that wasn’t the primary place that we’re selling. Some of our clients have made very big bets on manufacturing lots of product or spending tooling dollars that are quite expensive. I’ll just give an example. One product that we have sold at Costco and if you ever visited my website Hazz Design, which was the original home for WTFFF?!, you’ll see this chair that we designed that sold at Costco. That chair was even made in China, which it is $75,000 of tooling because every single piece of that chair was original and had to be tooled for injection molding, which is quite expensive. It’s a lot of parts.

Our client was willing to take the risk and spend $75,000 for a test of two containers, which was only about 700 to 800 chairs. No way if that chair failed would they have gotten their return on that investment. Fortunately, that chair ended up being an absolute home run and they did very well with it, but it’s risky to create a product like that and commit those tooling dollars hoping that you’re going to succeed and sell a lot. Enter 3D printing and whether you’re selling it at mass market retail or you’re selling in Amazon. I would say Amazon is where I think every new product should be tested. Test the waters there. Did you know any of the recent numbers, Steve, of the percentage of retail shopping in the United States? It’s done on Amazon versus brick and mortar retail now.

There are a lot of figures out there. What I can tell you for sure is that Amazon recently reached a trillion dollars, the second company as far as market value. That in itself is absolutely mind-boggling. What I also know is that the latest statistics are that they are presently doing about 65% of all eCommerce. There’s a lot of controversy as to how much of the retail because if you think about it on a global scale, eCommerce is still a small percentage compared to brick and mortar. I think those numbers are skewed and more importantly what I want to point out is I totally agree that Amazon is a perfect place to launch a product. Even if Amazon isn’t the choice, I would say almost in every instance eCommerce, launching it on a website, launching it on Etsy or Pinterest or some other platform, depending on what product you have, especially for most inventors, most people who are usually dealing with smaller budgets and don’t have $75,000 to blow.

I’ve come to understand Amazon selling mostly through you, I have to say. I have referred clients to Steve and Brenda who have products they want to get listed on Amazon. That’s part of our relationship as I develop products. If somebody wants to get it on Amazon and they don’t know how to do it, Steve is my go-to person to do that. What I’ve learned in working with you, which is very different from my experience with most of my career in brick and mortar mass market retail, you actually can look on Amazon and see how many people are searching each month for a certain type of product. Or at least searching on a certain keyword for a certain type of product. With readily available tools, freely available information, you may have to subscribe to a service to look it up, but you can see how much of other competitive products are selling each month on Amazon.

That’s more accurate. The searching onto keyword end of it, there is a lot of speculation done on that end. As far as the accuracy, we take it with a grain of salt, especially if it’s multiple words in a sentence. However, on the reporting side of how many items are being sold each month, especially if it’s fulfilled by Amazon, those are pretty accurate. We have a good idea of the market adoption and we can also say there are many factors that go into looking at what we’re seeing on any platform. The fact is that it’s also about the reviews. Sometimes it could be that there are thousands of something selling, but that market may be very difficult to penetrate or get to the top ranking because it’s so competitive.

What I love about this is there is data you can mine, you can research. Then you can figure out where the opportunities are or where they might be and come up with a strategy of how to compete. I think it’s much more well-informed than any of our clients would ever do in bringing a product to market in brick and mortar retail. You also don’t have to fill a thousand stores nationwide with stock. You can put it into Amazon at very low numbers to test something out.

That’s the biggest reason why I see this, if I may, a perfect storm happening in front of us between the eCommerce platform and specifically Amazon because that truly is the 80%, 90% of what we do is on Amazon. 3D printing allows us to potentially print, let’s say 100 units or even 200 units of something. There are a couple of different factors here. We look at, is 3D printing ready for printing thousands of anything? Probably not. In five years, that could be very different, but now printing hundreds of units could be very viable. This is the key, even if the cost of printing those products are 30% or 40% or even 50% higher than what you would pay for producing that product in mass production.

You’re not dealing with tooling. You’re dealing with design, but that design can carry over into the tooling. You’re not paying for something twice and you’re able to do tweaks to that very cost-effectively. In launching a new product, we could come up with hundreds of different ideas, which you and I have talked about. Let’s just look at it for example on the chair. I don’t know all the parts on the chair and this may not be the ideal way of looking at it or a similarity, but there are probably several plastic parts on that chair. There could be a part where it could have cost you a couple thousands of dollars for tooling and that part could potentially be made in 3D printing for the first couple of hundred chairs. How many did you say that they ordered originally?

Eight hundred in the first test, but still there are 3D printers that are out there that are large enough that could make all those parts. I’ll give a shout out to MAKEiT 3D who just launched a Kickstarter for a large format FFF 3D printer that’s very impressive and very reasonable. I’m sure you can contract with them to build parts for you. Buying that machine is so inexpensive. You could probably produce enough parts for a test here in the US without going into China, or anywhere and paying for the tooling to make those parts in a traditionally manufactured way in order to get proof.

We’re looking at the fact that it’s going to be at this point with almost every product. Once you hit a certain level, at least with our technology, it is not going to be cost-effective to 3D print the products anymore. The other part of this, and I think part of what we wanted to discuss, is something happened to us very recently actually.

There was an event that just happened. There’s another big factor entering the mix that could tip scales in favor of 3D printing. Please share that with us.

I don’t want to get political, this is not a political show. All I want to do is mention facts and how we are addressing this from our business. I just received an email from our freight forwarder, our customs broker stating to me, “Beware, there are a few of our products that are definitely going to be in the next wave of products that are in the whole tariff program.” There are thousands and thousands of products, so I have to go through all that. We look at the first wave where the first tariff is there will be a 10% tariff on our products. That probably doesn’t equate to 10% of the entire product because as we both know, if I sell a product for $3, the cost of that product could be $0.50. The cost of shipping it is probably another $0.50 for packaging and so on and so forth. We’re probably just looking at the actual cost of the product itself. However, when we do the math, we have to look at landed costs. Our shipping is going up and we have on top of that the tariff of 10%, but this gets even better. At the beginning of next year, that same tariff is 25%. This starts getting painful.

These are the tariffs that the US government is charging you, the importer. Do you import the vast majority of the products you sell on Amazon?

Absolutely. That’s something that we have to be aware of. The vast majority of products that we purchased in the United States are imported as we know because it just is not cost effective. We would be paying a lot more money for most of the products that we utilize if they were made in the United States. It’s plain and simple. Let me just be very clear. I would love for many reasons, both economically and socially, I would love to be able to manufacture products in the United States from a natural resources standpoint. I’m very clear that it’s a whole lot less expensive or costly to our environment to manufacture in the United States than it is to manufacture overseas and then bring it over here. However, the Chinese government has invested billions and billions of dollars in infrastructure. We have to understand that the good and the bad, the ugly.

The reality is that those billions of dollars have made the labor less expensive because frankly, we could compete. If we automate factories, we can compete on that level. The problem is who’s going to spend the money? It goes right back to the same thing like the tooling that we’re talking about. When I’m starting to look at 25% tariffs, I know that 3D printers are capable of printing metal parts. They’re capable of printing carbon fiber parts, they’re capable of printing a silicone or at least different varieties of plastics for sure.

I have a product that I developed for a client that I’m going to do a WTFFF??! episode about in the future. I just can’t yet because the product is not public, and I’m not allowed to disclose it yet. It will be public and I will be able to, that is a silicone product that we 3D printed prototypes of here in the US. We actually 3D printed a mold for the silicone and then it injects this silicone in it. Then they dissolve the mold away in a soluble solution and you have your one-off silicon part. We made four different parts for our client that way. You can 3D print silicone, not directly but it’s a prototype process that is available.

The conversation is, this is purely speculative, but if we look at history and we look over and over again throughout history, we’ve had technologies that have been around and they’ve gotten better and better. They may be ready for prime time. I go back to LEDs as a perfect example. LEDs were ready for the market with the light quality and the energy efficiency probably around 2011. We didn’t see those entering the market until 2015. Frankly, I will say that I think personally our government did a good job of how they were able to deal with that because a lot of people were upset that we were phasing out a 60-watt light bulb or actually it started out with the 100-watt light bulb.

A lot of people were very upset about that. It’s like, “You don’t want government in our business. I don’t want government in my business.” However, the fact is we were dealing with the technology that was literally a hundred years old. It wasn’t just the cost of the product, it was the cost of ownership. DOE was able to do a lot of good things to get to the point where basically it was a supply and demand thing. I’ve got to ask you a question, Tom. If all of a sudden there became a demand for 3D printed products in that consumer-driven, 3D printed products in the hundreds of thousands of units, whatever the product was, would the technology fill that void and get better very fast?

I’m quite sure it would. I believe it would for sure. We’re speculating, but we’re making educated speculation. I do think that it could. In fact, there are many existing 3D print service bureaus that could handle lots of volumes up into tens of thousands and maybe even hundreds of thousands. In fact, Invisalign braces are a good example of a company that’s been around for many years that uses 3D print technology. They output 6,000 a day sets of braces that are all using 3D printing as a part of the production process, not just prototypes. There are other examples in other markets. Yes, I agree 100%.

This is what was probably the very first thing that I saw that I realized, “We’re ready. We’re here.” I love Costco. Costco is one of my favorite retail outlets and they have a machine set up in there. First, they did it for a little while and there were crowds and they actually moved it back in, it’s not as busy but still, I’m sure that they’re doing enough business to warrant it. What they do is they 3D print insoles for shoes. They stand on the machine. It obviously takes a digital image of your foot and you go shopping and it starts the 3D print process. By the time you get back, it’s done. It takes maybe half an hour, 45 minutes.

In my opinion, this is one of the many areas where we can clearly see the benefits of 3D printing. It’s literally printing on demand for customizable products. These are the things that we already know. The Chinese are really good at producing high volumes of anything very inexpensively. Part of the reason for that and part of the reason for the tariffs is because the government, whether or not it was ethical or unethical or whatever, they’ve subsidized materials over many years. That’s one of the reasons why I think these tariffs would come into play. When you can buy materials cheap, it’s very difficult to compete in that as well.

With that though, if you go to China and you know this better than I do, and you ask them to produce 100 of something or even 500 or even 2,000 of something, the only way that’s going to happen is if that factory is producing 2,000 of the same product for five other clients or ten other customers. That’s where we get into the whole patent issue because there’s no way unless you want to pay very dearly for that product that they’re going to be able to produce 2,000 units of anything unless it’s 2,000, maybe a week or 2,000 a month. That’s the problem. If it’s 2,000 every three or four months, they can’t sustain that type of output at the cost or the price structures that they presently have.

They can’t sustain it and the reality is the cost of shipping gets very expensive if you’re shipping less than a full container load of product. If you have a relatively small cube product, it can take several thousand at least to fill a container. It depends on the product. When I was doing furniture stuff, maybe we could only get 350 or 800 of other certain furniture pieces on a large container. Other products, when I was manufacturing pens in China, which is the first product I ever manufactured in China. I went to China in 1998 the first time and I started making my products in the United States. I was making them locally and the economies have scaled to the point where I was forced to look at making them in Asia.

I went to Shanghai, China in 1998. We manufactured our pens in very large quantities because we’ve got very large orders for them in 50,000 at a time, 100,000 at a time. The entire time I was manufacturing five years of business in that company, I never was able to order enough pens in one order to fill a container because you can imagine pens. You can fit so many in a container. Plus the speed with which I needed to sell them, I airfreighted everything from China. Here you get to the other big cost factor and the environmental impact you were mentioning of manufacturing overseas and bringing it into the United States.

Let’s come back to the tariffs though because this is the big event that’s happening. I was actually a guest on another podcast called On The Shelf with Tim Bush as the host. It was a panel of a bunch of people talking about manufacturing products and selling products for retail. It’s a different focus, but I was asked on that podcast if I thought that terrorists were a good thing for the US economy or a bad thing for the US economy. I have to tell you, and this is again not a political statement, but just from my perspective. Manufacturing products and designing products that are manufactured for many clients that tariffs I see in the short-term hurting the US economy and hurting the US consumer because it’s just going to increase the prices eventually. Maybe not with the 10% you’re talking about, but when you start getting to 25%, you still have to make a profit selling those products so you have to raise your prices at some point.

Let me tell you one of the things that I am very clear about. The fact of the matter is the products that we presently sell, we do not have the margins to increase to absorb anything. Amazon is a trillion-dollar company for a reason. They get their share, I won’t knock what they’ve done. In fact, this would cost us tens of thousands of dollars in marketing dollars to get the volume of business that we do on Amazon, but we have to pay for that. You have fulfillment fees and you have other fees that come along. Certainly, it’s less expensive than having a brick and mortar store and having all of the other things that come along with that. The problem is that Amazon has created a model where it’s almost wholesale to the customer. That’s the model that they’ve created very successfully, quite frankly.

You mean in offering the lowest price of a product to the consumers?

Exactly. I’m fairly confident that the products that we sell, our competition are basically the same situation we’re in. They’re not going to be able to absorb an increase in costs and I think this is across the board. To your point, I do feel very strongly that the short-term effects are not going to be good for the economy. The other part of that is that there’s a very big difference in cost between manufacturing in China and manufacturing in the United States. I’m fairly confident, and I haven’t done all the homework yet, but getting the tooling done especially on some of the products that we do and having it manufactured in the United States, it’s going to cost double what it costs now. As a business owner, I can’t make that decision. I will say there may be some products where certain companies may look at it and say, “That 25% tariff it’s big enough to where we’ll start manufacturing in the US.” It remains to be seen.

Does this open up an opportunity? Is this a catalyst for tipping 3D print manufacturer venues, products in the United States? In the short-term, I do believe that the tariffs are going to hurt the US economy. They’re going to raise prices for consumers and it’s going to hurt business in general, and I’m not in favor of it from that perspective. Is there a silver lining where this would help make it economically more viable to 3D print and use products sold directly to consumers through Amazon, and eventually through brick and mortar retail? It may just very well be.

I will say that if you look again throughout history, when we look at businesses, most businesses don’t like to be the first mover on anything, especially established legacy institutions. That’s exactly why Amazon did what they did. That’s exactly why Uber did what they did. I can go on and on and on. Until that legacy industry feels a lot of pain, that’s usually when there were ready to move. That usually starts from the ground up. I believe that with the tariffs, with the fact that the technology is where it’s at, and looking at the timeline of strategically predicting where it’s going to go in the next five years, we are going to take a very different approach to launching products in the future. My first question is going to be, can that product be 3D printed?

That is very telling and if you don’t realize this right there, this is a business person saying that we have to look at this and we are looking at it in every new product we’re considering in the business decisions we’re making. Can it be 3D printed here in the United States? This is happening more and more across businesses across the country. Maybe even in other countries too, maybe worldwide. This is a reality of our future and that’s why I’m so excited and continue to be excited about 3D printing and that’s a business I want to be involved in in the future. Thank you so much for joining me. We’ve talked on many 3D printing subjects and I know we’re going to be talking on more here in the future because I do enjoy these talks and I think that our audience will too. If you have something to share with us regarding this episode, any thoughts or comments, go anywhere online @3DStartPoint especially on Facebook and you can comment or ask your question. Thanks for being here and we’ll be back next time with another great episode. This has been Tom on the WTFFF 3D Printing Podcast.

Important Links

• Steve Crimi
• Goldsol Inc.
• Hazz Design
• MAKEiT 3D
• Invisalign
• On The Shelf episode with Tom Hazzard
• @3DStartPoint on Facebook

About Steve Crimi

Steve has spent his lifetime owning and operating successful businesses in the industries of electrical, energy efficiency, and LED lighting. His portfolio includes co-founding a multi-million dollar LED lighting company, of which he was instrumental in developing and launching several cutting-edge products.

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