On Logistics

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As logistics become less expensive, more instantaneous, and support a greater variety of goods, the long tail category of "candidate products" continues to expand. For example, 3-D printers.

3-D Printers

While researching long tail impact on data warehouses, one of the more fascinating futures I came across were 3-D printers. That is, devices that allow the manufacture of solid objects onsite based in computer schematics.

These devices further enable the expansion of the long tail category of the “candidate products.” Included here earlier were examples such as custom car manufacturing on request and printing books on demand.  Printing books on demand is generally at the warehouse prior to distribution but, as with burning DVDs and CDs, can be adapted for the store with dedicated hardware.  The next step is on-site physical production of all types of goods on demand.  This requires no inventory other than the raw inputs. The elimination of inventory requirements decreases the cost of supplying a product, and decreases the sales volume required to offer the product – which adds to the product selection that can be profitably offered.

The most recent article I’ve read on 3-D printers is from The Economist, “A Factory on Your Desk” (subscription required). Up to now, 3-D printers have been pretty much restricted to prototype and model creation, using plastics or wood as the raw materials. But as the printers becomes cheaper and cheaper, “Desktop Factory… hopes to launch a 3-D printer for $4,995 that is around the same size as a laser printer,” mass market 3-D printers are on the horizon.

This opens up the market for delivery of toys, models, mobile phone skins, anything plastics based, directly to the consumer: first at the local store, later at home.

Adapting Current Brick and Mortar for Online Distribution

Ever wonder why you can’t order something online with a major retailer and pick it up at the store? A number of brick and mortar retailers offer the option of ordering stock online that is in the store, but large online volume shipments on demand to stores for pick-up has not been the norm. Until now.

Wal-Mart this year has directly put Amazon in their sights, starting with “loss leader” promotions in October (I snatched-up a number of $10 DVDs). Now, Wal-Mart looks to leverage their best-in-class distribution channels to support online sales with store pickups, as mentioned in the Wall Street Journal article, "Wal-Mart Uses Its Stores to Get an Edge Online" (subscription required). Quoting from the article, “Wal-Mart has started aiming at what it sees as Amazon's Achilles' heel: the costs and delays of shipping online purchases to buyers.” Any hits to buyer convenience requiring a trip to the store is mitigated by free shipping, and the advantage to Wal-Mart is driving more traffic to their stores.

As for applicability to the long tail, “Wal-Mart is learning to exploit the long tail of Internet retailing by offering thousands of items online which it does not stock in its enormous superstores.” We have here the battle of logistics: a large number of distributed warehouses versus a centralized set of very large warehouses in combination with shipping capabilities directly from suppliers. Wal-Mart will not be able to offer as large of a product selection as Amazon for the product areas in which Amazon chooses to compete, but Wal-Mart is catching-up.

More products, more data: EDWs will continue to grow.