Xometry's "take" grows to 39% last quarter

[F35Machinist]

Per Xometry's quarterly reports, their gross margin has grown to 39% from 26% last year. Does this really leave any room for the shops they work with to do a good job? I am hearing a lot of complaints from my customers that use them about their quality. Also notably, they tell me that quality from the domestic option is worse than the chinese option on xometry. This company is still burning 15 million each quarter to win customers.

As a shop owner who actually has to make money, I do not appreciate being in the same market as investors that are happy to lose money every year. I know that I have lost at least some business to xometry this year. The true test will come in 2023 when they say they will reach profitability.

I am posting to raise awareness of xometry's business practices, specifically operating at a loss and also taking a huge share from each job. I implore any shop working with them to explore other avenues for business development. Doing business with these people is just cutting off your own legs. There is also a huge risk for their "partner" shops that xometry has to either take more of a cut to reach profitability in 2023 as they promise their investors, or fail as a company. Both options would be disaster for shops that work with them!

 

[Ox]

Xometry bought Thomas Register.
I have advertised in Thomas for quite some time, but I have not renewed this year so far.
Seems like a conflict of interest.

???


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Think Snow Eh!
Ox

 

[DouglasJRizzo]

Per Xometry's quarterly reports, their gross margin has grown to 39% from 26% last year. Does this really leave any room for the shops they work with to do a good job? I am hearing a lot of complaints from my customers that use them about their quality. Also notably, they tell me that quality from the domestic option is worse than the chinese option on xometry. This company is still burning 15 million each quarter to win customers.

As a shop owner who actually has to make money, I do not appreciate being in the same market as investors that are happy to lose money every year. I know that I have lost at least some business to xometry this year. The true test will come in 2023 when they say they will reach profitability.

I am posting to raise awareness of xometry's business practices, specifically operating at a loss and also taking a huge share from each job. I implore any shop working with them to explore other avenues for business development. Doing business with these people is just cutting off your own legs. There is also a huge risk for their "partner" shops that xometry has to either take more of a cut to reach profitability in 2023 as they promise their investors, or fail as a company. Both options would be disaster for shops that work with them!

I refuse to subscribe to Xometry or the other, similar services. It's a race to the bottom. I get my own customers and they pay the freight or find someone else. This stuff is exercise, and I'd rather stay home.

 

[Finegrain]

I take Xometry jobs now and then, when my regular customers's work queue is empty and my choices are (a) work for cheap or (b) watch Youtube videos. Lately, it seems like the Job offerings from Xometry are especially weird and low-pay.

Once in awhile their AI makes a mistake and I see a proper-paying job. But those get snapped up PDQ so you have to hover over the computer and watch like a hawk, which sucks.

Regards.

Mike

 

[triumph406]

People use Xometry and similar services because they can upload a file, tell the interface the material,finish,tolerance, requirements, no of tapped holes, quantity, leadtime and get a quote in 5 minutes.

As opposed to making a drawing/solid, creating an RFQ, then writing an e-mail, then sending it out to multiple shops in the hope that they'll even quote the job, or even a reply to the e-mail.

I tried to teach a friend at a local company how to get stuff quoted, how to go thru the process of creating an RFQ, make drawings and solid models that somebody could quote from. Gave him a list of companies who do the work. Told him to follow up the e-mail with a phone call an hour or so later, "did you receive my e-mail, do you require any further information, any questions?" From maybe 8 companies got a couple of responses, took 1-2 weeks to get more then a couple of quotes.

He sent stp files to a vendor in China, got the quote next day. Placed the order.

You can't blame Xometry or even the Chinese for stealing work. They just make it so much easier for somebody to place work there.

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Quality from Xometry isn't good. I used to do a lot of work for a company fixing parts they had recieved from Xometry. I'd fix parts in 1-2 days which Xometry couldn't do.

Missing holes, holes in wrong pace, wrong sized holes, wrong tap sizes, missing features. Remaking parts that got lost in shipping etc etc.

One of the Xometry parts was a long 304 stainless bar that some dumbass had machined, evidently the last opertion they put a large pocket on side of the part. Either side of the pocket was straight, but the pocket made the part bend around the pocket, which was how it was shipped. I told them to send it to a straightening service, I wasn't going to touch that part. I wonder what the inspection report showed, as the customer specified they required inspection reports.

 

[Finegrain]

Quality from Xometry isn't good. I used to do a lot of work for a company fixing parts they had recieved from Xometry. I'd fix parts in 1-2 days which Xometry couldn't do.

Missing holes, holes in wrong pace, wrong sized holes, wrong tap sizes, missing features. Remaking parts that got lost in shipping etc etc.

Not surprising, given the business model -- offer the work simultaneously to 100's of shops, for dirt-cheap pay, and it is likely that the least competent shops will be the ones most interested. A good or great shop will simply ignore those jobs since they will not get paid what they are worth (unless they are getting bored of watching Youtube videos ).

Regards.

Mike

 

[boosted]

We still do quite a bit of Xometry work.

I've been trying to branch out, but it is hard. Most big customers require ISO certs just to talk to purchasing, and small customers burn up too much time for too little work, then wind up shopping us against Xometry anyways... Xometry is just SO hard to avoid if you have to sell six figures a month, and don't have a pile of legacy customers.

I'd be surprised to see Xometry fail outright. The demand is there. It is the "easy" button for engineers and purchasing agents. Not sure what direction they will go though. Hopefully as the influx of new suppliers slows down things will come back to reality.

Between Thomas, Xometry Supplies, and dropping prices, they are trying to gouge their "partners" for every penny of profit. Some (like my shop) are starting to reach the breaking point where enough is enough. But again, it's really hard to move past without having the resources to dump into sales.

 

[triumph406]

then wind up shopping us against Xometry anyways...

The young engineers at one company use me and Xometry (and another company I can't remember the name of). Couple of times I've run the STP file thru the Xometry quote process to see if I should even waste the time quoting.

 

[boosted]

Serious question - how are you folks finding new customers that don't force you to compete against Xometry and the like?

I think most people in purchasing have been trained to just hunt for the lowest price. The ones who don't either already have loyal suppliers (old company), or want to just dump poorly DFM-ed CAD models into a purchasing portal (new company). So they either make me fight Xometry for pricing, or make me fight Xometry for the convenience.

It's increasingly rare to find a customer that is looking to build equitable supplier relationships.

I can go door-to-door and get work, but it seems like that only works until somebody cheaper comes along. I've had customers call me to complain about quality from another vendor, and then still send the work to that vendor because they'd rather save a few bucks up front.

 

[EMTech]

Serious question - how are you folks finding new customers that don't force you to compete against Xometry and the like?

I think most people in purchasing have been trained to just hunt for the lowest price. The ones who don't either already have loyal suppliers (old company), or want to just dump poorly DFM-ed CAD models into a purchasing portal (new company). So they either make me fight Xometry for pricing, or make me fight Xometry for the convenience.

It's increasingly rare to find a customer that is looking to build equitable supplier relationships.

I can go door-to-door and get work, but it seems like that only works until somebody cheaper comes along. I've had customers call me to complain about quality from another vendor, and then still send the work to that vendor because they'd rather save a few bucks up front.

The old saying comes to mind.
Quality, low cost, or fast delivery. You can pick two.

I try to focus on businesses, people, and industries who need quality and fast delivery. As a general rule, this group tends not to mind higher prices as much.

As far as how to consistently find these customers... i don't think there is a template for that.

I try to build relationships based on referrals from current satisfied customers.

But i haven't been out on my own very long, and I definitely still have a lot to learn, so take my 2 cents for what it is worth.

 

[Garwood]

Serious question - how are you folks finding new customers that don't force you to compete against Xometry and the like?

Products my friend!

 

[F35Machinist]

But again, it's really hard to move past without having the resources to dump into sales

Sales is a critical function for anyone in our business. Many people avoid it because they don't know where to start or haven't had good experiences in the past. It is worth investing your time and effort into sales. If you have enough money to invest in equipment and tools, then you have enough money to invest in developing your business.

I get most of my new business from my website or from direct email marketing. I only engage in direct email campaigns if the website isn't bringing in enough business. 90% of my business is local and I'm sure at least half found my business by typing into google search or google maps "machine shop near me".

Invest 10k in having a slick website that is optimized for search locally. If you can't afford that, learn how to make a website in your spare time or contact the SBA and they will actually do it for you for free. I would not recommend spending much if any money on google ads.

Email marketing is highly effective in my experience if you do it right. For a campaign, I send emails directly to local design or mechanical engineers. I typically have to stop email campaigns in less than a week or else I have too many jobs to quote and can't offer good lead times.

This stuff isn't rocket science and no shop should be dependent on an outside organization like xometry to find customers.

 

[cmccull166]

I sent a print I have made several times prior for a customer of mine to let Xom. quote..
(X sent out an invitation try our quoting platform)

So. I made those parts in the 2200.00 ea range material supplied by customer....
X came back around 1800.00 INCLUDING material...shug
I made them in house for the record..
That was 3 years ago...

So continuing..... I have done 200k in the last 3 years pick jobs carefully and have done well price wise ..but if you want good paying jobs the delivery's and
complexity's will make your life difficult.
Its a young mans game but without many years of experience in a job shop
atmosphere you will fall flat on your face....catch 22..

But I have done some interesting parts from industries ranging from University's,
Space programs,surgical company's ...so there's always that.....

 

[jccaclimber]

I’m the customer side, and while I don’t use Xometry, we do use similar services. We also have a few local shops and a few not so local shops. I have one infrequent part that goes to a shop in the EU because I couldn’t find anyone in the USA willing to quote it after a many month search.
1. The convenience is a huge thing. I need to figure out what something simple is going to cost and I can get a quote on a huge pile of parts in under an hour without wasting anyone’s time. Say I email two shops, make the follow up phone call, get the PO written, and etc. That’s two hours of time. Add in an hour to make the drawing vs. just uploading a step file and it’s costing my employer hundreds of dollars just in administration.
2. IMO the best advertising for a shop is a good relationship with whoever is ordering parts, in a high turnover area. My employer gets 90% of their prototype work from a shop that was introduced by two employees suggesting their favorite shop from a previous job.
3. While it should be less than their take, what percent of receipts do sales cost you?
4. Absolutely use it as a quoting tool. Every now and then my current favorite shop tells me something is really different from what they know, and they need to program the part to estimate cost. I tell them to quote it at Protolabs and stay within 10%. Obviously this only works for low or moderate tolerance parts. We’ll pay a 10% (or whatever) premium for a local source we can call occasional favors from.

 

[newtonsapple]

Serious question - how are you folks finding new customers that don't force you to compete against Xometry and the like?

I think most people in purchasing have been trained to just hunt for the lowest price. The ones who don't either already have loyal suppliers (old company), or want to just dump poorly DFM-ed CAD models into a purchasing portal (new company). So they either make me fight Xometry for pricing, or make me fight Xometry for the convenience.

It's increasingly rare to find a customer that is looking to build equitable supplier relationships.

I can go door-to-door and get work, but it seems like that only works until somebody cheaper comes along. I've had customers call me to complain about quality from another vendor, and then still send the work to that vendor because they'd rather save a few bucks up front.

I am on the buying side and the thing that gets away from ProtoLabs and Xometry is having shops that we can just send cad files to (with a print to spec anything tighter than .005" or details) and they just run the parts. No quoting. If we get a big bill, I look at the part and decide decide if the shop or the engineer is the one who screwed up. Most times it's the engineer. We pay the bill no matter what and learn our lessons. This is all for 1-5 and the occasional small 50 pcs orders. Super efficient. The shops we do this with are all small 1-2 mill operations which is also likely key to making this work.

 

[Stirling]

I see xometry setting up to each job shoppers lunch by exporting all the work to Asia.
Asia has a driven workforce and government support. They will win. And I dare say they have earned it.

Another erosion of the west’s capabilities amd loss of sovereignty due to less manufacturing capacity.
I wish our governments/people would recognize the risk they are taking when cropping industry…..

Anywhoo. Preaching to the quire here.
But Xometry has only 2 paths if they want that kind of margins for simply allocating work. Go bankrupt or farm it out to Asia

That is an awful looong time to be bleeding out money to set up. I wonder who the majority investors are and if they have goals outside of strictly business?

 

[john.k]

if you want to see a hollowed out economy......look here!.........there is virtually nothing left .......good example ,when face masks became mandatory.....no one here was making them .....one company set up at great expense..........naturally the demand is gone,hospital suppliers are again purchasing Chinese masks to maximize profit.........and the brave /foolish enterprize will die...........In this country its far easier to dig a bucket full of coal or iron ore,and simply buy stuff from China...........since WW2 we have been the lucky country ,now we are the lucky,lazy country.

 

[BarnFab]

Xometry has its place, I think a lot of shops are using it to quote their own jobs and it has in a lot of areas set industry expectation. I have seen a few places advertise as we will beat USA Xometry quotes by 10% .. valid approach

 

[boosted]

we will beat USA Xometry quotes by 10% .. valid approach

F- that. I'm not about to fight a price battle with a company that is losing money.

So sick of customers that only care about cost. Shame on anybody who is encouraging the bastards.

 

[Ox]

Of course not any one shop can doo everything, so I would be carefull how I worded that phrase, but by adding a tag line of "if it fits in our shops envelope" or some such, then that could be beneficial most likely.

Just think of the time (money?) that is spent on quoting!

And I would think that 90% (or even "will match") of "the houses" gross, would likely be a good price - again - if it was in your type of workload/expertise.


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Think Snow Eh!
Ox