[Source: Wikimedia ]
Charles Goulding and Lara Tomiko of R&D Tax Savers examine opportunities for 3D printing toys by targeting Target.
Ever since the demise of Toys”R”Us bricks and mortar stores, the toy industry has been seeking a retail market leader. Target has moved aggressively to seize that position. On October 8th 2019, Toy”R”Us and Target announced that Toys”R”Us would utilize the Target e-commerce platform in time for this holiday season. The announcement surprised the industry since historically these toy sellers have been arch rivals. This may be a smart move since Target has demonstrated e-commerce expertise, and hybrid brick and mortar combinations are proving to be synergetic.
Toys”R”Us brings an iconic name to the deal and Target provides toy inventory, digital presence and alternative fulfillment solutions to the table. Target has over 1,800 stores and their online market grew 10x the rate of their in-store sales in 2018.
Toys have always been an important 3D printing market and 3D toy designers now have an identified market leader. Previously, consumers knew they could easily turn to Toys”R”Us for most of their toy needs and now they know they can turn to Target/Toys”R”Us.
3D printed toy designers and manufacturers, including injection molders, should consider using R&D tax credits to implement improved 3D technology into their new product processes.
The Research and Development Tax Credit
Enacted in 1981, the now permanent Federal Research and Development (R&D) Tax Credit allows a credit that typically ranges from 4%-7% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:
Must be technological in nature
Must be a component of the taxpayer’s business
Must represent R&D in the experimental sense and generally includes all such costs related to the development or improvement of a product or process
Must eliminate uncertainty through a process of experimentation that considers one or more alternatives
Eligible costs include US employee wages, cost of supplies consumed in the R&D process, cost of pre-production testing, US contract research expenses, and certain costs associated with developing a patent.
On December 18, 2015, President Obama signed the PATH Act, making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax for companies with revenue below $50MM and, startup businesses can obtain up to $250,000 per year in payroll tax cash rebates.
[Source: Wikimedia ]
The toy industry’s gift to itself this season may be a strong market leader. 3D toy designers and the 3D printing industry have some new opportunities.