Amazon will significantly expand its digital and on-demand printing capabilities after resuming an existing agreement with Kornit, the Israeli manufacturer of high-speed inkjet printing devices. Over the next five years, Amazon pledged to purchase $ 250 million in existing Kornit products, including digital printers and inks, and $ 150 million in “future products”. The deal amounts to $ 400 million.
The move is a big step for Amazon, which has steadily and methodically expanded its digital printing capacity in recent years. Most of that capacity was devoted to the Merch by Amazon service, a print-on-demand platform that allows sellers to create and sell bespoke clothing and other merchandise decorated and filled by Amazon.
We’ve covered Merch by Amazon and two related services – Amazon Custom and Amazon Merch Collab – in depth, especially where they stand in relation to the promotional products industry. This is what we wrote in January of this year:
Regardless, Merch Collab, Merch from Amazon, and Amazon Custom aren’t all that worrisome for the promo industry. However, if we look at them in combination, one at a time as a stepping stone to the next, we can see the entire path take shape. Take into account Amazon Business, the company’s booming B2B market that sells everything from paper clips to bubble hockey equipment and had sales of over $ 10 billion in 2018. This becomes even clearer. The pieces fit together for Amazon to make a wider match for the B2B goods market. Even if this iteration of Merch Collab doesn’t meet the requirements of Merch by Amazon, it might not matter.
We can look at Amazon’s new Kornit deal as another stepping stone. According to the Israeli newspaper Haaretz, Amazon plans to use the new devices for household goods, sports equipment and textiles such as upholstery and bedspreads. Most of these have a bigger impact on retail than B2B or custom merchandise, but the expanded printing capacity and product offering allows Amazon to flip the switch more easily if it ever chooses. The company has already pointed out its efforts here.
“I can tell you anything you can print on demand, we are considering it,” Miguel Roque, director of Merch by Amazon told Yahoo Finance in 2018. “The most important thing is that we can produce it on a large scale. ” and with a level of quality that both brands and customers will be genuinely satisfied with. “
Whatever Amazon is doing with its new $ 400 million digital printing device, it’s definitely not slowing down on the custom merchandise side. The company announced in August that it will be adding a new on-demand print and fulfillment facility from Merch by Amazon outside of Phoenix. This is part of a huge expansion with which eleven more new locations are to be established in the region. The company launched its first Merch by Amazon facility in 2015, followed by a second 100,000 square feet facility in 2017. In the same year, it purchased $ 150 million worth of textile digital printing equipment from Kornit. In July 2019, it received approval to operate an inkjet printing facility in Utah.
The pandemic has hurt or crippled companies in various industries, but Amazon has grown as consumers turned to e-commerce en masse. The company doubled its net income in the second quarter year over year from $ 2.6 billion in 2019 to $ 5.2 billion this year. This reliance on e-commerce is likely to persist and further strengthen Amazon’s position in the market in the future. It remains to be seen whether the company will leverage this position and its ever-expanding digital printing capabilities to play a real role in the promotional products business, but it continues to build the infrastructure to make it happen.
Read our full story of Merch by Amazon and Amazon Merch Collab here.