Investing In Digital Printing Presses And Inks, E-commerce Giant Amazon Spends Another 400 Million US Dollars!

After re-signing an existing agreement with Israeli high-speed inkjet printing equipment manufacturer Kornit, Amazon will greatly expand its digital and on-demand printing capabilities. In the next five years, Amazon promised to buy 250 million US dollars of existing Kornit products, such as digital printing presses and inks, and 150 million US dollars of "future products." The total transaction amount is USD 400 million.

As early as 2017, Kornit Digital (Nasdaq: KRNT), a supplier of printing solutions for the textile industry, announced a closer cooperation with online retail giant Amazon.com. According to the agreement signed by the two companies, Kornit Digital will provide printing systems, inks and support services within the framework of the Merch by Amazon program, including personalized shirt designs on demand.

With a total transaction volume of US$400 million, this initiative is a major move for Amazon. In the past few years, Amazon has been steadily and orderly building its digital printing capabilities. Most of the features have been used in its Merch by Amazon service, an on-demand printing platform that enables sellers to create and sell custom clothing and other goods decorated and delivered by Amazon.

I have introduced Amazon's Merch in detail before and two related services, namely Amazon Custom and Amazon Merch Collab, especially those related to the promotional product industry. This is what we wrote in January of this year: In addition, Merch Collab, Amazon Merch and Amazon Custom will not worry about the promotion industry. But if we look at them together, each one is a stepping stone to the next, we can see that the overall path is taking shape. Amazon's business factor, the company's booming B2B market, provides various functions from paper clips to bubble hockey machines, and revenue in 2018 exceeded $10 billion, and it is even more obvious. These things are gradually being used by Amazon in order to play a greater role in the B2B commodity market. Even if this iteration of Merch Collab does not catch up with the approach used by Amazon Merch, it may not matter.

We can view Amazon's new Kornit agreement as another stepping stone. According to an Israeli newspaper "Haaretz", Amazon plans to use new equipment to expand it to household goods, sports equipment and textiles, including upholstery and bedspreads. Compared with B2B or customized products, most of them have a greater impact on the retail industry, but expanded printing capabilities and product categories will enable Amazon to more easily respond to market needs. The company has already hinted at its wishes here.

Miguel Roque, the director of Amazon Merch, told Yahoo Finance in 2018: "I can tell you anything that can be printed on demand, and we are thinking about it. The key is that we can mass produce it, and with a certain quality, we think the brand And customers will be very satisfied."

No matter what Amazon ultimately uses its new $400 million digital printing equipment, it will definitely not slow down in custom products. The company announced in August that it will add a new on-demand printing and distribution facility provided by Merch by Amazon outside of Phoenix as part of its massive expansion. It will establish 11 new sites in the region. The company launched its first factory produced by Merch by Amazon in 2015, followed by a second 100,000 square foot factory in 2017. In the same year, the company purchased $150 million in digital textile printing equipment from Kornit. In July 2019, it received approval for an inkjet printing facility in Utah.

Covid-19 has hurt or weakened business in various industries, but as consumers turn to e-commerce in large numbers, Amazon's business has surged. The company's second-quarter net profit doubled year-on-year, from $2.6 billion in 2019 to $5.2 billion this year. Reliance on e-commerce may continue, thereby further consolidating Amazon's position in the future market. Whether it will use this position and its expanding digital printing capabilities to play a real role in the promotional products business remains to be seen, but it will continue to integrate the infrastructure to achieve this goal.