$400 million over five years (in exchange for not only digital printers, supplies, and services, but also stock warrants that Amazon can later sell) is impressive. The fact $150 million of Amazon’s commitment is for unspecified “future products” provided by Kornit is even more impressive.
Kornit Digital receives an order for five years of printer and supply purchases, enabling it to profit on the sales and bank on the cash flow. Coupled with the commitment to “future products,” Amazon’s investments not only prove the value of inkjet printing today but also demonstrate its willingness to support technological advances in digital textile and apparel production. All told, this is an excellent book of business and a significant customer reference that Kornit’s salesforce can leverage when selling equipment to prospects.
Amazon’s commitment to Kornit for an average of $80 million a year in digital print equipment and supplies purchases pales compared to the $18 billion (yes, billion) it is spending in 2020 to help small and medium-sized business grow their sales. In a year when every business worldwide has been impacted by the COVID-19 pandemic, Amazon is spending on logistics, tools, services, programs, and people focused on the same companies that are also your customers. And with good reason, as its recent advertising campaign illustrates:
According to the Advertising Specialties Institute of Canada, “Amazon has been using Kornit printers for its Merch by Amazon service for several years. The service lets independent designers sell personalized T-shirts and other items, with Amazon handling production, shipping, and collection. This new deal with Kornit will allow Amazon to expand its digitally printed offerings to things like housewares and sports equipment. Amazon will use Kornit’s Presto, an industrial single-step direct-to-fabric printer introduced last year that can be used to print a variety of items, including upholstery and bedspreads.” To underscore the point, a recent search on Amazon for basic textile products turned up more than 200,000 listings for “graphic tees” (shirts), 10,000 listings for “custom vinyl sign banners,” and another 10,000 for “custom textile tapestry” and “custom canvas wall art.”
While neither party would comment on the announcement, I spoke with Kornit Digital’s CMO Omer Kulka about the company and its technology roadmap.
Founded in 2002, Kornit Digital develops, manufactures, and markets industrial digital printing technologies for the textiles and apparel industry. The company “cater(s) directly to the needs of both designers and manufacturers to address the changing needs of the entire textile printing value chain.” While and the market potential for digitally printed apparel is significant, the biggest market opportunity for Kornit is the on-demand manufacturing of textiles. As Mr. Kulka noted, 80% of the textile-related industries’ profits derive from 20% of the items sold. Reducing the investment in slow-moving items while swiftly reacting to consumer- and event-driven demand changes cuts purchasing, warehousing, waste, and spoilage costs.
The textile and apparel industry has gradually adopted “direct to garment” (DTG) inkjet printing over the past few years. Kornit’s offerings began in this market, with their digital DTG printers providing its technological backbone. As the demand for “direct to fabric” (DTF) picks up, Kornit has developed the digital printers, supplies, consumables, software, and workflow tools appropriate for the roll-to-roll imaging of textiles.
While DTG and DTF are two different markets, Mr. Kulka notes there is “an interesting dynamic in the market. In the last couple of years, we started to see similarities in some respects (that is) interactions, intersections as the on-demand manufacturing concept is taking shape in textiles, becoming a viable business model and viable production method.” The textiles and apparel market came from an analog background, where digital DTG printing offers the required quality coupled with shorter runs and faster turnaround times. The textile market comes from a digital perspective, where DTF inkjet printing results in fewer steps and more flexibility. Both offer a smaller environmental footprint, with less waste, fewer toxic chemicals, and minimal water and electricity use compared to analog solutions. As a result, inkjet printing has attracted on-demand textile sellers.
Mr. Kulka notes that four aspects of the digital DTG and DTF markets are unique compared to other forms of textile printing:
- Applications range from fashion clothing and wall coverings to challenging conditions including sweat, saltwater, washing, direct sunlight, and more, that can impact the usable life and long-term quality of printed fabrics
- Strict health standards, especially when the material is worn (and in the case of young children, chewed)
- Demands for more sustainability are growing in an industry that is the world’s second-largest polluter, requiring more textiles and inks that can be recycled or reused and manufacturing processes that use fewer resources
- Substrate range is more expansive than with paper printing (think of knitted wool, woven cotton, polyester, as well as different textures)
Textile printing is a demanding application. Nevertheless, prepress, press, and post-press makeready and changeover times must be minimized on even the fastest digital printer. And to that end, Kornit continually improves the physical garment and fabric handling capabilities of its printers.
But more than that, the company’s goal is to take as many analog processes as possible and digitize and streamline them. Expensive labor and time- and resource-consuming analog steps are eliminated without sacrificing the print quality that buyers expect or changing the substrate’s original performance, look and feel. Kornit has met those demanding standards, with some customers who have sites that inkjet print more than one million shirts per month. As Mr. Kulka put it, “We are aiming for on-demand, sustainable production on a large scale.”
To accomplish their goal, Kornit strives to offer a competitive total cost of ownership, coupled with image quality, digital printer ease of use, quality consumables, software, and workflow tools that support the on-demand printing of textiles and apparel in high volumes. In other words, “Imprint any image on almost any fabric, in any quantity, at the push of a button, and do so profitably. Eliminate costly inventory and print only what you’ve sold.”
Kornit Digital’s expanding hardware, consumables, software, and workflow offerings remind me of the early days of digital in the commercial printing industry, when innovative providers, coupled with first-mover customers and evangelists, drove the use of digital printing technologies. In this case, Amazon’s expanding in-house printing initiative offers insights into the future of digital printing in textiles and apparel.
DTG or DTF printer buyers who are first movers must:
- Closely monitor Amazon’s efforts to grow its share of the small- and medium-size company market, including selling products through its “Merch by Amazon” offering where possible
- Test digital textile printers to assess product quality and printer productivity, including an acceptable hand feel to the finished product
- Capture the actual total cost of ownership of existing analog textile printing processes, including file creation, pre- and post-processing of printed items, inventory risk, and handling costs.
DTG or DTF printer buyers who are fast followers must:
- Assess market developments by observing how retailers, fulfillment companies, and others expand their use of digital textile printing on existing and new product offerings
- Ask potential digital textile printer vendors to provide samples of your products that are produced with their equipment to assess the quality and performance of the garments or textiles
The textiles industry’s shift to digital printing is inexorable and slow. Worldwide, only 7% of printed fabric is printed digitally today, up from less than 3% just a few short years ago, leaving considerable room for growth. The growing demand from early industrial digital textile adopters such as Amazon, coupled with continually improved inks, printers, and workflow tools, means digital textile printing is poised for growth. Significant business opportunities will result as textiles move into an increasingly digital future.