In August 2020, Kornit entered the world of web-to-print technology by acquiring Custom Gateway, a cloud-based software solutions provider of end-to-end workflow solutions for on-demand apparel and home décor production. Six months after the acquisition, we spoke with Custom Gateway to see how the transition was going as well as what we can expect for 2021 and beyond.
Robert Nute, Global Commercial Director of Custom Gateway at Kornit, expressed positive momentum and industry engagement. He said, “Feedback from current and prospective clients has been very positive. As Kornit’s first strategic acquisition, we are excited to help transform production and order workflow within the digital textile industry.”
Record breaking e-commerce growth is helping fuel a digital printing revolution that enables printers to produce retail quality prints without the need for costly pre-press activities or finished inventory risk. However, with new technologies come new challenges—particularly with order processing and production workflow management. A seamless end-to-end solution for PSPs who are transitioning into B2C and third-party fulfillment is vital to their bottom line, and ultimately their survival. So how did Kornit Digital land on Custom Gateway as their preferred partner? Nute notes, “We performed due diligence on many options but landed on Custom Gateway because of their modern suite of features, robust functionality, and professional development capabilities.”
In the world of workflow automation, challenges flourish as one size does not fit all. Out-of-the-box solutions must be adaptable to a diverse group of PSPs who are using different ERP, WMS, and web platforms. It is almost certain that custom integrations with existing software will need to be executed in a timely and cost-effective manner. After all, the more complicated and costly the project, the more likely PSPs will be hesitant to onboarding. The value proposition for PSPs may seem straightforward and easy to understand but, in reality, it can be quite complex when incorporating new workflow software with existing systems.
When asked how they approach and manage new projects, Nute notes, “First, we assign a workflow consultant who assesses the business and defines the requirements and workflow needs. Next, a solutions architect works directly with the IT and development team on building custom APIs and integrations, if needed. Then, an implementation manager is assigned to ensure they go live with complete satisfaction including training and troubleshooting.” He adds, “Our goal is to improve and complement existing operations without disruption.”
| Source: Kornit |
Naturally, as news broke of Kornit’s acquisition of Custom Gateway, many in the industry assumed that integrating with Kornit devices on the back end would be the primary end goal. But, according to Nute, this is only a piece of the puzzle. “Custom Gateway is a means to link analog and digital technology to respond to any sales model and any printing device, not just Kornit users,” he explains. “Our goal is to help PSPs, retailers, and third-party fulfillers expand their reach and increase their speed to market by combining shop floor production management with front-end platform integration.”
| Source: Kornit |
Although Custom Gateway is targeting all digital PSPs, retailers, and third-party fulfillers, it makes sense for them to pick the low-hanging fruit first—mainly Kornit users with previously established relationships. But even those users may be challenging to onboard. Kornit customers are typically mid-to-large size companies who already have integrated front and back end solutions. Nute notes that, in the future, Custom Gateway will be integrated with Kornit’s “Konnect” cloud-based software, which monitors and tracks production and consumables across Kornit devices. “By unifying both platforms, customers will have the ability to access advanced analytics for production while also having visibility into order operations,” offers Nute.
It is no secret that digital printer OEMs generate revenue from sales of new devices and recurring revenue from consumables, such as ink and other supplies—but for software, it is a different model. While Custom Gateway has nominal fees for onboarding, custom APIs, and integration, it generates much of its revenue from transactional fees of items ordered across its platform. In addition, there is a monthly charge for each printing device that PSPs connect the workflow automation to.
Our Take
In an environment where e-commerce is king and virtually endless product options rule, workflow automation will continue to propel PSPs forward as they transform into more than just printers—but end-to-end order processing and fulfillment providers, as well. Kornit Digital is not the only OEM to recognize this trend and, as competitors develop their own workflow solutions, competition is likely to heat up in the second half of 2021 and beyond. In the new digital printing age, what happens pre- and post-press is equally as important to what happens on press.
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