Jim Mathison is president of Prepac Manufacturing Ltd., based in Delta, B.C. The company’s design innovations, production efficiencies and enhanced freight logistics have brought it massive growth.The Globe and Mail
When the e-commerce model came to the world of retailing a decade ago, Prepac Manufacturing Ltd. was ready.
The Delta, B.C., company makes ready-to-assemble, or "flat pack," furniture. It started in 1979 selling basic wood shelving and utility cabinets through home-improvement stores such as Beaver Lumber and Rona.
It later expanded into items for the rest of the house and began selling through major U.S. catalogue companies. Today it sells 400 individual items and has made the leap to e-commerce, providing furniture for online retail giants Amazon, Wayfair, Home Depot and Wal-Mart.
"It was a natural progression," says Jim Mathison, president of Prepac. The company grew with its customers by keeping its model much the same, making the products in its B.C. factory and sending them directly to homes across North America in what is known as the "drop ship" model.
What has changed is the pace, volume, product range and expectations of the hyper-speed Internet era. This prompted design innovations, production efficiencies and enhanced freight logistics that have brought Prepac massive growth, with export sales doubling over the past five years.
"Times are changing," Mr. Mathison says. He notes that consumers are increasingly comfortable with buying household furniture online – the majority today even shop for these items on phones and other mobile devices "and expect them to be delivered tomorrow."
More than 85 per cent of Prepac's desks, tables, headboards and dressers today are sold to customers in the United States. Indeed, the company recently won the 2017 B.C. Export Award for consumer products.
While competitors move their operations offshore to shave costs, Prepac has opted to keep its manufacturing in Canada. The B.C. location works well, he says, with about 90 per cent of the raw materials used to manufacture its products sourced locally and a diverse talent pool to draw from for its 250 employees.
Prepac has also refocused its efforts to ship directly to consumers, improving lead times to just two days, with about 40 per cent of its orders shipping the same day. Its just-in-time manufacturing processes allow it to produce small batches and guarantee inventory availability, supporting an "always in stock" quick-ship model.
The company has also invested in automated processing and computer numerical control (CNC) technology. "We're as much an IT company as we are a manufacturer," says Mr. Mathison. That has allowed it to serve big retailers well.
"You don't want to be the company out there that's causing problems," he says. "You want to be the one that's low-maintenance, that can do high volumes with few issues."
Paul Briggs, senior analyst for Canada at eMarketer Inc., a digital marketplace research firm, says Prepac's success is reflective of the "omni-channel approach" necessary in e-commerce and "the myriad ways that people shop and transact in today's retail environment."
People are getting used to buying furniture online and appreciate the convenience of not having to lug bulky items home, he says. The drop-ship model is a good way to meet the demand; it eliminates steps and costs in the supply chain and opens up the massive U.S. market.
"It's smart for any company that's a manufacturer and wants to market their products to have a solid strategy for online fulfilment," Mr. Briggs says.
Mr. Mathison says Prepac is "always looking to reinvent ourselves and our processes." One important part of its innovation has been in packaging; it's one of the first companies in North America to use liquid foam injection to keep items from being damaged in transit, he says.
While uncertainties over the North American free-trade agreement "keep us awake at night," he is cautiously optimistic.
Prepac is just finishing the expansion of its operations by more than 25 per cent and adding 50 new full-time positions in its three B.C. facilities to capture more market share.
The company remains focused on value, service and its e-commerce niche. "We're not trying to be everything to everyone," Mr. Mathison adds. "We make a good product at a good price, on time."