Lapchi revolutionizes the rug business

| Print |  Email
Articles - February 2013
Monday, January 28, 2013
Lapchi
Managing partner: Kerry Smith
Founded: 2001
Employees: 48
Factoid: More than 6,000 custom and handmade rugs sold

Lapchi — Tibetan for “abode of good energy” — wasn’t the first company to fashion a made-to-order rug. “But we were the first to create a business model based on custom,” says Smith. Lapchi dealers typically purchase just a few rugs in each style, allowing interior designers to then customize for size and color. The manufacturing takes place in Kathmandu, where 30 Lapchi employees oversee the production of the on-demand carpets. Depending on the amount of silk and “knot density” — knots per square inch — a 9-foot-by-12-foot Lapchi rug typically costs between $7,000 and $12,000.

By 2005 most high-end rug dealers had started to adopt the Lapchi approach. But if the company revolutionized the industry, the rug company is also an example of “be careful what you wish for.” Under the new model, dealers no longer need large amounts of capital to purchase hundreds of rugs up front. “We inadvertently demonstrated the barriers to entry were very low,” Smith says. Today, “there are 100 companies doing what we do.”

As competition increased, so did factory costs, which are 70% higher than 12 years ago, Smith says. The recession also hit hard. In 2011 Lapchi grossed about $5 million, down from $6.5 million in 2008. To stay competitive in a tight market, Smith and his partner, Salman Khan, are pressing ahead with new innovations, with a focus on leveraging the atelier concept into higher sales.



 

More Articles

The short list: 4 companies engaged in a battle of the paddles

The Latest
Thursday, December 04, 2014
pingpongthumbBY JACOB PALMER | OB DIGITAL NEWS EDITOR

Nothing says startup culture like a ping pong table in the office, lounge or lobby.


Read more...

Legislative Preview: A Shifting Balance

January-Powerbook 2015
Thursday, December 11, 2014
BY APRIL STREETER

Democratic gains pave the way for a revival of environment and labor bills as revenue reform languishes.


Read more...

Will Medford Ever Be Cool?

February 2015
Friday, January 23, 2015
BY DAN COOK | PHOTOS BY JASON E. KAPLAN

A real-estate developer and a Lithia Motors executive aim to revamp the city's forlorn downtown.


Read more...

Corner Office: Pam Edstrom

January-Powerbook 2015
Saturday, December 13, 2014

Seven tidbits of information from an agency partner and co-founder of Waggener Edstrom in Lake Oswego.


Read more...

Old school: Paulsen's Pharmacy maintains old fashion ethos

The Latest
Thursday, December 18, 2014
121914-pharmacy-thumbBY MEGHAN NOLT

VIDEO: Under the radar — complete with a soda counter, the traditional Paulsen's Pharmacy looks to compete with big box retailers.


Read more...

Corner Office: Steve Tatone

January-Powerbook 2015
Saturday, December 13, 2014

Seven tidbits about the president and CEO of AKT Group.


Read more...

Streetfight

News
Sunday, December 07, 2014
BY LINDA BAKER

On Friday, Uber switched on an app — and with one push of the button torpedoed Portland’s famed public process.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS