Fulfilling a goal: five-year-old Imagine Fulfillment Services has logged rapid growth by providing shipping services at a lower rate than its customers can do the tasks themselves. (Small Business).

IN an economy where businesses are looking to cut costs, Torrance-based Imagine Fulfillment Services has found plenty of opportunities.

In the five years since its inception, the order-fulfillment company has accumulated 35 to 40 clients, including such name brands as Skechers USA Inc. and Speedo, and built its revenues from zero to $13.6 million in 2002.

Imagine provides services such as inventory tracking, credit card order processing and shipping for its customers.

With a 150,000-square-foot warehouse close to the ports of Los Angeles and Long Beach, as well as Los Angeles International Airport, Imagine tries to free customers to concentrate on more strategic elements of their businesses.

"We do order fulfillment less expensively and more efficiently, with a high sense of urgency," said Andy Arvidson, the company's founder and co-owner.

Arvidson started in the industry while developing an order fulfillment operation at Airborne Express's Sky Courier division--his first job after earning his MBA from the University of Michigan in 1989.

The original goal of Imagine was to capture a larger share of the promotional items distributed by the film and record companies in and around Hollywood.

Taking out a $100,000 line of credit against his house, Arvidson formed Imagine in June 1998, using a company name he thought would appeal to executives in the fantasy world of entertainment.

"For the first month, I was there alone just praying the phone would ring," he said.

He soon brought on Jim Heffernan, then an order fulfillment manager at 20th Century Fox, as a principal partner in charge of everyday operations. Arvidson handles sales and marketing, and both watch client services.

The company's first location was a 10,000 square foot facility in Gardena. The company outgrew the location within seven months.

Imagine was housed in a 60,000-square-foot facility in Dominguez Hills for three years before buying its current facility for $10 million in October 2001.

The company now serves five industries: products sold through infomercials, Web sites, entertainment, marketing/promotions and retail catalogs. Other clients include PepsiCo, 20th Century Fox, Cingular Wireless, Toyota Motor Corp. and Transamerica Corp., although the company also serves much smaller clients.

It charges clients sliding fees for warehousing, shipping and processing. Goods are shipped via airfreight and ground services.

Its 120 employees ship from 15,000 to 20,000 items daily, ranging from jewelry to apparel, health care equipment and vitamin supplements to movie posters and cardboard cutouts for theaters.

When Together Again Video Productions Inc. launched its Kidsongs Club last month, it tapped Imagine's experience in running so-called continuity programs.

Since 1986, Together Again has produced and sold 9 million children's live-action sing-along videos through chain retailers such as Wal-Mart, Barnes & Noble and Best Buy.

But entering the continuity market entailed sending new members their first product for free, maintaining a computerized calendar for additional shipments and maintaining credit card information, a market with which it was wholly unfamiliar.

Imagine spent a month helping Together Again develop a plan, said Carol Rosenstein, the company's owner.

"They are more than just pull, pack, ship and bill. They have worked with me on the creative development of the program," she said.

Growth pains

Some logistics experts believe a lot of the fulfillment industry's growth will come from small- and medium-size companies that cannot afford their own warehouse, order processing and distribution facilities.

One common denominator between organizations such as Imagine and the clients they serve is an entrepreneurial spirit.

"These order fulfillment people are entrepreneurs themselves," said Guy Fox, executive vice president of Redondo Beach-based Stonepath Logistics Inc. "They become specialists and they get a lot of other entrepreneurs coming to them."

Imagine's revenues are projected to reach $15.9 million this year, a 42 percent increase over the past two years.

At least 85 percent of Imagines revenues are from U.S. clients, but the company handles orders for Israeli cell phones and Asian car accessory and kitchenware products as well.

The company processes orders from retail Web sites, call centers and from the promotional departments of other clients.

There are 50 workstations set up in the distribution facility that is lined with 30-foot high metal shelves and 16 loading docks.

Keeping accurate inventory is an imperative, if the company signs off on a shipment of 1,000 wristwatches, for instance, but only receives 900. Imagine is liable for the missing goods.

"Attention to detail is what has made us successful in such a short period of time," said Heffernan.

Sooner or later, the company will have to open an East Coast facility, a move it expects will save customers even more on shipping costs.

But for now, Imagine is content to grow locally, within the industries it serves.

"We try to soak up a lot of the stress out clients are feeling," said Heffernan. 'To be competitive in today's marketplace, you can't go back to the client with problems--only solutions."

RELATED ARTICLE: Profile

Imagine Fulfillment Services

Year Founded: 1997

Core Business: Product storage and distribution

Revenues in 2001: $11.2 million

Revenues in 2002: $13.6 million

Employees in 2001: 100

Employees in 2002: 120

Goal: To open an East Coast facility by 2005

Driving Force: Client companies' need to save money by outsourcing services