Natural Beauty Soapworks

eCommerce Simulation

You are challenged to guide Natural Beauty Soapworks in its expansion. Your objective is to retain or grow profitability over time, by varying price, incentives and investment. You must do this while managing costs, so as to optimize the balance between losses, profitability, and long term prospects going forward. You may choose to sell your products via the traditional channel (stores, hotels, etc) or venture into internet sales. In this initial expansion, you will concentrate only on selling bar soap. Comparative retail prices for soap of similar quality range from $4.00 per bar to $8.00 per bar.

Your final score will be based on the sales volume achieved and on financial stability, calculated as Net Present Value (NPV) of expected earnings, less some measure of losses to date.

Your Name:

Please choose an approach by which you would like to sell your products over the internet. You may also choose to partner with other manufacturers in your move to the internet.

Your own eDirect Channel
Sell your product through another eStore Channel I want to partner with other manufacturers
Set industry parameters

Business Case

Natural Beauty Soapworks is a family-owned business offering traditional cold-processed soap and luxurious bath products. The company has been in business for five years, moving from a small, kitchen-based operation to becoming a leading supplier of quality, mid-priced soap and bath products in the Midwestern region of the United States.

The company started as a hobby – an easy and fun way for founder Kaitlin to enjoy beautiful handmade soap while on a tight budget as a stay-at-home mom. She spent almost a full year perfecting her recipes (using family members as guinea pigs) before she started selling her wares at local craft shows and farmers’ markets. Response was good, but not overwhelming. The next two years saw conservative but steady growth as Kaitlin formally established the company, worked through several design iterations to create attractive labels for her soaps and started researching trade shows related to beauty products and the hospitality industry.

Family members were recruited to help as word spread about the quality of Kaitlin’s soaps. Her mother, who had always been involved, soon became the first employee of Natural Beauty Soapworks. Today, after five years in business, the company boasts three full-time employees and six part-timers. Production is still in relatively small batches to maintain handmade quality and consistency, although more sophisticated scales, molds and mixing equipment are now in use. The company has also moved into commercial headquarters (a former bakery) consisting of kitchen space, storage and office space.

With the production capacity available in the commercial space, Natural Beauty Soapworks has been able to develop into a viable business for Kaitlin and her family. They currently offer a complete line of bath products including bar soap, liquid body wash, shampoo, conditioner and body lotion. Everything is made from all natural ingredients and is sold to small boutique stores and bed and breakfasts across the Midwest.

At the urging of customers, Kaitlin is toying with the idea of adding the internet as a distribution channel. She sees great potential in offering her products for sale directly to customers via an online store. Currently, the local fan base stops by their location in the former bakery, which has not yet been renovated to operate as a bath products store. Other orders are taken from more distant customers via phone and email; employees then process these orders and make trips to the post office as necessary.