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MODUS
Business Plan – Modus
Subscription for Personal Care Products
----IMI 302
date
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Table of Contents
Executive Summary ............................................................................................................... 3
Problem.........................................................................................................................................3
Solution .........................................................................................................................................3
Value Proposition ..........................................................................................................................3
Technical aspect / Probability of Success ................................................................................ 4
The Magic ............................................................................................................................. 5
How Modus Works ........................................................................................................................6
E-Commerce Websites ...................................................................................................................7
Market Potential ................................................................................................................... 8
Consumer focus .............................................................................................................................8
Commercial Focus ..........................................................................................................................8
Competition...................................................................................................................................8
How to compete ............................................................................................................................9
Marketing ............................................................................................................................. 9
Reaching Consumers ......................................................................................................................9
Financial ................................................................................................................................ 9
Funding ....................................................................................................................................... 10
Predicted Startup Costs (See Appendix A) ..................................................................................... 10
Operating Plans ................................................................................................................... 10
The Team.....................................................................................................................................10
Timeline .............................................................................................................................. 11
Works Cited ......................................................................................................................... 12
Appendix A – Projected Startup Costs ................................................................................... 16
Appendix B – Subscription Trend .......................................................................................... 17
Appendix C – B2B Market for janitorial supplies ................................................................... 18
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Executive Summary
MODUS is a personal care company that specializes in personal care products that is formulated
with natural ingredients and is environmentally friendly. The name MODUS derives from Latin
‘Modus operandi’ which means the ‘mode of working’. This follows the company’s vision of
creating products that do not harm the environment and further allows consumers to carry out
that promise by the method they purchase their personal care products. The brand does this
through e-commerce, where the product is virtually available to the consumer to buy at anytime. The products serve as a great alternative for consumers to pick their personal care products
through subscription or one-time purchase, at the same time choose products that are of high
quality without breaking the bank. The company has competitors in the same personal care
market. MODUS can set itself apart by delivering to its customers an easy online purchase to refill
products in the customer’s most convenient choice of time like a Subscription model. Price is
comparable to store-bought competition; the quality and aesthetics of the product serves as the
driving force for many customers to stay loyal and recommend to their friends. Although this
business was built as a response to the pandemic, it is not the driving force of why the brand is
built, but rather fills the gap with a great product and is environmentally friendly.
Problem
We start with the common problems that affect each stakeholder. The humans, the planet, and
your wallet. Personal care can get expensive, especially with the products that feel good, smell
good, and look good. Another problem is our increasing use of plastic bottled products.
Manufacturers choose the single-use plastic bottle because it is cheap, this does not help the
consumer make better choices. And finally, the notion of eco-friendly does not equal money
friendly. We all know and have heard that we need to be sustainable, but how can we? when
going sustainable is not budget friendly or wallet friendly.
Solution
We solve these key areas and differentiate ourselves from the competition by having
Economical pricing – we plan to market and sell our products using the average market price.
Which is around $5 in Canada. Reusable products – Every container product can be reused or
recycled. According to a 2021 study by PwC, over 40 percent of holiday shoppers in Canada stated
they avoid the use of plastic and single-use materials where possible due to concerns surrounding
sustainability (PwC, 2021). This is a growing trend and Modus wants to be a part of.
Natural Ingredient – Our formulas will consist of natural ingredients that does not sound like
gibberish, compared commercial soap, natural soap is just as effective as commercial soap
without the need for harsh ingredients.
Multi-channel selling – We will market our products not only to consumers but also commercial
clients
Value Proposition
There are certain demographics that are willing to buy the product for different reasons.
Environmental conscious, aesthetics, and online shoppers. Starting off with the environmentally
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conscious crowd, there are increasing trends for consumers to choose environmentally conscious
products if it satisfies their other needs such as aesthetics. Aesthetics play a big role for the
consumer when choosing a product that is new and chic, most especially when they can afford
it.
Another key metric is the online shopping crowd. There has been an increase of spending in the
personal care category especially in soaps. MODUS taps into the existing market of online
shoppers by adding an environmentally sustainable product that is affordable. With the likes of
competition like Aesop being a high luxury brand but not affordable, MODUS gives a way for
budget conscious customers to choose a product that looks great, smells/works great, and does
not break the bank.
Technical aspect / Probability of Success
The soap formula will be created by our research and development team, and once the optimal
formula is created, multiple testing stage will be used to ensure it meets regulation standards.
There will be two options available for the consumer to buy our product.
Option 1 – Online
The customer can order one-time or time-based recurrence on our e-commerce platform. From
there we would ship the product to the customer, if they opted to get our products through a
subscription model, they will automatically receive their soap in the mail at their preferred time.
1L of Hand Soap
$4.99
Reusable Glass Bottles
$12.99
Starter Kit (Includes bottle and soap)
$15.99
Option 2 – In-store
The customer can also get our products in-store through our partnered store like Shoppers in
Canada or CVS in the USA. The prices will be a bit higher to compensate the cost of shelving and
we will include literature on the product that states ‘you can save 20% on your first online order
with us.’ Enticing our customers to order online would push them to choose our online option
more and become a recurring customer.
1L of Hand Soap
$5.99
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In addition, we will sell to our commercial partners through a B2B portal where they can order
their products. When an order is received, we will send our products in bulk using biodegradable
packaging to our partner.
2L of Hand Soap
$8.99
Lastly, when Modus gains enough revenue to justify manufacturing the product inhouse, we plan
expand our product variation and reach. This means we will invest in new scents and dive into
different categories in the realm of personal care. Personal care includes lotions, body wash,
shampoo and conditioners, deodorants, and lip balm.
The Magic
The magic in Modus composes of three things. The ingredients, subscriptions, efficiency.
There are many subscription services found in Canada and the United States, most of them use
single-use containers. What makes us different is by providing the customer a re-usable bottle to
refill with our soap, and in the future, different products that will take advantage of reusable
containers.
Figure 1. Reusable glass containers with the MODUS logo
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We also target the commercial segment by making our soap in bulk and packaging it in biodegradable materials. Most, if not all commercial business has a reusable soap dispenser, all that
they would need is to replace the soap with ours. We entice them to use our product by selling
our soap close to their current cost and promoting the benefits of using our natural ingredient
soap vs chemical soap.
Figure 2. Bio-degradable pouch containing 2L of soap.
How Modus Works
Modus will mainly be operating through an e-commerce environment to sell our products, and
we will work with local stores like Shopper’s, Rexall, CVS, and Walgreens in the USA, to sell our
products in their soap sections. For our commercial clients, they will have a B2B portal for them
to order their products.
To create our product, we will initially outsource production to a contract manufacturer to create
the soap, the same will be done for our packaging material where we require bio-degradable
materials to be used. We will assemble the soap and reusable containers in our own warehouse
in the initial stages of the company.
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E-Commerce Websites
Our e-commerce platform will be split into 2. The first will be mainly used for consumer clients
where customers can order and or start their subscription service. The second will host our B2B
platform for our commercial clients to order their products in bulk and pay their invoices.
Figure 4 Consumer E-Commerce
Figure 3 Commercial E-Commerce
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Market Potential
Consumer focus
As a company focused on the problems of this generation, this includes the current largest age
demographic that is working right now: the millennials, their families, their friends, and their
loved ones. Thus, our market is reaching potentially millions of customers all over North America.
Especially because who doesn’t need soap? Soap is an essential product that everyone needs and
should be affordable and easy access too. Lessons learnt from the COVID-19 pandemic that had
taken North America by storm, is preventable by including daily hand washing and proper
hygiene to one’s arsenal of safety and health practices.
The most important customer segment is simply those who are need of quality soap that is
affordable, environmentally friendly, and feels great to use. Essentially, all good things that every
human should want. To be clean, afford the resources to be clean, to support a brand that is
advocating for better environmental practices, and to support a brand that is keen on developing
products that are innovative and sustainable.
Potential pains/problems for our customer segments are that they may not want to subscribe to
a subscription- based model and may only want to do a one-time purchase. Thus, to meet these
problems/pains, we will also implement the idea of having a free sample which can be sent
directly to your address to allow customers to see if they will enjoy the product. Prompting them
to question whether they would like to subscribe to our subscription services. We also see a
growing subscription trend and would want to take advantage of the wave (eMarketer, 2021).
Commercial Focus
Our goal for our B2B customers is to provide an alternative to their current suppliers while
reaching their ‘green’ initiatives. We will be focusing on the facilities management sector (malls
and property management) and primarily selling our hand soap to be used in commercial places.
We see that the market in the USA will amount to $15.3 billion (Statista, 2018).
Competition
We see that our competitors are key players within their respective market segments. Since we
are focusing on economical, sustainable, and natural market segments, we see that we have an
upper advantage over some of our competitors.
Competitors:
Economical – Dial, Soft-Soap, Equate, Dove
Sustainable – Method, Beast Soap, Aesop
Natural – Tom’s of Maine, Native
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How to compete
MODUS competes by actively achieving our goal of being economical, sustainable, and made with
natural ingredients. Each competitor mentioned above are competitors within their market
segment, but they do not hit all three. We at MODUS aim to hit all three segments and actively
innovate to customers tastes as they evolve.
Marketing
Reaching Consumers
Since the product would be available to the general public, heavy marketing would be involved
in social media to reach our target customers. One of the main places to start first would be social
media influencers that we give products to for free and in return review the product on their
preferred channel where all their viewers are. A category of influencers would be those that are
in the sphere of minimalism, aesthetics, environmentally cautious, and value hunters.
When the current pandemic is finished, and people are more willing to go out, the company
would start a brand awareness campaign in malls giving small samples to individuals to test the
product and provide a discount code on the website to acquire loyal customers. The majority of
the products sold will be online, but we would open pop-up shops to garner more customers in
a region we have not penetrated yet through online. As well as partner with pharmacies like
Shoppers to get our product on their shelves for more brand exposure.
Additionally, we could offer promotions, discounts, and sales that would make it cheaper and
more enticing for customers to sign up and evaluate if our product is something, they could see
themselves buying for the foreseeable future. Examples of promotions could be:
• ● Refer a friend and get 10% for the next 3 months!
• ● Free 1-month renewal if you subscribe within the next week!
• ● Christmas Promotion: Receive our new soap line for free with your next purchase!
• ● Subscribe now, and receive 25% off for the next 5 months!
Financial
Our main source of revenue will be based on a subscription model for our line of soaps and
related hygiene care products. This will account for the primary way in which we receive funds
to profit and function as a business. This recurring payment will allow us to expand our brand,
ensure a consistent stream of income, and ensure we have funds to continue to innovate and
create new quality products for our loyal line of customers. Other streams of revenue could
include selling products that are based on subscriptions services and are instead just a one-time
transaction. This could include selling a variety of MODUS branded soap dispensers that our
customers can purchase from our online store. Overall, products like these could add a consistent
form of revenue to add along our primary subscription-based model.
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Since our store is completely online, we will be using a payment method that accepts credit cards,
online debit cards, PayPal, and other forms of online payment options. Additionally, by operating
our store solely through a digital form, we will be saving potentially thousands of dollars from
having to purchase or pay rental fees for buildings and physical store fronts. By basing our
revenue off our B2C approach and focusing on our target segments – the millennial generation
starting in North America, we estimate our gross revenues to be anywhere from the 1 million in
by year 5. We estimate this by looking at the millennial population (age 24-39 in 2020) of just the
US numbers of 72.1 million adults, and then using our subscription price of $4.99. Ultimately,
there is a great potential of sales that can be estimated in terms of gross total revenue based on
our product price and the target market.
Year 1
Year 2
Year 3
Year 4
Year 5
Revenue
262,000
445,782
640,589
920,527
1,322,797
COGS
33,000
57,375
60,330
118,000
147,000
Operational Costs
99,776
42,000
45,000
47,000
50,000
Wages
300,000
316,000
340,000
357,000
374,000
Net Income
29,224
30407
140,000
397,527
751,797
Investor Profit
$4,384
$4,561
$29,289
$59,779
$112,770
Funding
We are seeking $150,000 for 15% of the company to help us through the first phases of the
company start-up. We will be using these funds to cover our expenses while we are developing
the initial product and building the infrastructure of our e-commerce platforms.
Predicted Startup Costs (See Appendix A)
Operating Plans
The Team
Our team will initially start with 6 members that have specialties in their field.
- A production specialist that coordinates with manufacturers to produce the product.
- Research and development team that formulates new scents and products
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-
Logistics officer that coordinates the movement of products between manufacturing and
client.
Sales and marketing the spreads the word of our products through social media, public
events.
Accounting and finance specialist that handles all incoming and outgoing cashflow.
Technology officer that sets-up and operates the website and the company’s Enterprise
Resource Planning
Timeline
Apr '22
Admin &
Legal
Jun '22
Research &
Development
Jul '22
Website &
Platform
Sept '22
Product
Improvement
Nov '22
Mass
Marketing
Mar '23
Mass
Production
By April this year with your investment we will start with:
1 – Admin and legal to start our operations and obtain warehousing space which will also work
as an office. Obtain the necessary licenses and certifications.
By June with our lab setup, we will develop the formula needed for our firsthand soap, then after
testing small quantities with a test group to gather data and preferences
2 – Research & development of formula
In July, we will be establishing our website and e-commerce platform
3 – Website & platform
In September, with the data gathered from test groups we will make final adjustments to the
hand soap formula for a small batch to be used for our soft launch
4 – Product improvement
By November, we will have a soft launch and market heavily during the holiday season to gain
brand awareness.
5 – Market for brand awareness with samples
Finally, by March of 2023 we will begin mass production and officially launch the brand and start
advertising to commercial clients.
6 – Mass production
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Works Cited
Duarte, C. e. (2018). How convenient is it? Delivering online shopping convenience to enhance
customer satisfaction and encourage e-WOM. Journal of Retailing and Consumer
Services, 161-169. Retrieved from https://doi.org/10.1016/j.jretconser.2018.06.007.
Pasquali, M. (2021, Sept 28). Personal care retail e-commerce revenue in the United States from
2017 to 2025. Retrieved from Statista: https://www-statistacom.myaccess.library.utoronto.ca/statistics/257527/us-health-and-personal-care-ecommerce-revenue/
PwC. (2021, Oct 27). Share of consumers in Canada that shop for items with sustainable
packaging during the holiday season in 2021. Retrieved from Statista: https://wwwstatista-com.myaccess.library.utoronto.ca/statistics/1074117/holiday-spending-onsustainable-products-canada/
Statista. (2018, May 2). Estimated value of soap and detergent market in the United States from
in 2016 and 2025, by product (in billion U.S. dollars) [Graph]. Retrieved from Statista:
https://www-statista-com.myaccess.library.utoronto.ca/statistics/844053/marketvalue-of-soap-and-detergent-in-the-us/
Figure 1. Reusable glass containers with the MODUS logo
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Figure 2. Bio-degradable pouch containing 2L of soap.
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Figure 3 Consumer E-Commerce
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Figure 4 Commercial E-Commerce
.
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Appendix A – Projected Startup Costs
START-UP COSTS
INITIAL COSTS
Business incorporation
fees
Legal
Website
Equipment
Total
MONTHLY COSTS
$
300
$
2,000
$
700
$
8,000
$
11,000
TYPE OF COST
Accounting
$
38 Fixed
Bank fees
$
40 Fixed
Communications
$
40 Fixed
Internet
$
85 Fixed
Insurance
$
80 Fixed
SEO
Marketing and Advertising
Website Hosting
Wages and Employee Expenses
Lab. Rent
Materials
Total
Months to cover overhead
Total cost covering overhead
TOTAL START-UP COSTS
$
$
$
$
$
$
$
12
$
$
700
50
15
3,700
1,150
1,500
7,398
88,776
99,776
Fixed
Fixed
Fixed
Variable
Fixed
Variable
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Appendix B – Subscription Trend
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Appendix C – B2B Market for Janitorial Supplies