Solace Skincare: sourcing and a big-box offer

Solace Skincare makes lotions and balms from natural ingredients. It has 85 employees and about $5,000,000 in annual revenue, and it sells through its own website and about 300 independent boutiques. Its mission statement reads: 'To make gentle skin care from ingredients that are good for people and the planet.'

Shea butter, Solace's main ingredient, comes from Kpana Trading, a low-cost exporter. A news investigation recently reported that some of the villages that supply Kpana pay the women who gather and process shea nuts far less than a fair local wage. Kpana denies the report. Some Solace customers have posted complaints online, and in a survey of Solace customers, 64% said ethical sourcing was 'very important' to them.

At the same time, HomeMart, a national big-box chain with 900 stores, has invited Solace to sell its products there.

Solace's leaders have narrowed their choices to two courses of action. Solace has $400,000 in cash available.

Solace would buy shea butter from a certified fair-trade cooperative run by women shea producers. Shea would cost 40% more, so Solace would raise its prices by 8% and redesign its packaging to show the fair-trade label. The cooperative can supply 80% of Solace's shea in the first year and all of it by the second year, so Solace would keep buying 20% from Kpana for one year. Solace would turn down HomeMart for now. Several boutique owners have said they would promote the change.

Solace would keep buying from Kpana and require an independent audit of Kpana's suppliers within a year. It would accept HomeMart's offer, selling to HomeMart at a lower wholesale price than it charges boutiques. Two of Solace's largest boutique customers have said they would stop carrying Solace if it's sold at HomeMart for less.