eKoala: a journey into the world of sustainable toys

Angelo Paletta, Eleonora Foschi, Selena Aureli January 11, 2024 5 min read

eKoala is the story of two young siblings, Daniele and Beatrice, who founded their first company in 2015 with the aim of producing toys made of biodegradable and renewable plastic. The company was born out of the personal concern of Daniele, a researcher in neuroscience, for the health of his newborn son. His education, combined with experience gained through the family business ‘Georplast,’ in fact allowed him to reflect on the impact of harmful chemicals, often found in plastic toys, on health and the environment. These reflections led him to collaborate with his sister Beatrice, an expert in business processes and operations, and discover with her that 70 percent of toys distributed globally are manufactured in China, that the big players in the industry are strongly linked to the oil industry, and that online sales have eroded product safety controls.

Reasons enough to decide to start something pioneering: a Made in Italy toy production that used almost exclusively plastic produced from renewable and potentially biodegradable plant sources. A real “leap in the dark” since, at the time, no major player in the sector was using these materials and there was no data available to assess the financial sustainability of such a complex operation. This alone would be enough to make the case of eKoala a fascinating object of study, but what turns it into a relevant business case for Bologna Business School’s MBA courses focusing on corporate sustainability and/or the circular economy is also, and above all, the fact that the two founders did not just look for sustainable materials to produce and market a line of safer toys: they put sustainability at the heart of the business plan, making sure that every aspect, from sourcing materials to manufacturing the packaging, was geared toward CO2 reduction, water saving, circularity, and generally minimizing the social and environmental impact. An enterprise that, in a world often geared solely to marketing and intoxicated by greenwashing practices, cannot fail to fascinate, and yet one that immediately faced major challenges such as decreasing revenues, especially in 2020, in conjunction with the COVID-19 pandemic and increasing competition in the alternative materials market by new entrants and large brands.

In fact, after reaching a turnover of 109,907 euros in 2019, eKoala dropped to 27,189 euros in 2020, with total assets remaining almost unchanged at 386,020 euros, compared to 386,330 euros in the previous year. Daniele and Beatrice were concerned: operating costs rose from 49,606 euros in 2016 to 119,916 euros in 2020, mostly due to the need to create a platform to operate e-commerce. A consultant, Gloria, helped Daniele and Beatrice think through their business model, illustrated through Osterwalder and Pigneur’s famous Business Model Canvas. Meetings with the consultant helped the siblings identify the weaknesses, but also the strengths, behind their value proposition. What transpired was that the material used for the toys, in addition to accounting for 50 percent of the company’s costs, was also the means through which to create environmental and social value, thus realizing the company’s value proposition: to offer health- and environmentally safe, sustainable and Italian-designed toys to parents who care about their children’s health, the environment and, in general, future generations. The formulation used, in addition to being made from materials sourced from renewable resources and purchased from a local supplier, was free of toxic-harmful substances and therefore, well-suited to children of a young age. With this and other information, Gloria was ready to analyze the market, then return five weeks later with a comprehensive overview of the company’s potential.

Led by Gloria, the entrepreneurial duo, who were joined by their father, analyzed the competitive environment and possible developments in the market for sustainable toys. It quickly became apparent that since the year eKoala was founded, something had shifted in the industry, and the target audience’s heightened sensitivity to environmental issues had led companies to raise the issue regarding the massive uses of plastic materials. Some of the good practices suggested by Gloria included a move toward innovative business models based on reuse and repair. There was the initiative of a large company like Lego, which launched Replay to encourage owners to donate their used bricks to children’s charities. Also, there was the interesting case of start-up Dagoma, which adopted eco-design-for-repair criteria to increase the lifespan of toys by providing 3D-printed replacement parts. A similar goal was also pursued by Danish company Modutoy, which offered modular toys. Even Chicco, a historic Italian company, had launched its new Eco+ line of baby toys based on a combination of bio-based materials and pre-consumer recycled plastic. In short, competition was increasing, but with it the potential of an industry that, according to a Technavio report cited by Daniele, could count on a CAGR of 10 percent in Europe from 2021 to 2028. Gloria urged the company to focus more effort on eKoala’s potential, which, however, needed to be explored, amplified, and narrated with more strength and conviction: sustainability must pervade all of the company’s strategies and operations; eKoala was going to need to maximize and better communicate the environmental and social value it was able to offer, addressing not only direct customers but all stakeholders who could be benefited. Daniele and Beatrice were therefore at a crossroads. With an EBITDA that went from -13,677 euros in 2016 to 16,993 euros in 2020 and a reduced net worth from 62,978 euros in 2019 to 44,275 euros in 2020, the road was uphill. However, with Gloria’s help, they were ready to rethink their business model for a more sustainable and profitable future. 

A new business model canvas based on a systemic view, the inclusion of measurement of economic but also social and environmental impacts, and more was going to support Daniele and Beatrice on this new path.

This case study opens an interesting debate on the business model of a small innovative company that, despite its long-term vision, faced complex challenges, accentuated by an increasingly competitive and tortuous environment. Reasoning about the sustainability of eKoala’s business model offers an opportunity to reflect on the elements that must guide a company with a mission strongly oriented toward the creation of value, not only economic, but also social and environmental value, not only for customers but for all actors in the ecosystem in which it operates. In an academic context, the case of eKoala becomes fertile ground for undergraduate but especially executive master’s students where experience, combined with knowledge, allow them to explore, with pragmatism, concepts such as systems thinking, life-cycle approach, and multi-dimensional measurement. Students are challenged to examine, validate and suggest improvements to the eKoala business model, thus providing valuable insights for business management. 

This article is based on
eKoala: Transitioning Towards a Sustainable Business Model in the Toy Manufacturing Industry
Eleonora Foschi, Selena Aureli, Angelo Paletta