Analysis

Reverse logistics: How can retailers support the circular economy?

circular economy

The birth of the “circular economy” is forcing retailers and brands to consider not only how to get products to customers but how to get them back again.

The circular economy is a proposed alternative to the traditional “linear” one in which products are made, used and disposed of. The aim is to try and keep resources in use as long as possible to extract the maximum value from them and then recover materials from them.

This could take a number of forms, from increased usage of recycling to leasing products rather than buying them. Its benefits can include a lower environmental impact and a lower product cost for customers buying second-hand products.

A report by Thredup anticipates that the resale market will reach $41 billion by 2022, with apparel accounting for 49% of this. One in three women shopped second hand last year. Another survey found that 78% of consumers said they always recycle their unwanted possessions, with 26% strongly agreeing with the statement.

To achieve this, companies will have to find ways of recovering products from customers in a convenient and cost-effective way.

One prominent company with ambitious recycling targets in Nespresso, which first began recycling capsules in 1991. The beverage company uses aluminium in its capsules but the majority of this can be repurposed for use in new ones.

Nespresso offers pre-paid recycling bags from UPS so that consumers can send back capsules to be recycled. Customers can request the bags from a Nespresso boutique, order them online or call the customer service centre. They then simply give them to a UPS driver or take them to dedicated drop-off points.

The coffee brand also recently made a $1.2 million commitment to enable the recovery of its aluminum coffee capsules through New York City’s curbside recycling programme. This means that customers can simply place them with their normal recycling.

John Lewis is another company allowing customers to hand products over at the door. Berangere Michel, operations director at John Lewis, explained in a panel at Retail Week Live that sustainability is increasing as a theme in terms of how much it is being talked about. However, she believes it is unproven whether this translates to changes in actual consumer behaviour.

An innovative partnership with sister company Waitrose allows customers to hand over a John Lewis return to a Waitrose driver. Benefits include the cost savings of only having one driver going to the home and the fact it encourages customers to become customers of both.

She is hopeful this partnership could expand to other areas in the future.

Click and return is also becoming a popular channel for consumers to send products back to retailers. Click and collect provider CollectPlus works with SodaStream, which makes machines for carbonating water at home. These come in canisters which the company is able to refill if they are returned.

“The click and collect returns service can work in a multitude of ways for recycling and, crucially, it means that customers can do this on their terms,” says Neil Ashworth, CEO at CollectPlus. The company has 7000 points across the UK, located in the likes of corner stores.

Ashworth highlights the appeal of the circular economy to the millennial cohort in particular.

“Two key purchase-decision-making factors for this demographic are sustainability, to reduce the environment impact of purchases, and convenience, so that customers can fit shopping around their busy lifestyles.”

These various experiments with reverse logistics all have one thing in common: convenience. To truly participate in the circular economy, customers will have to be able to send products back at their convenience with the minimum of fuss.

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