advertisement
advertisement
The Fast Company Executive Board is a private, fee-based network of influential leaders, experts, executives, and entrepreneurs who share their insights with our audience.

Why a circular program may be right for your business

Setting up your own program can be advantageous from a branding and financial perspective—instead of relinquishing control and splitting revenue with a partner, it allows a company to control the program and enjoy better margins when reselling products.

Why a circular program may be right for your business
[Parradee/AdobeStock]

One of the most responsible things a company can do for the planet is make high-quality products that last for years so consumers do not have to buy more. Additionally, there is an added value for the brand when customers are able to resell these durable and timeless items. And yet, one of the greatest misconceptions in creating a resale (or recommerce) program is the fear of complexity from an operational, legal, marketing, and sales perspective.

advertisement
advertisement

A CIRCULAR ECONOMY

Recommerce is part of a group of buzzwords including “circular economy,” “circularity,” and “circular systems” that have become increasingly used. While this might seem complicated, don’t be afraid. At its core, circularity is the new and sleeker version of “reduce, reuse, recycle”—which still holds true today as a crucial approach to saving our planet. However, reducing, reusing, and recycling are often seen as antithetical to growing businesses.

If a trade-in or buy-back program is developed to extend the life of a product, a sales team might fear no further sales of new products. An operations team might fear the added complexity of bringing back gently used items and the legalities and processes for cleaning, inspecting, repairing, and offering those products back into the world. Marketing teams may be concerned about how to distinguish and market new products versus the older ones that are breathing new life. Luckily, this is not as difficult as it sounds, and it can begin to create precedents and set standards across industries.

GETTING STARTED WITH A CIRCULAR PROGRAM

Creating a circular product program begins with evaluating products for their ability to be reused or recycled, then developing an understanding of whether this can be done internally or if the company should partner with an external organization. There are increasingly more organizations offering refurbishment, repair, and recycling services to brands, especially within the textile, electronics, and food sectors. A few examples include Tersus Solutions, Recology, Terracycle, California Safe Soils, Trex, and e-Cycle.

advertisement
advertisement

Setting up your own program can be advantageous from a branding and financial perspective—instead of relinquishing control and splitting revenue with a partner, it allows a company to control the program and enjoy better margins when reselling products. By reviewing how to bring back the products, ensure authenticity, inspect, safely clean, and restore products, many organizations have been able to set up their own initiatives and lead the way for others to do the same in their respective industries. A few examples include Apple, the LEGO group, Ergobaby through its Everlove program, Target (car seats), Staples (electronics), Pet Pros, Coach, Stio and Mark Cross.

Start with a high-quality product (often with a lifetime guarantee) that can be passed down and then lay out a clear plan for how that program differs from those of existing and new products. A cross-functional team should develop a process that can be diagramed to show intake, inspection (for authenticity, safety, and level of wear), restoration (if any is needed), cleaning, and outtake for sale.

It is critical to have different functions represented to ensure the process is seamless and follows all regulatory and legal compliance requirements. And, for the program’s continued success, marketing teams should be responsible for supporting promotion and sales—just as they would for any other product group. If done correctly, this program can have lasting impacts.

advertisement

A BRIGHTER FUTURE

According to the Ellen MacArthur Foundation, a circular economy has the potential to reduce 20% of global greenhouse gas emissions to reach the goal of net-zero emissions by 2050. According to a McKinsey & Company report, in the apparel industry, circular approaches could deliver around 143 million metric tons of GHG emissions savings in 2030 and an additional 13 million metric tons with every percentage point increase in market share. Currently, recommerce represents 7% of the apparel market and it is expected to grow to 12% by 2030.

Keeping products in use longer allows for more accessibility of high-quality products to get into the hands of more people and can create greater inclusion across socio-economic communities. Price point accessibility is typically a big win for marketing and sales as well, as it can allow consumers to buy premium products that might not be normally within their reach.

Further, it is a demonstration of the durability of your product to consumers who may not buy the upcycled version, and can even have the added benefit of preventing consumers from buying counterfeit or lower quality items based solely on price.

advertisement

Experience shows that having a recommerce program does not have an impact on new product sales. Most retail or wholesale customers have sustainability targets of their own and are measuring their vendors for sustainability. A recommerce program often aligns your company with what your retail or wholesale customer is already doing and may even improve that relationship.

Don’t be afraid to embrace the positive changes that come from extending the life of great products. As a result, many companies have not only made revolutionary changes in their respective industries, but they also continue to grow topline sales of new products, demonstrating that doing the right thing can still be a win for your business.


Petty Rader, Chief Growth & Legal Officer of Ergobaby

advertisement
advertisement
advertisement