How to build a circular economy for your brand
JP Arnaud-Marquez
·November 3, 2022
A brand’s environmental is becoming more important to consumers. And it’s influencing their buying decisions.
Some consumers are moving away from cheap “fast fashion” and single-use plastics, and turning towards high-quality products that are made from sustainable materials. Nearly 90% of Gen X customers say that they’re willing to pay an extra 10% or more for sustainable products.
The same focus on sustainability comes into play when customers are looking at how products get to them – nearly 90% of customers are interested in eco-friendly shipping options, even if the package takes a bit longer to arrive.
And when a product doesn’t work for a customer, they want to know that their return will be handled in an eco-friendly manner – after all, more than 5 billion pounds of returns end up in landfills each year, and conscientious customers don’t want to add to the waste.
What’s a circular economy?
As an ecommerce merchant, you can attract customers by promoting a “circular economy” with your products.
In short, a circular economy means that you’re transforming the ecommerce experience from a linear one into a circular one.
Typically, a product travels from business to customer to landfill, either once the product has reached the end of its lifespan, or, in many cases, during a return.
In a circular economy, the focus is on giving the product a second life – whether by being resold as a used or damaged product, recycled into a new product, or donated. By taking this approach, you’re able to extend the lifespan of the product, and keep materials out of landfills.
How can your brand move to a circular economy?
Let’s take a look at some innovators in the space for inspiration.
1) Resell items on a secondary market
Some apparel and outdoors gear brands, including Patagonia, Toad & Co, and REI, have built a sustainable process for managing returns. They encourage trade-ins to then sell gently used items on their own second-hand stores.
These items are often resold at a substantial discount, from 25% to 50% of the original retail price, with descriptions of any markings or signs of use. This approach provides a second life to items that just weren’t right for the original customer – and helps new customers build a relationship with the brand, too.
Last year, IKEA even launched its own buy-back program, where customers can sell back furniture and home decor items they no longer want in exchange for store credit. Those items are available for resale at a substantial discount through the brand’s “As-Is” section at their retail stores.
Want to launch your own resale marketplace, but don’t want to deal with the hassle of inspecting, photographing, and listing all the inventory?
A number of startups, including Trove and ReCircled, work directly with brands to manage the receipt of returns and trade-ins, inspect the items to determine whether they’re resellable, list the items for sale on a secondary marketplace, and handle fulfillment of the orders. Some brands are also partnering with the secondhand marketplace ThredUp to encourage them to resell their used items in exchange for store credit.
2) Repurpose materials from your products
If an item is damaged or ineligible for resale, can its materials be used for a secondary purpose, or transformed into new products?
Some brands have found innovative ways to repurpose used items that can’t be resold. At brands like H&M and Zara, customers can drop off used clothing (even from other brands) that will be converted into new fabric for manufacturing their products, or turned into material for insulation.
Nike also offers a recycling program at their stores; where customers can bring in old footwear and other products, and, if they’re not eligible for donation, they’ll be sent through the brand’s grinding machine and broken down by material type, so that the materials can be repurposed into new products.
The brand’s “Nike Grind” product line includes not just footwear, but items such as gym tile, turf fields, playgrounds, acoustic solutions, and many more sustainable products.
If you don’t have a manufacturing facility to repurpose your own materials, consider partnering with a company like TerraCycle, which is dedicated to finding ways to recycle different types of waste materials.
3) Donate items to organizations in need
Some brands make a point of accepting returns in less than perfect condition, knowing they can’t be resold. So what then? In many cases, they’ll donate the items to a nonprofit organization in need.
Allbirds gives customers a generous 30 day return period to try their shoes out “in the wild,” knowing that when returns happen, the shoes are likely to show signs of wear. In these cases, Allbirds donates their shoes to organizations or people in need: The brand partners with Soles4Souls to donate products to people in need, and launched a campaign that donated over $500,000 worth of shoes directly to healthcare workers in a five-day period.
Brooklinen, a luxury bedding brand, partners with Good360 to manage its product returns. After inspection, if a product can’t be resold, the item is donated through Good360’s extensive network of more than 90,000 donation partners, providing free bedding to homeless shelters, domestic violence shelters, and other organizations throughout the country.
Depending on your brand’s scale, you may benefit from finding a large partner network that can source donation opportunities – or maybe your donation volume is small enough that partnering with one or two local nonprofits will do the trick. Whatever the case, your donation recipients will appreciate the chance to get a second life out of your gently used products.
In closing
Sustainability is here to stay – and by following these strategies, you’ll be able to ensure that your brand will go the distance, too.
Want to learn how Loop can help you make your returns more sustainable? Get in touch.
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