Reusable packaging is a hot topic in the C-suite these days, with brand heavyweights like Procter & Gamble, Nestlé, PepsiCo, Unilever, Mars, Clorox, Coca-Cola, Mondelēz, and Danone partnering with retail giants Kroger and Carrefour to launch TerraCycle’s new e-commerce reuse initiative, Loop, announced earlier this year.
Reusable packaging is nothing new; what is new is bringing the zero-waste model to consumers at scale. As e-commerce reusables continue to gain traction, brand owners and retailers will demand new kinds of capabilities around last-mile reverse logistics, a huge potential opportunity for the industry. Here, we take a look at some of the e-commerce reverse logistics models shaping the market, and how savvy service providers can get in on the action.
The Established E-Commerce Reusable Model
The least disruptive model relies on existing parcel delivery networks where responsibility for returns belongs to consumers. Companies like Limeloop, Rent the Runway, and Thred Up use UPS, FedEx, and USPS to deliver goods in reusable boxes or pouches along with a pre-printed return label.
Customers simply remove the goods, slip the return label in or on the package, and drop it in their mailbox or drive it to the appropriate parcel delivery service location. For consumers, the process is identical to returning a product purchased online, less the hassle of arranging the return themselves and paying for return shipping. In this model, the reusable packaging joins existing “one-to-one” flows, from one retailer to one consumer and back.
The “Milk Man” Model
The second model functions just like residential milk deliveries in the first half of the 20th century. Delivery personnel work for a single company, delivering goods to multiple customers along a route. Drivers deliver the goods to customers’ homes in reusable containers and retrieve the empty container(s) from previous deliveries at the same time; a deposit system is typically in place to ensure container returns. This model is popular with meal delivery services and other consumables with regular delivery schedules, where there is enough predictable volume to justify a new “one-to-one” flow.
Tomorrow’s e-commerce model will present complexity and capacity issues
Now here’s where things get interesting. In developing the Loop initiative, its partners face a new challenge unaddressed by the two current models: multiple brands’ reusable packaging flowing back and forth to multiple consumers.
Loop’s solution is to utilize an existing parcel delivery network (in this case, UPS) with multiple flows; a kind of “shared milk man” network. In this model, reusable packaging is coming from a variety of brands, being consolidated either at the UPS facility or at the retail store, joining the retailer’s existing reverse logistics flows.
As the initiative is only in its infancy, the combined networks of UPS and Kroger or Carrefour will be plenty sufficient to handle both outbound order consolidation and inbound empty container retrievals – for a while at least. But let’s imagine a world where Loop and its inevitable competitors achieve much higher volumes. More and more retailers get on board. Empty reusable jars, boxes, bins, etc. wind up either at UPS/FedEx DCs or retail DCs in large numbers. They must be sorted and returned to their brand owners for cleaning and refilling.
By partnering with TerraCycle, UPS has staked its claim as the e-commerce reverse logistics provider, a natural extension of its focus on facilitating returns. But the transportation aspect of reusable reverse logistics is only part of the equation, and herein lies the opportunity.
For reusable packaging service providers, e-commerce is the next frontier
E-commerce reverse logistics requires not just delivery and retrieval capabilities but asset consolidation, sortation, cleaning, refurbishment and repair, and these activities largely make up the economic and job growth projections in a circular economy. Who better to provide these services than the experienced providers already performing the reverse activities for retailers with their pallets, reusable plastic containers (RPCs), trays and totes, and other returnables?
The demand will be there, and that demand will be met. The reusable industry’s service providers will have the opportunity to expand their offerings of sortation, washing, repair, and reverse logistics to the new e-commerce reusables market. Brand owners and retailers expanding their use of reusable packaging will benefit by partnering with these seasoned reusable service providers, leveraging their years of experience to build a more efficient, zero waste packaging system.