Author: Lauren Foye, Head of Reports at Zero Carbon Academy
In part driven by the pandemic, the reselling and rental of previously owned goods has seen a surge in popularity, aiding a drive towards a circular economy
Source: inmotionventures.com
What is the ‘Circular Economy’?
The concept of a ‘circular economy’ is a response to the challenges and issues relating to our take-make-dispose approach to production and consumption. As the World Economic Forum report, in 2019 over “92 billion tonnes of materials were extracted and processed, contributing to about half of global CO2 emissions. The resulting waste – including plastics, textiles, food, electronics and more – is taking its toll on the environment and human health”[i].
The circular economy seeks to eliminate waste, instead focussing on reusing and recirculating materials to preserve both the environment and natural resources. According to WEF It is believed that this could yield up to $4.5 trillion in economic benefits by 2030.
The Ellen MacArthur foundation further explains: “The circular economy is based on three principles, driven by design:
· Eliminate waste and pollution
· Circulate products and materials (at their highest value)
· Regenerate nature
It is underpinned by a transition to renewable energy and materials. A circular economy decouples economic activity from the consumption of finite resources. It is a resilient system that is good for business, people and the environment.”[ii]
Rental & reselling is growing in popularity
In a positive step towards circularity, there is growing interest from consumers around purchasing goods which are sustainable and responsible environmentally. Deloitte’s 2021 Sustainability and Consumer Behaviour study found that sustainability remains a key consideration for consumers, even with the global pandemic; 32% of consumers say they are highly engaged with adopting a more sustainable lifestyle. Further, almost 1 in 3 consumers stated that they had stopped purchasing certain brands or products because they had ethical or sustainability concerns about them[iii].
One way to achieve this is through the reuse of items, either via reselling or rental. Even prior to Covid-19, buying second-hand goods was a growing trend, yet with increasingly restricted supply chains (especially relating to the sale of vehicles and electronics) and tightening household budgets, consumers are becoming increasingly savvy in how they make purchases. Further, with the ease of online reselling sites such as eBay, Facebook Marketplace, and Craigslist, it has never been more convenient to list your own items for sale, as well as to purchase second hand goods.
However, it’s not just consumers reselling, brands themselves are waking up to the idea of monetising the resale of goods, via their own platforms. As a recent Forbes article noted that by allowing consumers the chance to resell items on a brand or businesses e-commerce site, this would provide a seamless, brand-loyal experience for customers, and at the same time would give retailers the potential to keep resale within their own business.[iv] Wilson Griffin, co-founder and COO of Recurate, told Forbes. “The resale market is growing 11 times faster than traditional retail, which is due to a combination of factors from customer demand for more sustainable and affordable ways of shopping, to advancements in technology that power resale.”[v]
e-waste a growing concern
Whilst much of the attention for reselling has more traditionally been around clothing, there is growing demand and recognition for the reuse of electronics- something which typically had fallen foul of todays ‘throw-away’ culture. The fact is, our love for electronic equipment can have significant negative consequences for the environment. Modern technological devices use many rare metals which are not only damaging to extract, but also cannot easily be recycled. Further, it is often the case that ‘recycled’ devices are simply shipped to poorer nations where they are incorrectly handled and disassembled, putting both workers and the environment at risk of exposure to harmful materials. The Sydney Morning Herald reports that “In just five years, the volume of discarded smartphones, laptops, printers and other electronic devices has jumped 21% worldwide. This e-waste reached a record 53.6 million metric tonnes in 2019, an average of 7.3 kilograms per person, and has become the fastest-growing domestic waste stream, according to the United Nation’s Global E-waste Monitor 2020 report.”[vi]
Source: eletimes.com
“In a properly built circular economy, one should rather focus on avoiding the recycling stage at all costs. It may sound straightforward but preventing waste from being created in the first place is the only realistic strategy.”- World Economic Forum
Fortunately, the issues around e-waste are being raised by increased media coverage on environmental issues- helping to change consumer attitudes away from simply discarding electronic devices. Potential solutions exist in allowing consumers easy means to either resell their goods or to remove the need to purchase them in the first place. On the latter point, there is growing investment by some businesses in the option of renting items as an alternative to ownership.
One such example is MusicMagpie, traditionally a buy & resell site, which has since moved into the device rental space. Following the popularity of its smartphone rental offering the company recently announced expansion of its subscription service into new product categories, including tablets, MacBooks and games consoles. A recent report by the company found that one in three people say they are now more likely than ever before to rent things instead of buying them. They rent for a range of reasons, from convenience and affordability to protecting the environment. More than one in ten can imagine a time when they will rent just about everything they use except food and toiletries.[vii] Over half (53%) also agreed that a redefinition of ownership is underway, whereby consumers don’t place as much emphasis on ownership and, as a result, have more access to a greater number of products and services.
In a press release Steve Oliver, Chief Executive Officer of MusicMagpie, said:
“We are delighted with the progress of our innovative rental subscription service, which is why we’ve expanded it beyond smartphones and into other consumer technology categories. It’s clear from the popularity of this service, as well as the growth of the wider subscription economy, that consumers are increasingly prioritising access, value and sustainability over full ownership.
There is also a growing awareness of the rising problem of e-waste, which MusicMagpie’s circular economy model helps to tackle head-on by refurbishing and reselling consumer technology products, giving them a second or third life which they would not otherwise have had. The beauty of our rental scheme in particular is that it keeps electronic products in the MusicMagpie circular ecosystem for longer.”[viii]
References
[v] Ibid
Zero Carbon Academy (www.zerocarbonacademy.com) aims to become the ‘go-to’ resource for the learning, information and community that individuals need to assess, plan, execute and monitor their organisation's migration towards a Zero Carbon footprint.
This blog reflects the authors own opinions, it therefore does not reflect the thoughts or opinions of the business, or any affiliated organisations.
The information presented in this blog is purely for interest, it should not be seen as direct business advice or investment strategy - using it for such purposes remains at your own risk.
Our analysts work hard to gather these insights, as such please do quote and link back to their research, or ask permission, before using excerpts.
