The push toward circular commerce is getting stronger in recent years due to several forces including stronger environmental regulations and consumer demand for sustainable products.
Traditional manufacturing processes tended to create a lot of waste, and were often focused on making products as cheaply as possible. Many of those products were destined for the landfill at the end of their life cycle. With consumers becoming more environmentally conscious and demanding the same of the brands they buy from, circular commerce is quickly becoming the standard for modern businesses.
In circular commerce, instead of products traveling in a straight line (raw materials to manufacturing plant to retail shelves to consumers to landfill), materials and products are kept in use as long as possible. The methods for accomplishing that include repair, refurbishing, and recycling, depending on the product and materials used to make it.
Here are the main ways a used product’s life is extended – and how your 3PL fits into that process for your customers.
Resale
According to secondhand clothing seller ThredUp’s recent resale report, the U.S. secondhand clothing market will reach $73 billion by 2028. That represents an increase of 11% every year – seven times faster than the overall U.S. clothing market.
It’s not just clothes, either: research and advisory firm GlobalScan reports that 74% of consumers around the world shop resale goods including apparel, electronics and home goods (such as furniture). And GlobalData reported the 2023 resale market at roughly $175 billion.
Tapping into that huge and growing market not only supports a brand’s sustainability efforts – it can also represent a significant revenue stream of its own. Turning returned products into resale-ready items is worth the effort, but many retailers lack the facilities, time, or personnel to process returns on top of their regular commerce activities.
That’s where 3PLs come in. By offering return processing and handling the inspection, dispositioning and resale for your customers, you strengthen your partnership with them. But the key to success with this strategy is having a clear plan in place with your customers that details how you need to inspect products, what criteria to use for dispositioning, and whether your retail partner wants you to handle the resale for them or send resellable products back to them.
The good news is, technology exists to clarify the whole process. Octolan, for example, walks your team through the entire inspection and dispositioning process with a series of questions about the returned product’s condition. This makes it far faster and easier to determine whether a product is destined for resale, recycling, or disposal.
Reconditioning
Some products are still usable, but need a little help in order to enter the resale market. Common products in this category include clothing, electronics and furniture – products that may show signs of wear or use, but can be cleaned and/or repaired.
These products go through a reconditioning process, which involves:
- Thorough inspection for damage or defects and assessment of whether or not those faults can be repaired.
- Repairs, replacing faulty parts, and refurbishing the item to bring it back to working condition.
- Thorough testing to ensure the product is working correctly.
- Cleaning, repackaging, and listing the item for resale in refurbished condition.
Reconditioning products extends their useful life and dramatically cuts their amount of waste. In the case of electronics, where materials often include rare, expensive or hard to procure resources, that’s an especially big deal.
But reconditioning can also come with a few challenges, such as cost effectiveness and maintaining quality of refurbished products. Here, again, technology can help by walking team members through the inspection, repair, and refurbishment process.
Modular Design
One method of extending a product’s life that’s gained popularity in recent years (especially for electronics and furniture) is modular design. Creating products with replaceable components allows a product to remain in use for much longer as worn-out pieces get replaced instead of the whole unit. Modular products can also allow consumers to add functionality as needed, without buying a whole new product to complete a new task.
And by offering a return and replace program to customers, brands can recover those worn-out components to either refurbish and resell or recover materials to make new ones. Either way, these products help reduce the amount of waste headed to landfills. This is also a great way to improve customer satisfaction by reducing or eliminating the need for consumers to replace products every few years.
Recycling
Of course, not every product comes back in reusable condition. Clothing may arrive too soiled or damaged to be cleaned or repaired for resale; electronics may be damaged beyond repair. Deciding on the disposition of these products involves assessing the reason the customer returned them and thoroughly inspecting them to determine the amount of damage.
Depending on the product, its condition, and the materials used to make it, you may have several options for recycling. Establish clear rules with your retail partners for how to handle recyclables. Is the whole product recyclable? Are there materials you can recover from damaged products to return to the manufacturing process? How can your team quickly and cost effectively determine which products go into which recycling processes?
Return Desk’s dispositioning process, for example, walks users through a series of questions about each product based on criteria provided by your retail partner. This allows each item to be assessed and dispositioned quickly without a lot of back and forth with your customers.
Why 3PLs Should Embrace Circular Commerce
In case the above points didn’t convince you, there are several more compelling reasons for your 3PL to handle returns and dispositioning for your retail partners – not least of which is those brands wanting their 3PLs to handle more of this process for them.
But there are plenty of other benefits to your business in handling the inspection, refurbishment, resale, and recycling for your brands, too:
- Offering these value added services generates more revenue for your business.
- Sustainability-sensitive brands will appreciate cutting down on the resources expended in sending returns back to their warehouses instead of handling them at your 3PL. This strengthens your relationship with your customers.
- Offering these services makes you more attractive to new customers, which makes it easier to grow your business.
Handling the entire returns process for your retail partners may get overwhelming – but, as mentioned throughout this post, technology can help. Octolan’s shop floor automation solution walks your team through the whole process. Scanning a return as it enters your facility triggers step by step prompts (which can include images) to show users how to inspect returns, recover consumables like batteries and packaging, and dispositioning products.
Taking advantage of solutions like this allows you to offer valuable returns services to your partners without creating added headaches or costs to your own business.
Circular commerce is growing in popularity thanks to more stringent regulations and customer desire to do business with sustainable brands. By clearly outlining the inspection, disposition, and repair/refurbishing processes with your retail partners, your 3PL can become a valuable part of the circular commerce movement.