What are the Principles of the Circular Economy?

Every year tonnes and tonnes of items are disposed of, from clothing to appliances and electricals. All of this waste, year upon year is causing a huge amount of damage to the environment that will be felt for generations to come. An increasing number of environmentalists, consumers and even brands in the retail sector are looking innovative and creative ways to repurpose, recycle and reuse all kinds of products from fashion to electricals and homeware. One of the ways that this can be done is by re-selling or reusing items that we no longer need or want. This can be applied to absolutely everything we buy from food and packaging through to appliances and electricals.

The process of reselling pre-owned items is known as recommerce and it’s a concept that continues to grow in popularity. Businesses and brands are becoming increasingly aware of how it can scale into a profitable and environmentally friendly alternative to the throwaway culture that generates so much waste.

The traditional product lifecycle is a linear one that follows a similar process to:

Source > Produce > Consume > Discard

  • Various raw materials are sourced in preparation for manufacturing (Source)
  • The goods are made with the raw materials (Produce)
  • The products are then purchased and used by the consumer (Consumer)
  • Once the product has reached the end of its lifespan or it’s no longer needed/wanted it will be turned into waste when it’s thrown away (Discard)

This process applies to every single product that you buy, from food to clothing to cosmetics to electricals. The list goes on and on. While some of this waste is recycled, most of it may end up in landfill, contaminating the environment in the process. When you buy a new item the process begins again, in time generating even more waste.

The circular economy takes a different approach.

In an ideal circular economy, landfill doesn’t exist. In its place is a system where one person’s waste is another’s food. If we look at natural products as an example such as an apple tree, most of the energy required to grow the apples is through the sun. When the apples fall to the ground, this apple will be broken down and then reabsorbed by the soil where the process begins again.

In our current system of consumerism, we have adopted a linear approach rather than a circular one. When a new gadget comes out, the latest laptop, the up to date phone or when the washing machine breaks down, old items are discarded without much thought of what happens to them. Each time this happens we are generating huge amounts of waste. This approach is simply not sustainable over the long term. The damage that it will do and is doing to the environment will become so great that the environment can no longer cope. The cyclical model is a viable alternative.

Within the circular economy, every product is thought of in terms of a ‘biological’ cycle. With a little innovation and clever design, products can be redesigned, and packaging reshaped to produce compostable and safe materials that can help produce more products in the future. Everything that goes into a product can be recycled, reused or made so that it biodegrades. In this way, there is no waste because every component is reused in some way. Plastics and metal components from a washing machine or refrigerator for example can be reused and recycled to become a kettle or an iron.

There is often stigma attached to resale items, with many people assuming that an item that has been resold is of poor quality, has little value or is something that is undesirable. But this view is starting to change. Even more so with the introduction of recommerce which has transformed the resale of items and reframed it in a much more positive way.

Benefits of The Circular Economy and Recommerce

  • Sustainability – Recycling and reusing products will reduce the demand for new
  • Money saving – When items are recycled, they are often sold at a lower cost, allowing consumers to save money
  • Conscious consumption – Consumers buy products which have a better resale value making them more conscious of what they buy
  • Promoting recycling – Consumers are actively encouraged to reuse and recycle
  • Space saving – Clearing out stocks that are overflowing that would otherwise end up going to waste

Principles of the Circular Economy

There are many principles that underpin the circular economy including:

Principle 1: Waste to Reusable Resources

The first principle is used to describe a perpetual cycle of use and renewal. Any product that is used and no longer needed never becomes ‘waste’. Once it is discarded it enters a new lifecycle where it is dismantled, and the various components are extracted to become a new item. Products should enter a cycle of constant renewal with little to no waste.

Principle 2: New Systems

If recommerce and the circular economy are going to work as effectively as possible, the second principle plays a crucial role. The current systems that we have in place to deal with the huge amounts of waste will need to be transformed. New systems must be developed that help to recycle products rather than processing them as waste. Recycling must become fast, efficient and environmentally friendly.

Principle 3: The Use of Renewables

Drawing on natural sources of power such as solar, wind and tidal sources to drive the systems and techniques used to recycle products rather than using polluting fuel sources such as gas and oil.

Principle 4: Do More with Less

Making the manufacturing process much smarter, taking advantage of technologies such as bio-plastics, bio-based chemicals and carbon fibres as well as low impact steel and aluminium that would bring huge benefits across multiple industries.

Principle 5: Repair and Refurbish

The throwaway culture that society has widely adopted generates more than 50 million tonnes of electronic waste every year according to Lombardodier. To counter this increasing emphasis is being placed on improvements to the manufacture of products, obliging manufacturers to make their products much easier to repair and ensuring that there is a range of affordable repair solutions for all types of products with a specific focus on electricals.

Product refurbishment is another idea that fits nicely into the circular economy. Rather than discarding an old piece of equipment, this will involve a full restoration, replacing older parts and bringing it up to date. When more products are refurbished, this has a direct impact on the demand for new materials which in turn reduces waste.

Principle 6: Repurposing

The items that we throw away can be turned into so many different things. Upcycling or converting a discarded product into something new and creative is a growing trend and the fashion industry is leading the way in this area.

Principle 7: Recycling

Increasing the materials that can be recycled so they can be put back into the system and transformed into something else.

All of these principles combined are designed to eliminate waste and pollution, keep products and materials in a constant flow of use drawing on a variety of natural systems and processes to keep the cycle going.

How Retailers Can Remain Competitive?

Consumers love shopping in the recommerce market because they can get more for their money and they know that they are buying a more sustainable product. This method of shopping however does present a major threat to traditional retail stores. As resale continues to grow there are strategies that the average retailer can use to maintain their competitive edge in the circular economy:

Promote Sustainability – At the core of recommerce is a circular economy. This is an economic system designed to eliminate waste and promote the constant use of resources. In certain industries such as fashion, this will mean taking a different approach. Ensuring that clothing is more durable as an example, moving away from the ‘fast fashion’ which generates huge amounts of waste.

Pricing – Recommerce retailers are able to offer their products at significant discounts so traditional stores need to be more strategic about their pricing if they are to compete. Smart pricing solutions are recommended so sellers can quickly respond to consumer demand and adjust pricing to drive sales and facilitate the flow of inventory.

Category management – Retailers must learn to constantly innovate to attract and retain customers for the long time, maximising their lifetime value. Category management is the process of arranging retail categories as independent business units so retailers can identify where the most valuable categories are, optimise products and use resources in a more efficient way.

That said, while recommerce is continuing to grow, there are no signs of it replacing or even reducing demand for traditional retail. As the owner of a retail store that sells physical products, you should be thinking about whether resale commerce would work for you or how you could weave certain elements of it into your existing business.

PS, Are returns & overstock damaging your business? If you are ready to join the recommerce revolution with a sustainable selling solution then contact ClearCycle today.
Dan Hague ClearCycle

Dan Hague

24 November 2020

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