By Returnity CEO, Michael Newman
- Reuse is a return rate challenge more than a product design challenge – 75% isn’t good enough. 90% is the floor in most circumstances
- Brands need to work with reusable packaging vendors that are transparent and provide that information from the start
The search for environmentally-friendly packaging has taken on a new urgency due to the COVID-19 pandemic, with corporations, governments, and consumers all seeking an alternative to the mountains of cardboard and poly mailer bags our ecommerce lifestyle creates. With 100 billion global parcel deliveries a year, and over 200 billion by 2026, the impact is undeniable. In the United States alone, it is enough packaging to pave a mile-wide cardboard road from New York City to Los Angeles and back – three times over.
Yet in the rush to find more environmentally-friendly packaging, brands are missing the tools to best assess the true impact of reusables – operationally and environmentally. And when considering the relative sustainability impact of reusable shipping and delivery packaging, there is no more important metric than the return rate.
Reuse in Practice vs. Reuse in Theory – The Inconvenient Truth
Read any article about a reusable packaging company, and you will see them boast about the number of uses you can get out of their products. 50 or more is common, and some even claim 1,000 uses. If you are looking at a mountain of cardboard in your warehouse or recycling bin, that easily impresses. But what you don’t see them discussing is why your actual return rate is what drives the number of uses – not the durability or “intelligence” of the package.
As an example, say you integrate reusable shipping packaging into your ecommerce logistics stream, and 75% of your customers send back the empty packaging to be used again. 75% might seem high – but in actuality, it means the average bag is only used for four outbound shipments before it is either thrown in the garbage or into a customer’s closet or garage.
In practice, it means you ship out 100 bags and get 75 back. You then ship out those 75 and get 56 back. Ship out the 56 and you get 42 back, etc., etc. It is true that roughly two of those original 100 bags will be the lucky ones that keep getting returned and end up being used for 15
customer shipments. But on average, the bags will only be used for four customer shipments, because 44 of the original 100 are used for only one or two shipments total – a critical finding that is rarely disclosed.
With a 95.5% return rate, the average bag or box can be used for 20 customer shipments – the standard Returnity guarantee. Return rates are profound – even a drop to 90% would cut in half the average uses per package. Returnity’s focused process identifies high-return rate opportunities for clients and is now being used for over 500,000 shipments a month, pointing the way towards high-volume, sustainable deployments of reusable packaging.
The Return Rate Bottom Line
Reusable packaging is more material and energy-intensive to manufacture and consumes resources to reaggregate, clean, and stage for the next use. To see an environmental benefit, the packaging has to be reused “enough,” though enough does depend on the specific circumstances of use.
Regardless, the recent comprehensive analysis of reusable packaging by Fashion For Good highlights that “… a reusable package must fulfill more than four cycles before it presents a reduction in CO2 eq emissions…” With a 75% (or lower) return rate, you are likely creating more environmental harm, not less, by switching to reusables.
The Path Forward
Reusable packaging is an important tool for brands looking to reduce the environmental footprint associated with delivering their products to customers. For companies considering making the switch, follow these important steps to ensure your program is successful:
- Start by defining the number of uses per package necessary to achieve environmental and financial targets.
- Require that reusable packaging partners document exactly how they will enable the return rates necessary to hit those targets – ideally by highlighting previously demonstrated success.
- Test and monitor real-world performance to assess adherence to that target.
In future papers, we will explore why return aggregation costs drive program economics, the limitation of consumer incentives to increase participation, and why “One size fits all” doesn’t work for last-mile packaging.
About Returnity: Launched in 2017, Returnity replaces single-use shipping and delivery packaging by designing, manufacturing and implementing reusable packaging and circular logistics systems. Customers include Rent the Runway, New Balance and others. The company is led by CEO Michael Newman and is based in Brooklyn, New York.
About Mike Newman, CEO: Mike is one of the leading experts in the transformation of logistics platforms from single-use to circularity, reducing the mountains of plastics and corrugated cardboard entering our waste stream while saving millions in packaging expenses. He received his MBA from the Ross School of Business at the University of Michigan. Over the last 20+ years, he has worked at the intersection of supply chain and sustainability, including directing the Sierra Club’s political operations in 20 states and building e-waste programs for such as Verizon, Walmart, and Best Buy as the Sales Marketing VP for ReCellular.