1. Sustainability Problem: Increasing amounts of retail good returned lead to high amounts of waste and GHG emissions
With e-commerce on the rise, the number of goods that get returned by customers is an increasing problem — for e-commerce return rates are ~10-20%. The problem is not just that the retailers incur vast financial losses but also are responsible for substantial amounts of waste and a large carbon footprint from inefficient transportation with multiple touch points. The process of taking back returned products (a process called reverse logistics) has traditionally been unsophisticated and even today, the aggregate goods returned result in 4 B pounds of waste going to the landfill and 11 M metric tons of carbon emissions entering the atmosphere.
2. Technology: Reverse Logistics Management System by Optoro
Article: “Optoro Is Building A Billion-Dollar Business Helping Companies Cope With A Glut Of Rejected Stuff”, Forbes (https://www.forbes.com/sites/susanadams/2017/09/26/optoro-is-building-a-billion-dollar-business-helping-companies-cope-with-a-glut-of-rejected-stuff/#2c799bc81a8c)
- This article discusses a startup called Optoro, which provides a reverse logistics management system to retailers as a subscription service
- The technology scans returned and overstock goods for the retailers and efficiently directs the goods to their most suitable path and optimizes the route for the products to reach their final destination
- Optoro’s technology reduces waste created by up to 60% and carbon emissions resulting from fuel for transportation up to 31% according to a model built by the Environmental Capital Group
- Instead of ending up in the landfill, Optoro redirects goods to retailer shelves, manufacturers, discount-goods websites for consumers, recycling centers, or charities
Tags: #waste #retail #logistics #reverselogistics #ecommerce #sustainability
3. Organizational stakeholders
On the one hand, the technology would be used by retailers. The logistics departments of retailers would have to adopt the reverse logistics management system so that returned and overstock goods go directly to Optoro’s warehouse.
On the other hand, end customers would also be stakeholders for the system because many of the goods end up being sold through discount-goods websites also run by Optoro. Making customers aware of these options will also be valuable to the success of the technology and company.
The technology has already been deployed to a certain extent with Optoro having secured 30 clients so far. However, an issue in raising awareness regarding the success of the solution seems to be that clients don’t want to reveal that they’re using this solution, even though it has such significant financial AND environmental benefits. Therefore, to further scale the technology, I would focus on raising awareness with the following 3 steps:
- Work with a consultant or provider of certifications to explore the possibility of creating a sustainability certification/stamp of approval for retailers using this solution openly
- Conduct study with customers on their perception of retailers using this solutions and see if the data reveals that this is in fact seen as a positive aspect of a brand, rather than a negative aspect
- Use data and certification/endorsement to talk to more retail clients and encourage them to disclose their use of Optoro technology
5. Comment on Another Post
I commented on “Highway of the Future”:
The sustainable highway is also supposed to improve the response to accidents using autonomous drones flying over the highways. I wonder at what scale and thus cost you’d have to deploy these drones for them to make responses to accidents quicker than they already are.