Online shopping is booming—by 2021, approximately $4.9 trillion is expected in global e-commerce sales, with more than 2 billion shoppers turning to one-click ordering for their every need. For online retailers, this means more business. Though without easy options for reusable packaging, booming online sales also means more waste for the planet.
According to the Environmental Protection Agency, 29.7 percent of all municipal waste in the United States comes from packaging and container materials for both food and goods. That material ranges from plastic, which sees 40 percent of its global production being used for packaging, to cardboard, which is responsible for 165 billion packages annually.
TerraCycle, a New Jersey-based waste management company, is tackling the packaging problem head-on. At the 2019 World Economic Forum, the company announced its newest endeavor, Loop, an online marketplace hoping to change how products are packaged and shipped.
“Our mission has always been very clear and the same,” says Anthony Rossi, vice president of global business development for TerraCycle. “We are here to eliminate the idea of waste.”
For TerraCycle’s CEO, eliminating waste comes down to finding ways to reuse packaging materials—even recyclable plastics. That’s where Loop comes in. While many eco-friendly companies, such as Lush Cosmetics or Honest Co., offer recyclable and reusable packaging for their own products, Loop plans to offer consumers a more sustainable way to shop for brand names. Through partnerships with big name brands such as Proctor & Gamble, Nestlé, Unilever, Tide, Gillette, and PepsiCo, Loop will sell shampoos, detergents, cleaners, ice cream, and more through its online marketplace. Products such as Pantene, Axe, Tide, Seventh Generation, and Häagen-Dazs will come in reusable and returnable containers and arrive in sustainable packing materials.
Loop has an initial limited launch (for customers in New York and Paris) planned for May 2019 and has plans to extend to London, Toronto, Tokyo, and San Francisco within the next two years, but the company may face some hurdles as it grows.
Breaking out of single use
Loop works like this: Products ordered directly from Loop’s website are sent in a durable and reusable tote bag. When a product is empty, the container, typically made from steel, aluminum, or heavy-weight glass, is placed back into the bag, then picked up and returned to the processing center, creating a supply chain that eliminates single-use packages.
That supply chain is key to Loop’s model. One million plastic bottles are sold globally every minute, but only about 9 percent are recycled annually. Currently, Loop is working with partner brands to create packaging that can be used a minimum of 100 times.
While that’s a huge leap forward, introducing new packaging won’t have an immediate sustainability payoff. Different materials require different usage times to hit a point of green neutrality, or essentially “break even” on the planetary resources scale. For example, a Danish study published in 2018 found that paper bags should be used 43 times before being discarded to hit green neutrality. According to Rossi, depending on the materials, a Loop product package would need to be used anywhere from four to seven times in order to hit a point of green neutrality that ultimately leaves a more sustainable footprint than a single-use container. The product packaging would have to be used more than seven times before environmental payoffs can start to be seen.
That green neutrality number comes from life-cycle analysis conducted by Loop around plastics in single-use products, which found that the mining and refining of crude oil associated with plastics is responsible for the most devastating impact on the environment.
Adapting the “cheap and convenient” business model for a new era
Many household brands built their reputation on being affordable and readily available, which could create a growth hurdle for Loop as an online retailer. After all, consumers are used to buying sodas at gas stations and shampoo at the drugstore down the street. But Loop and its business partners have made strides to keep the experience familiar.
“When we were creating Loop, it was very important to us, and to our partners, that doing the right environmental thing can also be the most convenient thing as well,” says Rossi.
To that end, Loop worked with its business partners to keep prices as close to market value as possible, avoiding the upcharge for everyday items that has become all too common with online shopping. However, customers will have to make a small one-time deposit, ranging from a few cents to $10 and up, to cover the reusable packaging. That deposit is fully refundable if a customer wants to stop buying that product.
But even with the allure of fair-priced products in environmental packaging, Loop is fully dependent on its consumers to go along with the recycling process. Returning the empty containers is integral to the platform’s reusable model, and it ultimately falls on the customers to give up the convenience of single-use packaging that simply gets thrown out when emptied.
If you build it, they still might not come
The idea of reusable packaging isn’t new. In 2007, Salazar Packaging developed a reusable and re-shippable box that allowed the customer to simply flip the package inside out, pack, and send it back; even the shipping label was already attached. However, even with the process simplified for the consumer, the company found that participation rates were low.
“What we find is that in many cases [is that] it’s impractical,” says Dennis Salazar, president and co-founder of Salazar Packaging. “Let’s say, for example, I am a shipper, and I ship a box to you. I’m expecting you to ship [it] back to me so that I can use it to ship to the next person. No matter how easy we made it for the consumer, the consumer resisted because they’re acting out of their element.”
This placement of responsibility on consumers is where a lot of the unknown falls in reusable packaging. According to a study in the Journal of Environmental Management, while the need to be more environmentally conscious draws shoppers to order items in sustainable packaging, it can be tricky to get them to actually reuse the boxes or containers. To achieve consumer follow-through, reusable packaging must be presented as an easier option than the disposable alternative.
Loop hopes that by implementing reusability into the model from day one—and using “encouragement” moves such as small deposits—customers will adapt quickly and be willing to give up a little bit of convenience to better their environmental footprint. Selling recognizable brands may also make the transition easier for some customers.
Rossi notes that Loop has been running test markets for about a year, and consumers have adapted to the new steps in the reusable recycling process, though the real test will be the widespread launch.
Looking to the future, Loop hopes to launch in a number of additional markets in the coming years and expand its category market to a number of new companies, products, and packaging.
On the consumer side, as shoppers become more aware of the waste created by all those plastic bottles and shipping boxes, sustainable packaging may become more of a demand and less of luxury. And we’re creatures of habit, after all—it wasn’t so long ago in our history that we were comfortable with the milkman system of delivering and returning milk bottles. One way or another, our shopping habits have to change in order to protect our planet—Loop is one solution leading the way.