FMCG brands: How to do reverse logistics better

Aware brands —?especially those selling fast-moving, limited-use, “disposable” products — are already investing in increasing recycled content in products, and making those products more easily recyclable.?

That’s great, but we need to go further. In a viable circular economy, recycling should be our last option. Brands need to reuse, repurpose and upcycle before resorting to recycling. And to do that, they need to get their “disposable” products back from consumers.?

That’s the challenge that brought us into reverse logistics: enabling brands to efficiently, effectively retrieve their used-up products. We’ve embedded circularity in new business models, but making it work in an existing “linear” model requires more nuance. Our in-store collection model was designed and iterated with a major disposable lighter brand as part of complying with intensifying producer responsibility regulations in Europe. While it starts with compliance, the model goes beyond and delivers value to various key partners, exceeding expectations and objectives.

As we scale this model, we’re keen to work with brands in Africa, Europe and beyond to innovate and design bespoke product-collection solutions that work better than established reverse logistics solutions. We expand on that here, as well as the potential compound positives of better reverse logistics: regulatory compliance and environmental benefits are the fundamentals but, done well, there are key brand and positioning benefits, too.?

Reverse logistics require insight and iteration

We’re helping brands build reverse logistics differently —?and more cost-effectively — than established providers.?

Essentially, that means shifting the bulk of investment up front. This enables us to design a retrieval system for used products that’s specific to the geography, retail points and consumers critical to the brand’s success, and the consumer behaviour they’re trying to change. Then we test, pilot and improve the system before scaling up.?

This sets us apart from established providers, as they’re offering brands cookie-cutter solutions. These overlook the nuances of location, social context, product type and behaviour change. Overall, this means brands unintentionally roll out solutions that are less effective and more expensive: operating costs are higher for poorer results.?

We work differently, investing time and effort in the design stage and using context-specific insights. This initial insights phase can be focused internally and/or externally. Internally, it has yielded sources of waste material that are perfect for smaller, more nimble new business models. One example in Kenya created a negative cost of goods sold, as the “waste” product we found at the client’s Egyptian manufacturing facility had a very high waste processing cost.?

Externally, we take time to understand and work iteratively with key partners to ensure that what we implement works and creates value. We’ve all seen lonely, hidden, useless collection bins in retail outlets (full disclosure: I was responsible for these at PUMA ages ago!). But the collection system we’ve implemented for lighters across a major EU market has gone from the back of the store to the point of sale because we’ve invested in insights and iteration to build and show its value to participating small retailers.?

So yes, we do have higher upfront costs than established reverse logistics providers. However, our approach delivers value via lower operating costs, better core performance (e.g., volumes recovered) and brand-specific strategic benefits.?

Results so far: Exceeding aims with a major disposable lighter manufacturer

We piloted our approach with a major brand manufacturer in the EU, determining the optimal circular economy model for their product. This involved understanding the local recycling ecosystem, identifying suitable partners, assessing collection potential and analysing consumer habits. After initiating a pilot with small retailers to refine our operational processes, we successfully scaled up. In less than a year, we recruited thousands of small retailers to serve as collection points. Interestingly, the collection volume initially lagged behind the installation of collection points more than we anticipated. However, once regular customers developed the habit, the initiative gained momentum.

In addition to its direct environmental impact, the project has had unexpected positive impacts. For example, encouraging residents and businesses to reconsider their roles in the ecological transition, both at an individual and community level.?

Well-designed reverse logistics: What’s the ROI for brands?

Leadership & reputation

This is obvious but worth reiterating. Brands need to reduce waste, emissions and environmental impact, and product retrieval systems open up valuable opportunities for companies to lead, and differentiate themselves, in their sector.

Point-of-sale brand visibility

Collection points enhance your point-of-sale visibility, and hand you an opportunity to evolve and deepen your relationship with retailers and consumers. At the shelf, your product visibility hinges on choices your retailers make. Are you the best-seller that brings buyers in? Does the store owner like your sales rep? Are they simply indifferent about your brand and products? A well-designed reverse logistics approach (with engaging collection points — see below) can be a key element in becoming your retailers’ preferred brand and/or gaining prime POS position.?

Consumer engagement

Product collection can be gamified. It’s a chance to create fun, silliness and conversation, upping attention and incentivising engagement. We think Hubbub’s ballot bin is a great example, getting consumers to vote for fun while responsibly chucking their cigarette butts.?

Compliance & risk prevention

Producer responsibility regulations are intensifying globally. In the EU and the UK, brands are increasingly liable for collecting and treating product and packaging waste: FMCG, single-use products, textiles and others with wasteful linear value chains need to think about how they’ll comply, and go beyond that to innovate circularity into their models.

We have a track record of going “beyond compliance”: using compliance as a lever for change, and introducing new models and approaches designed to deliver multiple value streams. Others are proposing tick-box workarounds; we focus on dynamic solutions.??

Collaborating with informal workers

We design and build models driven by meaningful incentives for the informal sector: in most emerging urban markets, informal actors already collect ~80% of solid waste.?

We work with and understand these sector dynamics, so we can design relevant social incentives for informal workers that link back to our clients’ brand objectives.?

Cost-effectiveness & feasibility

We’ve tried and tested our approach, honing design, testing and implementation. Our work with Mr. Green Africa, C40 Cities, SMEs in the Sahel and European social enterprises means we’re experienced in answering the tricky questions:?

→ Identifying circularity opportunities, designing product/packaging collection approaches and value streams

→ Piloting and scaling collection programmes, including identifying and onboarding retailers and field teams

→ Designing and actioning initiatives for retailer/customer communication and behaviour change, building habits and loyalty

→ Making the logistics work

(If you’re interested in talking more, do reach out to us via email or the comments!)

Reverse logistics for disposable products: 3 thoughts to take forward

1. Recycled/recyclable products aren’t enough

In a viable circular economy, recycling should be our last option: brands need to reuse, repurpose and upcycle first. Furthermore, producer responsibility regulation is only increasing. For both leadership and compliance, we’re working with brands to get their products back from consumers, efficiently and effectively.

2. Well-designed reverse logistics create compound ROI

Regulatory compliance and environmental benefits are the fundamentals, but there are also brand and commercial benefits: leadership/differentiation, point-of-sale visibility, customer/consumer engagement, risk prevention and opportunities to create shared value with diverse partners.

3. Are you in the African FMCG market?

We’re ready to work with brands anticipating intensifying producer responsibility regulations in Kenya, Senegal, Cameroon and across the continent. Let’s discuss how to design the systems, incentives and behaviour-change initiatives you need to retrieve disposable products, and deepen links with your retailers and consumers.?