Reusable quotas in e-commerce: how quotas shift market potential in favor of less sustainable suppliers

In today's world, the e-commerce sector faces a new challenge: reusable quotas. This new regulation in the european Packaging & Packaging Waste Directive calls for an increasing share of reusable packaging in the non-food sector. At first glance, this seems like an excellent idea in terms of sustainability. But what are the actual market implications of this regulation? This article looks at a likely scenario.

Returnable "re-use" packaging has the potential to skew the market toward less sustainable suppliers

The sustainability aspect of the packaging itself is not part of the considerations, but the impact of the reusable quota on the market is. The impact of the reusable rate on the market is an important aspect that has not been sufficiently considered in the debate to date. This omission can potentially skew the market in favor of suppliers with a less commendable sustainability record. It is imperative that such elements be incorporated into our assessment of market dynamics to ensure fair competition and promote sustainable practices among all providers. Ignoring this could inadvertently incentivize unsustainable practices, which would run counter to the broader goals of environmental protection and sustainable resource management.

Convenience and sustainability

Convenience also plays an important role in the return or disposal of a package. A cardboard packaging that is received positively by the consumer can simply be disposed of in the paper bin outside the house. Modern cardboard packaging can be used for returns, with a PSA adhesive strip ensuring resealing. The customer doesn't even have to look for tape. One-way packaging becomes two-way packaging. All of these improvements are for the convenience of the consumer and a good shopping experience.

A reusable package must be returned by the consumer to a collection point, regardless of whether the consumer keeps or returns the product. The goal of generating less waste can only be achieved if the consumer has incentives to return the packaging to the loop. The incentive can be a deposit or sweepstakes in which the consumer participates if he or she returns the packaging. The first apps that enable incentive systems are already coming onto the market.

However, a deposit system always means that the customer initially invests more money in the purchase. This can deter price-conscious shoppers. In addition, returning the packaging to a collection point involves effort and discourages convenient shoppers.

Costs for e-commerce retailers

In addition to the aforementioned challenges, reusable quotas come at a cost to the shipper. One barrier to moving toward reusable packaging is the current high cost of returning reusable shipping packaging in Germany. E-commerce providers face high costs for establishing the systems.

Possible market shift using the example of Temu

There is therefore a real danger that the reusable quota will drive shoppers into the arms of less sustainable e-commerce stores that are not subject to the reusable quota. The site Utopia has analyzed the new online stores that show rapid growth.

One of these stores is Temu, an online store from China that lures customers with absurdly low prices. Shortly after its German launch, Temu stormed the app charts in this country. The app is currently the most downloaded free app in the Apple App Store and is even more popular than TikTok, Amazon, Shein or Instagram.

Temu was founded in Boston (USA) in 2022, but is Chinese. The company launched in the US in September 2022. Since spring 2023, Temu has been available in Germany, Italy, France, Spain, the UK and the Netherlands.

Temu is an online marketplace that says it "connects consumers with millions of sellers, manufacturers and brands around the world, with a mission to empower them to live their best lives." Similar to Amazon, Temu sells a huge range of items - from fast fashion and drugstore items to electronics and home goods - through its website and app.

Behind Temu is a Chinese company: the Chinese e-commerce giant Pinduoduo.

The downsides of Temu

Despite the low prices and wide selection, Temu has many issues and drawbacks:???

1. The goods mostly come from China. In the baggage: problems such as miserable working conditions, a lack of social and ecological standards, and a poor carbon footprint due to transport.
2. ???You order from individual retailers here - and therefore never really know who you're actually ordering from.
3. ???There is much to suggest that the products are not produced sustainably.
4. ???As a Chinese company, Temu is not subject to EU law.
5. ???It is not possible to determine the extent to which human rights and environmental protection are observed during production.

Impact on sustainability

Temu and its affiliates, as an example of the new fast-growing online platforms, will not implement a return system for reusable packaging and will not be charged the cost of implementing it. Temu and its affiliates have the potential to gain market share with cost-sensitive and convenient consumers by waiving this savings. This is equally true for all online platforms and online retailers importing goods into the EU from outside.

The potential market shifts associated with a negative impact on sustainability must therefore be included in the consideration of reusable versus two-way carton packaging.

Thomas Walther Corporate Strategy & Innovation

Baumer hhs GmbH

PS: The reusable rate also jeopardizes other aspects of sustainability and leads to more plastic waste instead of less. Read the comments of MEP Miapetra Kumpula-Natri in TheParliamentmagazine: https://www.theparliamentmagazine.eu/news/article/the-eus-packaging-reuse-targets-could-worsen-europes-water-scarcity