When Circular Economy Meets E-Business

Circular Economy

How many of you have complained about the product does not last as long as you expected? How many times you threw the electric devices into bin? How concerned are you towards environmental-friendly? Here is a useful link to see if the package on your hand is recyclable.

As living in our generation, sustainability is an inevitable topic. ‘Circular Economy’ is the new term widely advocated to do business today. The following video sums up the concept of a circular economy and gives a good overview. 

In general, circular economy is about minimizing waste by reusing packaging, products, or raw materials. Within a truly circular economy, waste is even completely avoided. The waste from the last chain is to be used as material for the next chain in the circle.

A circular economy aims to redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources and designing waste out of the system. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural, and social capital. Using Apple company as an example, we can see that more and more business players are transitioning towards three directions:

Regenerate Natural System

Since 2014, all of Apple's data centres have been powered entirely by renewable energy. Since 2015, Apple’s Supplier Clean Energy Program has helped manufacturing suppliers’ transition to renewable electricity generated from solar, wind, and other renewable projects. And by 2030, all apple products will be made with 100% clean energy.

Design Out Waste and Pollution

Apple commits that its products have a lighter environmental footprint. The new iMac is made with low-carbon aluminium, and it also uses recycled plastic, recycled tin, and recycled rare earth elements. This change, along with using recycled and low?carbon materials, has decreased the carbon footprint of the new iMac by about 20% compared with the previous generation.

Keep Using Products and Materials

Every Apple product contains materials that can be used to build new products. And research is reclaiming more of those building blocks with transformative tools and technologies. Apple uses disassembly robots to take apart iPhone devices and components to enable the recovery of materials like rare earth elements, steel, and tungsten. These materials make it back to the raw materials marketplace so to be used for the next generation of products.

E-business and Sharing Economy

After defining circular economy, we should be curious about how e-business transition to the circular economy. For manufacturers, it means embracing environmental standards that might have been dismissed earlier. For example, clothing manufacturers H&M and Speedo use recycled fabrics in their garments. Fabric maker Aquafil partnered with Speedo to create a superior “upcycled” synthetic fabric for reuse from the swimwear company’s own remnants. For the service sector, it means keeping inventing and innovating to reduce waste. The sharing economy, born by innovative idea, can be seen as a part of the circular economy, where consumers have access instead of ownership. For instance, lighting manufacturer Phillips is consciously transitioning to a circular model. Its pilot program includes pay-for-use — instead of purchased — MRI machines for hospitals. The company also maintains, refurbishes, and reuses its own products.

In previous years, many sharing e-commerce companies have sprung up, such as Uber, BlablaCar, Airbnb, and Lime. These pioneers explored the market, met the needs of consumers, and were favoured. However, the same type of e-commerce companies has flood into the market with varying quality. Ofo, a Beijing-based bicycle sharing company founded in 2014, is a typical representative. In 2017, it had deployed over 10 million bicycles in 250 cities and 20 countries. The company was valued at up to $2 billion and had over 62.7 million monthly active users. However, in 2018, ofo announced massive reduction in operations and by 2020, facing a large amount of unpayable debt, the company was no longer operating bike rentals. 

This result was not untraceable. After receiving a huge amount of investment, ofo's operation adopted a massive-distribution strategy and increased its launch in multiple locations. However, due to the failure of management to follow up, and the lack of stakes or electronic fences, too many ofo bicycles crowded sidewalks, blind corridors, and other public spaces. The arbitrary parking of ofo bicycles caused great danger and difficulties for blind people and people with disabilities who need wheelchairs to move around, leading to difficulties for pedestrians to find their way and an increase in traffic violations. Caused public discontent and the attention of management, ofo had been withdrawn from some cities. 

Due to the low price of ofo bicycles and the fact that early ofo bicycles used mechanical locks with fixed codes, they were easy to break and could not be monitored. This made the damage and loss rate of ofo bikes much higher than other brands of shared bikes. In addition, "zombie bikes" and "scrap bikes" can be found everywhere in the city streets. How to dispose of these "street scrap" had become a new problem for society.

The technical limitations also caused danger and loss to users. In 2017, a child under the age of 12 on ofo was run over by a bus in Shanghai and died, caused social concern. Moreover, ofo's billing system sometimes charges users repeatedly or charges for unlocked bikes.

Another big issue was the conflict with traditional local public transportation. Since its launch, the ofo had been boycotted by many Taxi drivers and bike rental business for taking over the local market and leaving them without business. As a result, large areas of ofo had been vandalized and discarded. 

Why did the ofo, which were intended to promote a circular economy and encourage low-carbon living using the concept of the sharing economy, ended up being unmanaged and unrecovered, and polluting the environment? Obviously, management and the lack of market supervision were to be blamed. The deeper reason were perhaps the incomplete use of disruptive technology and the limitations when e-commerce become circular economy. If had used fixed charging piles, if had used dynamic-password remote electronic lock, if had additional child locks, if had engaged with the local transport sector, if had used Bionic Technology to unlock the bicycles, maybe the story of ofo would have been different.

Disruptive Technologies

Although the entertainment industry does not require as much work in the supply chain as manufacturing, its contribution to the circular economy cannot be underestimated if enough attention is paid to it, thanks to the disruptive technologies. The transitioning to circular economy in the service sector is focused on the consumption process.

In the era of digitalization, people get used to online shopping, and trust becomes a key. Consumers tend to be more comfortable with those they can see and touch. Therefore, many real estate companies have adopted Virtual Reality technology to develop a set of VR viewing system that allow customers to see longing houses without having to leave home, even those that not even built. In China, some real estate agents have developed a mobile 3D house viewing feature that enables users to simulate a live tour on their mobile phones. As a result, many overseas clients do not need to travel long distances to see properties, thus saving on transportation costs and reducing carbon emissions.

Thanks to the grow of e-commerce and online payment system, many venues that originally required queuing for tickets have been further digitalised, replacing paper tickets with e-tickets. Visitors only need to scan a QR code or give a booking number to enter, which not only saves time, human and material resources, but also thus greatly saves the use of energy and reduces waste. 

Is it possible to go a step further? Think about customers do not need to queue and check in, and even do not need to walk in to visit. How about experience a day trip in museum, from historical artifacts to technological exhibits, just in front of your computer? Many of the Museums and exhibitions have already offered VR tour, some of them use AR technology to provide an interactive tour experience to customers. In this way, customers do not even need to take transportation to the venue in person or buy food and drinks in the museum, they can just relax at home, have a cup of hand brewed coffee, and complete a pleasant museum tour. Pollution and carbon emissions are almost zero.

Another example is Nintendo Games’ Pokémon Go, which uses mobile devices with GPS to locate, capture, train, and battle virtual creatures. Many of my friends have started their walking trips instead of commuting by car to capture Pokémon. Compared with traditional games, such AR games not only enhance fun, but also drive energy saving and emission reduction. However, it also has its hidden dangers. Many players around the world have suffered various injuries from accidents related to the game. Police departments in various countries issued warnings, regarding inattentive driving, trespassing, and being targeted by criminals due to being unaware of one's surroundings. The game sparked complaints from Dutch company ProRail, who said that players entered their railway tracks and fire stations told players to not impede their staff by congregating outside.

Under today's pandemic, we need to have the mindset that everything remote will become the trend. If museums and exhibitions can be VR and AR-enabled, I believe concerts can be too. The stage and audio synchronized live, so that not only can avoid the crowd gathering, reduce waste generation, save the occupation of human and material resources, people can real-time AR interaction with idols.

Conclusion

Transitioning to a circular economy does not only amount to adjustments aimed at reducing the negative impacts of the linear economy. Rather, it represents a systemic shift that builds long-term resilience, generates business and economic opportunities, and provides environmental and societal benefits. The emerging disruptive technology has turned e-business to an indispensable part of circular economy. While allowing people to enjoy a convenient and low carbon life, the e-business players should rethink about the limitations and hidden danger before innovating and inventing, for example, balancing the impact on traditional economic model, corporate with Google to obtain data of traffic to detect danger around, etc.

Reference

Apple Newsroom (France). (2020). Tous les sites d’Apple sont à présent alimentés à 100% par de l’énergie renouvelable. [online] Available at: https://www.apple.com/fr/newsroom/2018/04/apple-now-globally-powered-by-100-percent-renewable-energy/ [Accessed 30 Apr. 2021].

Apple. (2021). Environment. [online] Available at: https://www.apple.com/environment/ [Accessed 30 Apr. 2021].

ecosistant. (2020). Circular economy: is a new vision for e-commerce necessary? – ecosistant. [online] Available at: https://www.ecosistant.eu/en/the-concept-of-a-circular-economy-why-a-new-vision-for-e-commerce-is-necessary/ [Accessed 29 Apr. 2021].

Ellenmacarthurfoundation.org. (2020). What is a Circular Economy? | Ellen MacArthur Foundation. [online] Available at: https://www.ellenmacarthurfoundation.org/circular-economy/concept [Accessed 29 Apr. 2021].

Terhune, L. (2016). These firms work in circles. It’s a good thing. | ShareAmerica. [online] ShareAmerica. Available at: https://share.america.gov/these-firms-work-in-circles-its-a-good-thing/ [Accessed 29 Apr. 2021].

Wikipedia Contributors (2021a). Ofo (company). [online] Wikipedia. Available at: https://en.wikipedia.org/wiki/Ofo_(company) [Accessed 30 Apr. 2021].

Wikipedia Contributors (2021b). Pokémon Go. [online] Wikipedia. Available at: https://en.wikipedia.org/wiki/Pok%C3%A9mon_Go#Criticism_and_incidents [Accessed 30 Apr. 2021].