The Current, delivered daily.
In 2020, more than 20 billion parcels were delivered in the US.
It was a 37% increase over the prior year, according to Pitney Bowes, and spoke to the explosion of ecommerce that took place that year.
It also meant a lot of cardboard was being shipped.
“It’s enough cardboard to pave a road from New York to LA and back a mile wide three times a year,” said Mike Newman.
Increasingly, finding ways to reduce that amount of cardboard is on the mind of retailers and consumer brands. Calls for change are growing louder from consumers and governments, leading many brands and CPGs to set sustainability goals to reduce consumption. Single-use packaging is a key focus area. At ShopTalk this week in Las Vegas, both sustainability and resale were on the mind of conference organizers, investors and speakers.
Newman was among those from the latter group. He's the CEO of Returnity, a Brooklyn, New York-based company working with companies to develop reusable shipping and delivery packaging systems. By the third quarter, the company will be displacing over two million cardboard packages a month. It recently raised $3.1 million in seed funding from investors including Brand Foundry Ventures and the retail tech and consumer goods-focused VC and accelerator XRC Labs.
To this point, the company has evolved from a single-product focus to a systems mindset. The company started as a “happy accident” after ThredUP founder and CEO James Rheinhart asked to create a reusable shipping bag, and became the first investor in the concept. It ended up being a promising enough idea to start a company around, and about five years ago Returnity was officially launched.
As with most startups, it wasn't a straight line to get to the right model. After struggling with uptake of a single reusable bag product, the company now works alongside large companies to develop reusable packaging that works best for them.
“We realized that packaging is really about systems first and the product second, and not the other way around,” Newman said in an interview with The Current. “With reuse and sustainability, you have to be conscious of and working towards an effective system to derive the kinds of benefits that reuse can create, and not just get excited about a thing that you make in the lab.”
In practice, this means Returnity works alongside companies to understand how their shipping and packaging operations work, and determine where reuse can play a role. Businesses have economic and environmental goals in mind, and Returnity takes a collaborative approach to meeting them.
“Our job at Returnity is to help retailers figure out where in their business reuse can happen in a way that will meet those requirements,” Newman said.
It has led to a variety of new solutions.
The Rent the Runway garment bag (Courtesy photo)
Working with fashion rental company Rent the Runway, it developed the reusable garment bags that are now core to the brand’s identity. These made reuse part of the company’s sharing economy model. It underscores a use case with rental services, in which items can be returned in the same packaging in which they were delivered.
After winning Walmart’s Beyond the Bag challenge in 2020, the company developed packaging for grocery delivery. The teams identified how packaging could be picked up every week as groceries arrived.
Returnity developed a reusable shampoo bottle for Aveda (Courtesy iamge)
With Estee Lauder-owned haircare company Aveda, it developed a reusable shampoo bottle. With New Balance, it created a reusable box that is used to sample products. At Happy Returns, a Returnity-developed box allows for exchanges and returns of ecommerce items at drop-off points, without printing or packaging.
Returnity developed a box for New Balance. (Courtesy photo)
Returnity also works with DTC brands, which value packaging that is often both unique for consumers and sustainability-minded. In 2021, Returnity worked with zero-waste mascara brand Izzy to launch steel mascara tubes designed for 10,000 refills. Subscription-based companies are also a good fit.
In each company it works with, Returnity takes a consultative approach. Often, companies want to solve the hardest problems first, and usually that’s replacing the single-order ecommerce purchase. But that’s a big challenge when it comes to designing a system. Not only do returns of these items have less predictability and lower frequency, but a successful reuse program would require 95% of consumers to participate, and getting 95% uptake of anything is difficult.
“We tell brands, let’s start with your easiest problem,” Newman said. “Let’s build from a platform of success.”
It may be a key lesson for any company looking to implement sustainable practices: Start where you can make impact today, and build toward the bigger wins.
After working through the system comes developing the packaging product itself. It has to be the right size to hold the proper amount of product, and have the right branding. The company is also constantly experimenting with materials. A current pilot with GoreTex may lead to a form of reuse in and of itself, as it is developing material from fabric that would otherwise be going to landfill.
"We are always trying to find the right durability, cost, material and impact balance," Newman said.
Returnity is now in growth mode. Revenue tripled from last year’s total in the first quarter of 2022 alone, and it is hiring. Expect to see more types of unique reuse solutions from brands in the future.
“We now are in pilot with the next wave of omnichannel retailers that we know is going to continue this aggressive expansion,” said Newman.
Trending in Operations
LadderUp is aiming for 50% LGBTQ+ and BIPOC participation. Shopify will provide access to its platform.
Shipt is launching a new accelerator program designed to provide ecommerce tools for local retailers.Called LadderUp, the program is centered on equity. Target-owned delivery owned Shipt said conversations with business owners have revealed that local entrepreneurs face “gaps” in technology, but they also want to participate in ecommerce platforms. The COVID-19 pandemic was especially difficult for Black business owners, who saw earnings drop between 11-28% in 2019-2020, as compared to the earnings decrease of 5-17% for the rest of the population.
With the new program, the company’s goal is to reach at least 50% LGBTQ+ and BIPOC participation in the program.
Shipt is aiming to serve businesses in Atlanta, Birmingham, Alabama, Detroit, Houston and Washington, D.C.
Target categories include: grocery/beverage, health, beauty, and floral/gifts retailers.
“Working with small businesses to build up their capabilities is a key part of our commitment to help create healthier, more resilient and equitable communities,” said CEO Kamau Witherspoon. “We recognize the unique role that we can play in both combating hunger in under-resourced communities and boosting small, local retailers that are so vital to communities across our country.”
What will entrepreneurs receive?
Education: Business owners who are selected will receive an 8-week course with industry leaders that covers business-building topics including finances, efficiency, marketing, ecommerce 101, the basics of using Shipt, and legal knowledge.
Funding: Upon completion, retailers will provide $5,000 for businesses to invest in ecommerce.
Shopify access: Shopify, which is partnering with Shipt, is also providing to its access for a limited amount of time to help business owners build an online storefront and manage inventory. The program will also provide technical assistance.Applications are open Feb. 6- March 6.