How marketplaces are driving the circular economy

The world is beginning to understand that it is not sustainable to use resources only once and then throw them away. However, only the 8.6% of the extracted materials of the land end up returning to the economy to give them a second way. This is because most companies are based on linear models: take materials, make, waste. Giving businesses and consumers the tools to adopt more “circular” practices – reduce, repair, recycle – is no easy task. But across the economy, forward-thinking creators and executives are doing exactly that.

One person’s trash is another person’s treasure

The drive for sustainable business practices is creating rare connections between sectors, as waste from one becomes an input for another. For example, biasola food company that manufactures breakfast and pastry products and that works with Stripe. Its founders saw a hidden opportunity in the craft beer boom of the past ten years.

Why do we need to import chia seeds? There is a lot of fiber and protein in used grain from brewers, literally the grain they throw away. We saw an opportunity to recycle it and create really nutritious food.” Launching our business on Stripe allowed us to get paid quickly, manage our cash flow, and make life easier for the entire supply chain,” says co-founder Ruairi Dooley.

The responsible fashion company RÆBURN – best known for turning military parachutes into clothing – was created with a similar philosophy and has grown internationally with Stripe. Its founder, Christopher Raeburn, focuses on reducing material inputs, remaking existing items, and recycling. “You have to start small and keep the things you already have in circulation,” Raeburn said. “We now have access to better recycled and regenerative materials, so the challenge is to find new waste streams and localize them globally.”

Recycling materials and creating sustainable supply chains at scale will require new financial and technological infrastructures. When supply and demand don’t match, marketplaces are likely to play a critical role in connecting buyers and sellers, enabling sustainable sourcing models to emerge.

“Companies cannot succeed alone, they have to come together to create a new fabric of interconnected value chains,” said Kristin Hughes, director of resource circularity at the World Economic Forum.

From owning to renting

As industry patterns change, consumer behavior evolves towards more sustainable consumption models. Sharing and renting are two successful examples. Stripe saw a 550% increase in money spent on clothing, equipment and tool rentals in the first three quarters of 2022 compared to the same period in 2019. The largest clothing rental markets – the United States, the United Kingdom and Australia – grew by 1,000%, 3,500% and 5,000% respectively. Thousands of clothing rental businesses are operating on Stripe in these markets, up from just a handful three years ago.

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“It’s all about comfort and confidence,” says Ola Lowden, founder of omocom, which offers insurance for rental platforms and collaborative economy. “People are more and more open to renting out their stuff because the platforms make it easy and help manage risk.” With worsening economic conditions, renting and co-location are going to become even more attractive, both as an affordable alternative to buying and as a source of income.

“It’s not a coincidence that Airbnb was founded in 2008,” Lowden said. “In difficult economic conditions, people will have more incentive to rent items or monetize the valuable things they own.”

Closing the circle

Stripe users include native circular brands such as wallapop, Vinted, EcoAlf, Of popY fat flameas well as established brands such as zara Y H&Mwhich are evolving from linear models to more circular systems.

“The old model doesn’t offer brands a way to grow without commensurate growth in emissions. We help create new business models where brands can resell something multiple times and get more value out of each item they make,” said Andy Ruben, founder of Trovewhich Stripe uses to create reselling platforms for Patagonia, Lululemon, and others.

urbanwhich owns brands like Urban Outfitters and Anthropologie, launched its circular fashion platform, nuuly, in 2019. Nuuly combines a rental platform, stocking 300 different brands, with a Stripe-powered peer-to-peer resale marketplace that extends the lifecycle of garments beyond rental. “Most consumers and businesses want to do what is right for the environment. The difficult thing is to find a circular business model that is economically viable. We saw that clothing rental would become a bigger part of consumption, and so we doubled down on Nuuly’s potential by launching a resale marketplace built on Stripe,” said Dave Hayne, URBN’s CTO.

Consumers aren’t the only ones who can reap the value of used items. In the automotive industry, mechanics need a growing list of expensive and specialized equipment to perform complex repairs. To help bodyshops limit costs and operate more sustainably, Toyota has recently launched a platform called Mechacomi, that allows you to exchange used equipment instead of collecting dust.

Reasons to be optimistic

Circular practices are good for both the economy and the planet, and businesses and consumers are taking notice. The World Economic Forum estimates that the transition to more sustainable models could generate $4.5 trillion in additional economic output by 2030. But realizing that potential will require a complete change in the way we produce and consume.

“A truly circular economy will be one where nothing is thrown away and existing materials flow between industries with little to no waste,” Hughes said. “But without a coordinated approach, our circularity ambitions will far exceed the market’s ability to keep up.”

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