Festival of Circular Economy speaker Peter C. Evans, Chief Strategy Officer at McFadyen Digital, explains the power of circular platforms to scale the circular economy.
Momentum is building to advance a more circular economy globally. Many major companies, start-ups, cities, countries, and international organisations have all embraced circular economy principles and launched supporting initiatives.
Venture capital and private equity investment into circular economy businesses has grown since 2020, indicating growing commercial interest. Multilateral organisations, such as the OECD (Organisation for Economic Co-operation and Development), World Economic Forum and United Nations (UN) all have major initiatives to accelerate the transition to a circular economy.
Measures are needed to scale circular transactions, across a wide range of sectors.
This momentum stems from concerns over resource scarcity and sustainability, as well as shifting consumer demand and commercial interest in circular models that emphasise reuse, repair, and recycling.
However, there is still much more that needs to be done. Measures are needed to scale circular transactions, across a wide range of sectors, including apparel, electronics, plastics, machinery, EV batteries and commercial buildings.
Circular platforms
One way to ensure circular economy initiatives scale is through circular platforms.
By connecting buyers and sellers of underutilised assets, facilitating resale marketplaces, streamlining reverse logistics, providing data insights, and building circular economy communities, platforms can create digital infrastructure to advance the circular principles of reuse, repair, refurbishment, and recycling.
The connectivity, information exchange, material tracking and quality assurance enabled by platforms allow stakeholders to participate in circular activities like resource sharing, redistribution of used goods, and closed-loop material flows.
Circular platform business models can be quite flexible and support scaling in a variety of ways.
Platform business models have demonstrated the ability to successfully scale and achieve widespread adoption in a variety of industries and use cases, enabling connection and exchange among large networked user bases. Key factors like network effects, discovery engines, and buyer and seller aggregation have facilitated growth.
Circular platform business models can be quite flexible and support scaling in a variety of ways. Three of the most common approaches to going to market are:
- Horizontal: serving multiple sectors.
- Vertical: serving a specific sector.
- Niche: focusing on specific products.
Horizontal
Some of the biggest and most well-established circular marketplaces are operated by some of the world’s largest platforms. Among the oldest and largest is Idle Fish (Xianyu). This circular platform was established by Alibaba in 2014 and has grown to 500 million registered users to sell and buy second-hand goods.
Facebook Marketplace, established in 2016 allows users to buy and sell new and used items locally including furniture, appliances, sporting goods, automotive parts and clothing and accessories.
eBay Refurbish is another platform that facilitates peer-to-peer circular shopping that spans many sectors. Launched in 2017, the platform ensures quality by requiring sellers must meet certain requirements to list items as refurbished.
Refurbished items must be professionally inspected, cleaned, and repaired to function like new. eBay provides certifications and guarantees for refurbished items that extend up to 2 years.
Vertical
Vertical circular platforms create dedicated channels for underutilised materials or used products in specific industries. This brings economic and sustainability benefits for suppliers, businesses, and consumers in those verticals. One example in the sports vertical is Geartrade.
Founded in 2011, Geartrade is an online platform for buying and selling used outdoor gear and apparel, which takes a commission on sales. Customers can buy and sell items like camping tents, hiking boots, ski equipment, cycling accessories, outdoor watches, and winter jackets. Sellers can list their used gear for free and set their own prices.
Another example of a circular platform is Back Market, which specialises in buying and selling refurbished electronic devices and appliances. The platform provides a 12-24 month warranty and 30-day return policy to give buyers peace of mind when purchasing refurbished.
Vertical circular platforms create dedicated channels for underutilised materials or used products in specific industries.
Founded in France in 2014, Back Market connects certified professional refurbishers and workshops that sell a wide range of electronics including smartphones, laptops, tablets, computers, TVs, gaming consoles, and small electronic appliances.
Other vertical players can be found in industrial sectors. A new entrant is Metycle a start-up in Germany launched in 2022 to connect buyers and sellers of scrap metal internationally.
Creating steel materials markets and stock exchanges improves visibility and enables steel reuse. Scrap steel and surplus can also be traded between companies to bolster circularity. The Metycle platform not only promotes reuse but is part of a global effort to reduce CO2 emissions by up to 95% compared to primary metal production.
Niche
Niche circular platforms focus on a subset of a sector or specific products. Swappie Swappie is a Finnish company that specialises in refurbishing and reselling used iPhones and other Apple products. The platform was founded in 2016 and handles everything from sourcing used iPhones to fully refurbishing them in their European factories.
All phones are tested to ensure they meet performance standards. iPhones purchased from Swappie come cleaned, with new batteries and replacement parts, and include a 12-month warranty. Buycycle is another circular marketplace in the sports vertical that focuses just on bicycles.
It’s a digital platform established in Germany in 2021 that facilitates the selling and buying of road, gravel and mountain bikes. The goal is to provide the bike community with a lower-cost and sustainable alternative to new bikes. The platform provides buyer protection, secure payment and shipping support.
Summary
Circular platforms are a growing part of the circular economy. They can significantly advance circular economic activities across value chains, unlocking circular economy opportunities that leverage digital marketplace infrastructure and services for greater resource efficiency and sustainability.
The platforms outlined here and others that will be launched through the rest of the decade will play an important role in scaling the circular economy.
