Episode 133: Building Reuse at Scale (Transcript)

[00:00:00] Liz Bothwell: Hi everyone, welcome to Waste360's NothingWasted! Podcast. On every episode, we invite the most interesting people in waste recycling and organics to sit down with us and chat candidly about their thoughts, their work, this unique industry and so much more. Thanks for listening and enjoy this episode.

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[00:00:26] Liz: Hi everyone. This is Liz Bothwell from Waste360, and I'm with Meagan Knowlton, Director of Sustainability for Optoro. Welcome Meagan, and thank you for being on the show.

[00:00:37] Meagan Knowlton: Hi, Liz. Thank you for having me. I'm so excited to be here.

[00:00:41] Liz: I can't wait to hear your story. We usually start at the beginning on this podcast. Could you please tell me about your background, and your journey to the world of sustainability?

[00:00:51] Meagan: Absolutely. Back in the day, I started with an interest in nature, and how we, as people, interact with the environment and with natural systems. I was actually a big water girl and loved studying rivers and streams, and how we, as people, access water resources and impact those resources through our own activities and through climate change. Over time I started realizing, "Wow, the way that we interact with resources, the field of study that I can use to interact with those topics every day could be sustainability".

While I was in grad school at the Nicholas School of The Environment at Duke, I started taking more classes and working in the sustainability arena. I ended up from there in the Coca-Cola bottling system, partly because of my passion, at the time, for water, and partly because I loved the idea of being able to influence how business works with the resources that make up products and with operations and how businesses interact with their customers as well, in creating change for the planet, and doing better for the planet.

I was there for a while within the Coca-Cola system, really managing all kinds of programs, having to do with water, waste, recycling, carbon emissions, and energy usage. Over time, I thought, it would be really interesting to get closer to the whole retail system and focus on more products, more types of products. I stumbled across this company that I'm at now called Optoro.

We make returns technology and that sounded super different niche to me. I ended up where I am now. I focus less on water itself now, and more on waste, in particular, on the entire product waste, and durable goods waste. It's been different, and it's been a really interesting field for me, and has opened a lot of doors and focuses that I had no idea existed before, or had a chance to dive into before.

[00:03:22] Liz: That's a great background. I love hearing that, and how you found Optoro. I know that you recently noted that every year 5.8 billion pounds of retail returns, and excess inventory end up in the landfills. That's such a staggering number. Meagan, how do you think retailers can be more circular based on your experience with Optoro and previously Coca-Cola?

[00:03:45] Meagan: That's a great question, Liz. I think that's a great question partly because we included in a sustainability and circularity in the same sentence and they're not always necessarily go hand in hand. I love what I get to work on because it's reducing product waste from landfill, and keeping those products in a reuse system, both hitting sustainability targets of waste reduction and in keeping products in use.

What I focus on and what I aim for retailers and brands to keep in mind is, how can we keep both products and packaging in a reuse system for as long as possible and making it to the next consumer as long as possible. In the circular economy, there are a few key places where brands can focus. First, it's around design and sourcing materials that make a product more durable, and similarly, make the packaging around it, and even the shipping packaging, more durable and more reusable as well.

Luckily, there are so many good service providers, experts, and consultants out there who share many overlapping expertise in keeping materials, products, and packaging in the retail ecosystem for as long as possible. From there, after that design phase, you also want to think about the use space, the selling and the use, and how consumers interact with the product.

There are lots of different ways that retailers can do this, but the area I'm so fascinated by is in using technology to keep products in use. One example is my company. We make returns technology that helps retailers along the entire life cycle of a product's return journey. First, it starts with returns initiation in an online returns portal that we make, or that we offer with a partner, then there's the core of our work, which is in returns processing and dispositioning, which are big words.

It basically means that we make technology that allows our clients to bring back returns, and then make the best decision for where the next best home is for that product. Our technology uses AI and data science to determine where that product should go to next. Should it be resold on a variety of different marketplaces? Should it be listed right back to stock for that retailer? Should it be donated or recycled? So on down the line.

The next core piece of what we do is in that refill or re-commerce area. We integrate into a number of resale marketplaces, and we also have our own resale marketplace that sells to a number of mom-and-pops resellers, and that's called bulks.com. The offerings that we create and expect others in our area create, are super helpful for building reuse at scale, not just these one-off refill pilots that we're seeing all over the place, but really being able to build out systems where retailers and brands can make sure that they are reusing, either donating or reselling as much as their access to inventory and returned inventory as possible.

Another area that I think it's a really great place for companies to be thinking about is in the digitization area. Really tagging your products at their point of manufacturing with a digital ID, whether that's a QR code or an RFID tag, there's a variety of different solutions in the market right now where companies are testing, putting ID on their products, and then using that ID to generate data on where the product goes to, how it's used, how consumers are interacting with it, and where they part phase with the product.

Whether if it's single-use goods, that might be where they're recycling the product, and what service provider does it go to, or if it's a more durable product, it might be when and where they return it or send it back to the manufacturer as part of a take-back program, or where they're disposing of it. A few really great places, I think, for companies to be focusing their efforts right now, in the area of circular economy.

[00:08:39] Liz: That's great advice. I love how you covered everything there because I think there's an opportunity for everyone. It's not, it's only this one area, it's technology where you are saying, "Hey, there's a whole secondhand market here that we can exploit, and that will also help keep this out of landfills." I love that you're focused on all of them.

[00:09:04] Meagan: Yes. I think too, I focus so much on the products. Everything from home furnishings to apparel, to everything in between, but there's so much focus in the parallel to what I'm doing on packaging as well, and there are so many great different programs out there that are piloting opportunity for keeping packaging and use.

I love my aluminum can that has my shampoo in it that I know was put on by TerraCycle through their Loop program. I'm really interested in that kind of program as well, but that's not specifically what I do in my job.

[00:09:53] Liz: Got you. That makes sense. I know you mentioned a little bit about the technology behind Optoro. Now, how are the consumers part of this? Are you working directly with them or is it mostly done through retailers to consumers?

[00:10:12] Meagan: We work primarily B2B. Our clients, our retailers, and brands. [unintelligible 00:10:21] we're finding more and more that in order to make the most sustainable returns to the system, we have to engage with the consumer, of course. There are a few key ways that we do that.

I mentioned earlier that we have a returns portal, that we offer with a partner called Returnly. When a consumer of a brand or retailer goes online to make a return, they go to a portal where they initiate their return. On there, they can tell the retailer why they're making the return, and that can generate such useful data on products durability on their buys and fit guides, for example, if it's apparel.

Just really giving retailers information about, is this a good product? Is it described well? Is there something off about our description or our photos? Is there something that we need to reassess in the design phase? That also helps retailers as well once they get data from the returns portal, to know about what inventory they have for restocking and that are currently existing in their supply chains as well. That's one place where we engage with the consumer.

The other main place we engage with the consumer, which I'm so excited about, is a package list for turns program that we recently launched with Staples. We offer these drop-offs for different brands to drop off their returns, or for customers of these brands to drop up their returns at Staples stores. What's great about this program is that we consolidate the returns for different brands behind the counter at Staples in one box.

They're all going together in one box without any packaging around them. From there, we're able to send back consolidated returns package to a returns hub, or a distribution center. From there, those products can either go back to their respective brands, or they can get listed back online, or sold on secondary marketplaces, or what have you, directly from that hub.

That is a great place where we're complaining convenience for the customer and providing a variety of returns options. If it's easier for a customer to just drop it off without the original packaging around it, at Staples, then that's great. That's a win. Then we can also save a little bit on carbon emissions and on cardboard. Bringing all of these products from different brands together into one consolidated box behind the Staples counter, and then send it back together.

Saving on the carbon, saving on the cardboard, making the consumer have a, hopefully, positive returns experience, which means they're going to be happy to shop with that brand in the future, and that kind of thing. Great place where we're able to combine all of those values together and really engage with the consumer.

Something I'm excited about, too, is being able to give consumers information about the sustainability behind their returns decisions. Really trying to get the information out there to people who are shopping, which is myself as well, I'm a consumer, to remind ourselves that just because he returned something doesn't necessarily mean that it's getting reused.

That's an area where I'm really excited about this type of program, because I like to hope that this shows consumers, "Hey, this the brand or retailer you're working with is engaging in this type of program, it's likely that they are trying to be more responsible about getting products back to themselves as quickly as possible, so they can resell them as quickly as possible or donate them, or whatever disposition works best for that product".

[00:14:32] Liz: Yes, definitely. I think you're onto something because it really seems that the consumer is demanding that now, and a lot of companies are being born out of that and respecting that. That's great.

[00:14:45] Meagan: Yes, that's such a great point that the circular retail area is really becoming an area of growth. I know that Ellen MacArthur Foundation, as well as-- I believe there was a book from McKinsey last year, these types of companies are coming out with all kinds of good data about the opportunity involved in the circular economy, and in particular, leaning into second hand or open-box sales and in developing new business models around the circular economy.

One company I love is Rent the Runway. They, of course, really are the leader in the apparel rental space. I'm a member with them, have been using them for a while, and love being able to have new clothes, and then send them back, have them dry cleaned for me, and all of the convenience that comes with that, but then also knowing that instead of buying new clothes, I'm able to keep those high-end durable clothes in use for as long as possible, and let somebody else enjoy them as well.

That's an example of a business model that is really rooted in the circular economy, in creating shared assets as opposed to individual where I might not get as much use out of something unless I were sharing it with others.

[00:16:17] Liz: That makes sense. You talking about Rent the Runway was a great example. I know you have partnerships with Ikea, UPS, and others as well, and that Staples' example was great. Is there anything else happening that you want to share with some of those other programs and how you're working together?

[00:16:37] Meagan: Sure. One thing that I get to do in my day-to-day life is creating what I call alternate disposition channels for our client retailer. You're right that we work with Ikea, we work with American Eagle, Best Buy, a number of different brands and retailers, and including some of the largest in the US. One of the things that I get to help our clients with, specifically, is on standing up donation and recycling channel.

When a brand or retailer comes to us, they might say, "Hey, we've got all this inventory, we're doing our best to resell it, or we're liquidating it, or some amounts is maybe going to dispose, and we think that maybe we can try to divert some of that from the landfill. Can you help us?" From there, we'll say, "Yes, totally. We have experts in-house who can help you with optimizing your resale channels and adding new resale channels, and creating your whole strategy for resale".

Then it'll be my job, Meagan's job, to come in and help stand up any donation programs or recycling programs that they might need to supplement those resale, or listing back to stock channels as well. I get to be that bridge between our clients and donation partners or charities, to figure out where products should go? What kind of products? How often do they go? The whole range of the project management there.

That can be really fun for me. It puts me in almost a consultant role, which is not my background. I'm not originally a consultant by trade, but it ends up being really fun because I get to work at all ends of those kinds of programs. One great example is with Ikea in the US. We have been working on standing up a donation program for them over the last-- gosh, over a year now. They're live in some of their US stores with this automatic donation program.

I'd like to clarify, Ikea does donate a lot of their inventory, but it wasn't automated yet. It could be subject to whether it's just human error or it's just people deciding whether something should get donated. That takes a lot of time, effort, and energy. We used our technology in their stores to determine, automatically, if something that got returned should just go straight to donation. That save some time, save some of that energy, and space. and then gets products into the hands of people who will reuse them as soon as possible.

I love those kinds of programs because I get to really see the difference that I'm doing in my job, and get to work with a variety of different stakeholders on those projects as well. Those kinds of programs are growing. I think more and more retailers, too, are seeing the value in community giving, in social impact, as well as, for some types of donation programs, there can also be a tax benefits with donations as well.

[00:20:07] Liz: That's great. What a way to keep everything so fresh for you, you get to see it from start to finish. That's a very cool project.

[00:20:15] Meagan: Yes, thank you. I know, it's a fun, almost niche area. I feel like I've said that before, that my job feels quite niche to me. I bet listeners of your podcast are like, "No, I've seen this kind of job before. Reverse logistics job." It's such a fun and interesting place. Being at a company like Optoro where we're a tech company, and we have to remain agile and we have to be able to pivot on certain projects, or on our products. It means that no two days are the same.

[00:20:51] Liz: Oh, I bet. Speaking of having to pivot, did COVID impact your role, for Optoro and the work they're doing?

[00:21:02] Meagan: That is such a great question, Liz. Yes, COVID certainly impacted our industry, my role, our company, and all of our clients, all of the major retailers and brands, and of course the small one as well. First things, first. It's early, March, 2020. I wake up one morning, and I look at, I guess, my email, or maybe it was Slack or something, and there were all of these alerts going on saying that Optoro main warehouse where we processed a bunch of returns for our clients had been hit by a tornado. I was like, "Oh my God, what?"

This is very early March, 2020, and then, within a couple of days, I'm flying out to the Nashville Tennessee area, which is where our warehouse was. We had within six days found a new space so that the old space was destroyed. So within six days, our company had found a new space set up that new space and with getting it up and running for our clients, so that they wouldn't miss a beat in processing returns for their customers, because customers are wanting their refunds and wants to purchase new products.

They're like, "We can't stay down long, otherwise people won't get the refund." Within six days we stand up a new facility and I fly out there to kind of help just wherever I can. Me, and couple of other people were like, "I'm going to come make coffee for you and sweep the floors. Whatever you need. I'm here. I'm not the expert on operations, but I can be here." We go out there, and I get on the plane to go to Nashville, and I have to wear a mask. I'm like, "Oh, this is new" I didn't have a mask before, I had to get a mask to get on the plane. I'm like, "This is kind of funny".

Then we get there and you have to have hand sanitizer, and all of the stores are out of hand sanitizer, and I'm like, "Well, this is complicated" and on and on, and we keep going around and some places require masks and others don't. After I come back to where I live in Washington, DC from Nashville. It's crazy. I get back to Washington DC, and I can't go into the office. They say, "We're going to test closing down the office because of COVID" and then I think like a day later after I get back from Nashville, it's March 13th, 2020, and everything shut down.

That was kind of a wild time for Optoro, certainly, for our clients, certainly. Once everything shut down, including, all of the supply chain blockages that happened right around that time. We had clients coming to us saying we have tons of truckloads of inventory sitting out, on the road, or outside of warehouses because we don't have them staffed, and we can't get people to unload these truckloads for people's safety. We have all this inventory that's just sitting in trucks or in stores that are closed or in their houses that are closed, and we can't move any of it.

Within a few months where we were frantically working with our clients to help them try to move this inventory, use our technology to automate it, resell inventory that with now out of season, because spring inventory was trying to go and stock and then everything shut down. By early summer we're like reselling all of this, since a lot of it was out of season. We're doing our best to kind of keep up with that, and then right around that time too, the rise of digital just skyrocketed. Everybody's shopping online, and the Mantra products is high, and our brands and retailers are reaching out to us saying, "Oh my gosh, I need digital solutions. I need to make my solutions better, and we need to do it now".

It was really a wild time, both kind of on the supply chain side of what we do at our company and on the digital side of what we do. Creating these returns platforms, and providing customers with easy, safe contact lists ways to get returns to retailers. A lot happens there for Optoro, for our company personally, that tornado impact, really had big impact on us as well. From there, we've been more remote, of course, over the last couple of years. We've been, I used the word agile earlier. It get really showed how adaptable our company can be when we come together. It's been interesting. Luckily, I'd say in the last year with that rise of digital and with the rising interest in circular economy solutions among consumers.

Anything from rentals to secondhand shopping, product as a service, everything like that, our work has only been increasing. It's been a really interesting space, it hasn't slowed us down at all. It's been all hands on deck for a while. I feel blessed to have continued having a job and have a company that stayed around and that didn't have to do a mass layoff. I'm excited that our retailers and brands are here during the continued pandemic and are saying, now more than ever, we need sustainability, we need resiliency and we want to provide more responsible options for our customers.

[00:26:54] Liz: Definitely. I think the pandemic definitely shined a light on that, for sure.

[00:27:00] Meagan: Yes. I think so. Early in the pandemic there was also the major people in the US around racial injustice. Around that time, I'd say is when is when the retail ecosystem, since that's where I work within, we saw retailers and brands taking stands on social justice issues. I think around that time, this kind of awakening sense of justice and seeking responsible governance from companies, that really took more hold, I think in the average person's brain space, if I can say that.

I think the pandemic has made many of us experts in supply chain. Many of us experts in public health, and many of us better educated in racial injustice issues. When we're shopping with a company, or when we're engaging with a company of any kind, we want to see that they're doing the right thing. It's great to see that that's only gotten stronger in the last, almost two years.

[00:28:13] Liz: I agree. Meagan, I know you were really instrumental in our impact report that you published. Could you dig into that a little bit more the findings, and what came out of that?

[00:28:25] Meagan: Yes. Thanks, Liz. Yes, part of my job at Optoro is project managing our annual impact report. Last year's report was a little bit different. Normally we rely on a lot of photos and we talk about volunteering in our communities and what we did do that in 2020, it was to a lesser degree, but luckily I was able to still focus on the data and the impact of COVID, and other trends in 2020 on the returns ecosystem, and on retail in general.

The findings of last year's impact report were so interesting. We found that in 2020, as you mentioned earlier, the terms resulted in 5.8 billion pounds of waste to landfill just in that year. What's interesting about that is that that was up from about 5 billion times in the year previous, and that 5 billion had stayed pretty stable for a number of years. That jump up from 5 to 5.8 was interesting, and we suspect that partly has to do with the rise of digital, and on supply chain trying to keep up with that digital shopping.

The returns in the US last year also resulted in about 16 million metric tons of carbon dioxide emissions, which was up as well from about 15 million. So a really interesting year, I don't love to see the impact of the turns go up, but it doesn't really surprise me, especially with e-commerce, and online shopping increasing.

What's interesting is that waste metric 5.8 billion pounds, that's about the same weight as 6,400 fully loaded Boeing 747. Huge airplanes that are fully loaded with fuel, and with passengers, and cargo, 6,400 of them. As we're looking at that as well, we were also seeing that online returns, or e-commerce returns tended to create more waste further down the supply chain than brick and mortar or the traditional returns. We found from our data that online shopping creates about 14% more waste from returns than brick and mortar does.

There are a few reasons for that, and then we found that likely it has to do with that downstream supply chain effect. When returns come back to the warehouse, it takes a lot of time to open them and process them. From in store, somebody at the counter is looking at it, putting it in a box, and you might be able to either put it back to stock at the store, or maybe it can go to donation or something like that, or to markdown at the store. For econ returns, they all go back to a warehouse. They're usually individually packaged. Somebody has to stand there, open each and every box, and inspect each and every product and condition it and figure out where it can go from there, and that's super time-consuming.

That can create a lot of waste because it might just be quicker to liquidate everything or to send something's to export or something's to donation. From there, we believe that, that can really create more of the waste and the downstream kind of supply chain from returns in econ. What's another key important area of our impact reporting is trying to get a sense of how Optoro's programs helped our clients in the last year. We have these annual impact models that we make for each of our clients. We're able to see, with every client in the last year, we helped them reduce the waste to landfill by this amount, and we helped them reduce carbon from transportation by this amount as well.

That's something that I'm actually doing right now for this current year. Stay tuned and early 2022 or 2021, but one thing that I'm really proud of is that last year we helped our clients even during the pandemic keep 96% of their returned inventory out of landfills. So 96% of their inventory was going to a resale channel of some kind, or a donation channel.

[00:33:15] Liz: It's amazing how much data you collected in there.

[00:33:18] Meagan: Yes, thank you. We do a lot of work around data, in our modeling, and with our clients. I think so much of our platform is really based on generating data on collecting data for our clients, and it's kind of one of the key values of using technology in your returns or your excess inventory strategy.

Is that if you can have data on where your products are and where they're coming from and where they're going, you can better optimize how you're routing them and how you are dispositioning them, and what price you might resell them at or what price you might list them at, and kind of on and on down the line. The more data, the more opportunity you have for really optimizing what your entire supply chain looks like. I think, the nice part about my job is that I get to pair our environmental impact with our financial impact, and with our operational savings as well.

For anybody who works in the sustainability or circular economy space, there's huge value in being able to tie sustainability impact with financial outcomes. You want to be able to tie positive ROI to what you do, and my job it can be pretty clear right there, front and center when we're working with a client, and we helped them resell X percent more than they did last year without us. Because of that, we've diverted inventory from landfill, and we helped them generate more money from their returns than they used to. When across the board, and when there's a customer benefit there as well, the customer is engaging with the retailer more because they had a positive returns experience, then you see even more of a win on top.

[00:35:18] Liz: Absolutely. I know you talked a little bit about what you're seeing, and how you're adapting to them, and we spoke a little bit about trends, but is there anything else that you're looking forward to? Or Optoro? What's next? What are you paying attention to?

[00:35:35] Meagan: Yes, great question. I do think there's such a focus right now on circular models, particularly in fashion and apparel. I'm spending a good amount of time trying to focus on the fashion, and apparel space in terms of thought leadership, and what the impacts of the fashion industry are on the environment. I'm really enjoying kind of digging into that space. There's a lot of reporting coming out on it, and the resale company you've brought up are the real, real have really interesting reports they've come out with on second hand, and how that's been rising.

That's kind of a trend that we're watching, as well as seeing customers really engage with so much. For the average customer, myself included, a key way of help people present ourselves to the world and show off our personality are through our clothing choices. Apparel and the fashion space are really a great place to lean into sustainability and circular economy. Offering and messaging in an authentic way, of course, because customers are really demanding it.

I think another key place to watch as well is keeping an eye on regulation, and on advocacy action. This year there's been a lot around climate action, and carbon emissions goals being set in the last year. We've seen the Climate Conference COP 26. We've seen the infrastructure bill in the US. We've seen the IPC, or the intergovernmental panel on climate change came out with a new report this year on climate.

I think just all of these trends kind of together are showing us that climate is front and center for business and for governments. So keeping an eye on regulation, on extended producer responsibility laws in the US, in particular is going to be interesting just to see where companies might in the future, or even currently are required to be responsible for their packaging or for their products after the use phase with customers.

That's going to be a place where there will be change, and it'll be coming for the retail industry, I believe. It might not be next year, but it'll be over time. Finally, yes, again, I think bringing up digitization aspect and block chain within retail. That's definitely a growing area, and should be a really great opportunity for more companies, big brands and small service providers to get smarter with how we're managing products and the entire supply chain.

[00:38:38] Liz: Love that. What great focus is, and I can't wait to hear more about it. Where else can listeners learn more and really follow you and Optoro?

[00:38:47] Meagan: I'd love to chat with any listener whoever wants to kind of dig into this more, or get more info or data. You can always check us [email protected] O-P-T-O-R-O. We have a blog on there, and our impact reports are there. You can always reach out to us through the website as well. Of course, I'm on LinkedIn. Again, Meagan Knowlton, you're welcome to reach out on there. Stay tuned for the latest and greatest news reports out there on what's coming up and what kind of programs we're doing with our clients. We're always looking to share good ideas and get involved more and get smarter about the ways that we're creating change in retail, and how we're measuring and communicating it too.

[00:39:42] Liz: That's fantastic. Well, Meagan, this has been awesome. I'm so happy you shared all of this with us, and we look forward to following you and seeing what else you guys accomplished, and to how we divert more. I love this story. Thank you.

[00:39:58] Meagan: Thank you so much. This has been super great. We appreciate your engaging with us, and including us on the podcast, Liz. It's really exciting, and I'm glad to have Nothing Wasted in my podcast too now.

[00:40:10] Liz: Good. Well, we're thrilled to be there. Let us know if you can think of any other topics you want to see covered because you have such an interesting background, and perspective. I'd be completely open to that.

[00:40:22] Meagan: That sounds so fun. Okay, great. Well, I'll just come on as a producer real quick, and give you some pointers.

[00:40:31] Liz: Love it, thank you.

[00:40:34] Meagan: Wonderful. Well, thank you so much, Liz.

[00:40:37] Liz: You too, and have a great day, and enjoy your new apartment, especially for the holiday.

[00:40:42] Meagan: Thank you so much. I got to go hang up some twinkle lights, burn a yummy cookie-scented candle. 

[00:40:51] Liz: I love that. Do it.

[00:40:54] Meagan: Thank you.

[00:40:57] Liz: Thank you for listening. It would mean the world if you would take a moment to rate or review this podcast. If you share it with us on one of our social networks, we are giving out some fun, Nothing Wasted podcast swag. Just tag us, and see what you get. Thanks so much.

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