Incentivizing return in reuse systems
A closer look at return rates for “free to borrow” reusables
By Cerise Bridges
Over the last several years, a new category of business has sprung up, one that I never imagined I’d see: reuse service providers for foodware. As more and more people realize that our throw-away lifestyle is not sustainable, consumers and businesses are turning (back) to reuse.
Though using reusable packaging may at first seem difficult or confusing, it is not a new concept. As we wrote about in The New Reuse Economy, reuse was once the norm. Before WWII, if you wanted to buy a consumable product, you would either bring your own container to be filled at the store or market, or the merchant would sell their product in a refillable container that they would loan or rent to you. Merchants would charge their customers a deposit to incentivize them to return the container, and the system worked well.
In the decades since, our economy has been based on single-use, disposable containers that are marketed to be more convenient and economical. But this convenience and savings is achieved by shifting the burden of cost downstream to the communities that must manage the waste and bear its harm.
So how do you get customers to return to a system of reusable containers when they have been trained for years to throw them away when they are finished? There are dozens of reuse businesses around the world, each trying to answer this question.
Options for incentivizing return
Let’s look at the different ways reuse service providers can operate.
Deposit. Customers are charged anywhere from $.25 to $5 to borrow a container or cup. When the container is returned the money is refunded to the customer or credited to the customer’s account for the next use. If it is not returned, the deposit is not refunded and an additional fee may be incurred.
Free to borrow. Customers add a credit card to their account, giving the reuse provider a way to collect money if the container is not returned. Charges can range anywhere from $5-$15. Customers generally have 7-14 days to return the container.
No deposit or credit card required. This usually happens in a closed system, such as a school or corporate dining service. The food service provider relies heavily on education and signage to maximize return rates.
Subscription service. For those committed to the reuse lifestyle, a limited number of providers offer a monthly subscription for a small fee and often include a loyalty or reward program.
I wanted to know: Are there different outcomes/return rates for those who require a deposit and those who do not?
To charge a deposit, or not charge a deposit?
I speak with quite a few reuse service providers as part of my work at Upstream, and it is always interesting to hear the owner’s motivation for starting the business, how many locations they have and the return rate for their packaging.
One conversation in particular surprised me. The company’s representative told me they do not charge a deposit for their containers and was very adamant that deposits don’t work and do not incentivize return. I assumed everyone charged a deposit because it is a proven way to incentivize material recovery, such as in U.S. states with Bottle Bills.
So if reuse service providers aren’t charging a deposit, how are they maximizing their return rates? How are they incentivizing customers to return the reusable containers, changing decades of habit and keeping the containers in circulation? I turned to three reuse providers to ask these questions.
Insights from reuse service providers
Vytal, based in Germany, does not require a deposit. They boast a return rate of 98%. They list several reasons why on their website, including “higher reusable acceptance.” They believe (and I agree) that consumers associate deposits with higher food costs—and I would add, given the option, would choose a single-use product for free.
How does Vytal account for such a high return rate? Psychology. Peter Simon of Vytal says, “the idea of facing a penalty fee [for not returning containers on time] is more abstract compared to a prepaid deposit. By implementing this system, it creates a stronger desire for individuals to return the items promptly.”
Recirclable, operating in the Boston area, does not require a deposit either. They also have a return rate of greater than 98%. They believe that “customers are taking on the responsibility of returning containers, and that should be their primary ‘investment:’ their time. Customers should only pay when they don’t return containers…”
Recirclable’s return rate is maintained by timed reminders that let customers know they will be charged if the item(s) is not returned within 14 days. According to owner Margie Bell, “that is enough motivation to return.” They also provide multiple return locations that make it more convenient for customers.
In deciding whether or not to charge a deposit, Rene Hallen, founder of Buoy containers, tried “to create a system that was scalable and therefore is for everyone’s pocket.” There is a fine line between charging a deposit amount that is too large and may deter people from participating in a reuse system, but also too small “where people think they have paid for the container and have no incentive to bring it back.” Like most other reuse service providers, Buoy asks for a credit card guarantee and charges $8 if the container is not returned after three weeks. Rene says, “this is a much stronger incentive to bring back the container than a deposit system.”
“Customers are taking on the responsibility of returning containers, and that should be their primary ‘investment:’ their time. ”
Moving beyond fee systems
For these three companies who do not charge a deposit, it is clear that the real incentive for return is the threat of a fee if the container is not returned in a timely manner. With return rates of at least 98%, it seems customers do not want to “buy” the container. And that’s the goal. We want reusable foodware packaging to be returned to the system so that it can be reused—again and again.
At this point, whatever companies need to do to make that happen, to normalize reuse and keep their businesses afloat, they should do. However, as soon as possible, they should begin to think about how to make reuse fully accessible and equitable. And the best way to do so is to make it the default system—no deposits, credit cards, or subscriptions required. To do that we need investment in infrastructure which will enable volume. With volume comes efficiencies and lower cost, and with lower costs come shared interoperable infrastructure and reuse for all.
Toward a joyful reuse economy
It should be noted that many additional factors contribute to maximizing material recovery aside from economic incentive. Many of them are design solutions in the return system, such as messaging and reminders. Others are intrinsic motivators by people like me who want to participate in a healthy, joyful industry that makes tangible impacts.
Unfortunately, where I live there are very limited options for reusable foodware for takeout. When they come, deposit or no deposit, I will be more than happy to use and return them in a timely manner and play my part in the growing circular economy.
This is the first in a series looking at the ins and outs of return systems for reusable packaging. Stay tuned for more throughout the year.