Circular economy has become an extremely popular term in recent years. It is seen as the solution to the ongoing global environmental crisis, which is more severe than the pandemic and sometimes plays second fiddle to other global matters.
As its name suggests, this type of economy requires a continuous system of production and reuse of resources and waste that can be used in many fields, from the fashionable food industry and the automotive to the energy one. Initiatives in this regard already exist, albeit on a small or medium scale.
The scope of the circular economy is to interrupt the classic cycle of production – raw material – processing – consumption – waste. Specifically, it wants to take the waste and put it back into production. Thus, the cycle looks rather like this: raw material – processing – consumption – reuse of waste in production. And then the process starts from the beginning.
This article looks at the main principles of circular economy, explains why it is so important for the world around us and also for businesses, and how it is connected to online shopping and ecommerce.
First of all, the concept of circular economy has emerged as a response to the aspiration for sustainable growth in light of the (over)production and (over)consumption of natural resources. Until now, the economy has operated mainly on the procurement-production-disposal model, a linear model through which each product has a limited lifespan, as shown below:
Valuable materials are used in food preparation, in the construction of infrastructure and buildings, in the manufacture of consumer goods or in the supply of energy – basically, everywhere. Once they are consumed or no longer needed, they are disposed of as waste. However, due to population growth and wealth, the demand for limited resources is higher than ever and leads to environmental degradation. Now’s our time to shelter those resources and equip business with the right tools to join a circular economy model.
We can best understand the circular economy concept if we look at natural, living systems that work optimally because each piece of them is a part of a whole. The products are intentionally designed to fit into certain material cycles, and these materials have a flow that keeps their added value for as long as possible and reduces residual waste to almost zero.
The transition to a circular economy requires the involvement and commitment of many different groups of people. Such a systemic transition is aided by information and communications technology advances and social change. Thus, the circular economy can create new markets in response to changing consumption patterns from traditional ownership to the use, reuse and sharing of products, and can help create more and better jobs.
Although online shopping was a widely trending online habit way before the pandemic, this global health hazard made it a necessity even for those who were reluctant to it. More consumers started to shop online and found a wide variety of ecommerce platforms to choose from that will cater to their every need. As time went on, consumers became more and more aware of what impulse purchases and returning of products meant for the environment: carbon footprint increase.
Apart from that, the packaging that online businesses provide for their products becomes waste and further contributes to the negative environmental factors. This also led to consumers actively searching for brands that embody their personal sustainability values.
Less wasteful packaging and use of recyclable and pick-up-in-store products can help and are an easy win for many retailers. Some ecommerce platforms are getting involved with second-hand (vintage) and reselling of clothes. Leaders in this field include companies like Vestiaire Collective, Farfetch and Depop.
There are many factors that can make a brand more sustainable and brands have to showcase that they are making those sustainable efforts too. These efforts could be finding ways to boost deadstock, sometimes called reclaimed fabric in the supply chain, or being transparent regarding the end-to-end supply chain process.
Despite the simple ideas above, not all online businesses are doing enough to reduce our impact on the planet. Thinking about being part of a more circular economy is important, but we cannot ignore the action needed to help our planet.
The CCX Company, in collaboration with VTEX Commerce Cloud, expresses gratitude for having had the opportunity to enhance its understanding of the advantages, trends, and other elements addressed in the current topic. This article was jointly developed and is brought to you by the VTEX Commerce Cloud team.
