The business model making consumerism both sustainable and profitable
Anyone growing up in the ’70s will remember suburban streets ringing to the sounds of businesses that were mostly gone by the end of the ’80s. The early morning whine of the electric milk float, the midday chink of the fizzy pop lorry and the soft, slow clop of horse-drawn rag and bone carts.
But hang on. Daily milk deliveries, fizzy drinks replenished weekly and worn household goods removed for free – these sound like the kind of startup ventures that would get serious financial backing today. These days, who doesn’t like the convenience of same-day delivery, the environmentally-conscious credentials of reused glass bottles or the thrift of furniture up- or recycling?
If the whistling ’70s milkman were invented today, he’d be the point man of what we’d now call ‘dairy-as-a-service’. It’s easy to see the mix of convenience and sustainability appealing to busy, urban, eco-conscious millennials in the same way that out-of-town superstores accessible only by cars appealed to their parents’ generation in a previous decade. Attitudes change and while modern consumers value convenience, they also want ethical concerns to be addressed. In this respect, as-a-service seems to be the right idea at the right time.
The recycling illusion
Recycling – it is great or is it, well, rubbish? While certainly better than dumping everything in a hole, recycling isn’t the best humanity can do, it’s actually the least we can do and still feel good about ourselves. There’s a reason why it’s the least-preferred option out of the ‘reduce, reuse, recycle’ mantra.
Recycling isn’t stopping rafts of non-biodegradable refuse clogging the oceans, just as western cities exporting their plastic waste to China aren’t saving the planet but are appeasing their consciences by shipping off their problem somewhere else. Humanity shouldn’t be recycling more, it should be using less. As-a-service can play a part by, surprisingly, selling us all something new.
Solutions, not products
There are all kinds of problems that we tend to solve by buying something. Every home has a washing machine yet it’s not the kind of purchase anyone’s proud of – we all just need to get our laundry done. In the same way, out there in the business world, manufacturers are building and operating vast warehouses that require storage, haulage and inventory management infrastructure just so they can feed third-party components into the production line at the right moment.
The as-a-service model works by guaranteeing a result, often supplying a product that enables this but also bundling repairs, maintenance and even consumables into a rolling contract. So a household laundry-as-a-service contract would see a company like Hotpoint providing a washing machine and detergent on a per-wash basis, upgrading and repairing that unit whenever it starts to wear out. Or, to use the factory example, a logistics company would supply car fittings-as-a-service, eliminating the need for warehousing by integrating its own supply chain with that of a car manufacturer’s to allow components to be delivered directly into the production line at the precise moment of need.
As-a-service is attractive to customers since it replaces initial purchase costs with long-term contracts. But since ownership of products remains with each supplier, we see sustainability suddenly becoming valuable to the manufacturer.
When a company sells a product, it wants it to wear out so that the customer will buy a replacement. That’s built-in obsolescence. But when a company supplies a product-as-a-service, it wants each item to be long-lasting and capable of cosmetic and functional upgrades, since it’s responsible for any replacement.
A widespread uptake of the as-a-service model shifts production techniques away from built-in obsolescence and towards built-in repairability. We’d see things built to last – reduction rather than recycling.
And maybe, just maybe, we’ll even see doorstep ‘dairy-as-a-service’. After all, Deliveroo did reintroduce bicycle delivery. What seems more certain is that addressing needs – heating, transport, office cleaning – rather than supplying products – boilers, cars, floor polishers – can and will deliver long-tail profits to suppliers while at the same time reducing environmental impact. And it’s not very often that those two go hand-in-hand.
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