While many businesses struggle to recover from the impacts of the coronavirus pandemic, we’ve spotted some interesting signs that companies with circular and sharing business models may be more resilient to major impacts. What can we learn from them?
Here are a couple of examples:
Operating a car and e-bike sharing model in South West England, Co Cars was affected by a loss of trade during lockdown. In the immediate aftermath, the network was suspended, and the fleet stored securely, resulting in zero revenue generation.
However, because Co Cars’ model focuses on helping customers get flexible access to convenient transport options, they quickly pivoted to supporting key workers. During lockdown, they provided free transport to health sector employees and neighbourhood policing teams then, as lockdown eased, evolved this into paid hire packages.
As soon as restrictions were lifted, Co Cars’ asset fleet – with the necessary hygiene controls in place – was ready to redeploy. This meant it could quickly get up and running again and start generating income. Car club new memberships rapidly reached pre-Covid levels whilst usage e-bike fleet increased massively due to those who had taken up cycling during lockdown.
Co Cars is now interrogating pre and post Covid usage patterns to develop a product portfolio best suited to our ‘new normal’ world.
Clothing recommerce platforms
Over the last couple of years, peer to peer ‘recommerce’ platforms selling ‘pre-loved’ fashion have experienced exponential growth – and lockdown only seems to have accelerated the process. For example, in March 2020, Depop alone recorded a 65% increase in sales and 74% increase in app traffic compared with March 2019.
In fact, many recommerce operations fared better during lockdown simply because they didn’t have to shut down then restart complicated international supply chains. Instead, they feed directly from existing clothing assets in the “national wardrobe”. Not only did this mean they could continue to trade during lockdown but, due to the ongoing economic uncertainty, many customers are tightening their spending budgets and turning to pre-loved as an affordable way to update their wardrobes.
Compare this with many of the larger clothing brands who had to try and quickly cancel large forward orders from their Asian supply chains. They are now are struggling to recover full capacity as they are hit by a drop in consumer spending and resurgence of the pandemic across the fast fashion producing heartlands.
What do these examples have in common?
Both Co Cars and recommence are driven by online platforms, meaning they are remain widely accessible to their customer base, even when lockdowns are in place. They also extract unused value from the assets that they, or their customers, are already holding.
Furthermore, they rapidly flexed their offers as the customer behaviour and market requirements changed; with a reduction in consumer demand for ‘new’ aligning with lower-impact options that meet customer needs.
Can you be more resilient with a circular business model?
We believe circular business models deliver better resilience for most businesses because, designed properly, they focus on real customer needs, not simply ‘selling stuff’.
We know it can be challenging to set up some of these models. For example, funding an asset fleet or developing a recommerce user base. But, over the longer term, a circular model with the right proposition that gets more value from assets will be more profitable.
As we continue to navigate new lockdowns and extended measures across the globe, keep an eye on linear and circular businesses and see which remain in business and continue to grow their profitability during this sustained threat to their resilience.
Who we are
QSA Partners is a specialist team of circular economy and sustainable business experts with extensive experience in fashion and consumer goods. We have worked with many designer and high street brands including adidas, Farfetch and Ted Baker. We believe that better business models – whether based on sustainability or circular economy principles – help our clients stay relevant, grow market share and open up different markets in this rapidly changing world, providing business resilience against the impacts and risks of climate change. Find out more about our services or contact us to see how we can help your business benefit.