Returnity: Fighting the Battle of Making Packaging More Sustainable

Posted on December 4, 2018

As e-commerce continues to carve out a more significant role in our world, we must begin dealing with the consequences of single-use packaging. According to a report from Fast Company, an estimated 165 billion packages are shipped in the U.S. each year. The cardboard used in those shipments equates to somewhere around 1 billion trees. The Environmental Protection Agency has stated containers and packaging account for 30 percent of all solid waste generated in the U.S.

This is an issue Returnity is tackling head-on with its reusable packaging. Several e-commerce companies — including Brideside, thredUP, Rainey’s Closet, For Days, Happily Ever Borrowed, and La Belle Bump — are using Returnity to help alleviate the economic and environmental cost of single-use packaging.

Mike Newman is the CEO at Returnity. He has worked at the intersection of supply chain and sustainability for more than 20 years. He was previously the vice president of sales and marketing at ReCellular, where he helped build e-waste programs for Verizon, AT&T, Walmart, Best Buy and more, saving millions of used cell phones from landfills.

We recently spoke with Mike about a number of topics for our new podcast, which is set to launch soon. Here are some of the highlights from what Mike had to say during our question and answer session:

Q: In your words, what is Returnity?

Mike: Returnity is sort of the answer to the success of our e-commerce world. What’s happened is consumers are getting all these deliveries to their doorstep, which is a great convenience. It also creates this hard-to-avoid, growing pile of waste that frustrates everybody from brands to shippers to consumers. And so what we’ve done is come up with something that’s better for the planet, better from a customer standpoint, and creates an easier way of delivering and receiving goods. We make bags and boxes to replace cardboard and poly and make it cool to do that. That’s kind of what we work on every day.

Q: What led you to the idea of launching Returnity?

Mike: The business incubator originated out of a reusable shopping bag business. One of those shopping bag customers was James Reinhart, the founder of thredUP, which at the time was still pretty small. It has since grown to be this huge e-commerce brand in buying and reusing women’s and children’s clothing. He was buying these reusable shopping bags and he asked if we could make him a reusable shipping bag. That spun us down this rabbit hole of innovation and [James] came on as an investor because he liked what we were doing and he brought some others as well.

So, it sort of started with some e-commerce leaders who felt a little bit of maybe guilt around what success meant from a planet and resource standpoint. Having that kick in the butt from someone who wanted it and needed it was a great starting point. Then leveraging my experience and others in understanding how consumers make decisions, how to change behavior, and then how to integrate into a such a complex logistics stream was where the rubber hit the road. That’s where we really had to be smart and that’s how it’s led to where it’s gone.

Q: What kind of steps have you taken to make Returnity easily usable from a consumer and a business standpoint?

Mike: Change is hard on all levels. The fewer friction points you can create, the better. Cardboard boxes and poly mailing bags may be hated, but they also work really well and are cheap and easy. So for us, it was really understanding why those products had been successful and then what it would take to disrupt them. It wasn’t that consumers found them cumbersome or that it didn’t keep the product safe, it was that they just had too much of it. We really started from the standpoint of how can we make this as similar to the current experience as possible so that you’re not having to train people to do things entirely differently or asking companies to change their supply chain process. The less different it was beyond the obvious difference of being able to use over and over again, the better off we knew we were going to be.

Q: What were the early conversations like with investors and partners that took a chance to work with Returnity?

Mike: The sustainability component is central and critical. It’s the first thing we love about the business and it really motivates us. But the reality of that is if you can’t scale, you don’t make an impact. You can have the best product or service in the world but if no one is using it, it doesn’t matter. We had to be really smart about when and why the sustainability component of it was relevant to achieving that scale and I think we were really forthright about that from the early days.

A good illustration of that is just a few months ago we were with sitting with the marketing team of one of the largest clothing retailers in the country. The head of marketing made the point that they could put Instagram posts up about what they’re doing from a sustainability standpoint and their followers will click “like” on that all day long and they’ll love it. But then if you ask them to pay more for something that’s sustainable, they don’t.

That is kind of the core lesson for us in how we’ve approached it. We absolutely want to make sure we’re transparent and that we are a better choice from a sustainability standpoint. But we’re going to win based on math, and that comes down to cost and revenue. We really are super focused on building applications for companies that are at least cost neutral or save them money. And then they also benefit from the brand experience and the sustainability metrics they can brag on.

Q: Who does Returnity serve the best and how do you get that done?

Mike: One grouping is really e-commerce companies who have planned a return, such as a rental or try-at-home model. They tend to be the easiest sell because it’s not just their customers that are getting all that packaging every day, they’re getting it all back at their warehouse, so it sort of hits them right between the eyes as well. It’s a really great group for us to be working with because it’s such an innovative space in the broader e-commerce world regardless.

The second group is what we call the local aggregator. Think about when I mentioned that major apparel retailer earlier, they ship a ton of stuff to their stores every day in cardboard that they then have to recycle locally. But what they’re looking at is using our packages instead to ship to their stores, then they aggregate our packaging locally, and they bring it back to the warehouse to use it again. And they do it in bulk. So that return cost on a per-unit basis goes down really low and now it makes sense financially.

But most e-commerce doesn’t work that way, right? Even for apparel where you’re having 20 or 30 percent return rates, to ship an empty reusable bag or box back tends to put you under water. That’s where we’re getting creative right now and that’s where our long-term growth will be. Part of what we’re doing is making packaging that you don’t necessarily have to send back because it converts to an item you can use at home. We have a line of shipping bags that turn inside out and you use it as a tote bag. We have one with a company that they ship it and our bag turns inside out and it’s a gym bag. It looks like an old-school duffle bag. Again, you’re sort of innovating and now it’s this bonus item for your customer.