The consumer product landscape is undergoing a seismic shift. As customer values continue to prioritize durability, sustainability, and reusability, new revenue models are emerging across various industries. Item-level traceability – the ability to track individual products throughout their lifecycle – will be a key driving force behind the scalability of these innovative models.
Business leaders are able to unlock huge amounts of new value thanks to exciting innovations in this area. But where to start? Let’s find out.
The shift toward durable and reusable products The global perspectives
Consumers are increasingly demanding products that last longer, can be repaired, and are reusable. This shift is evident in the rise of repair cafes, the popularity of vintage fashion, and the decline of single-use plastics.
One report found that from 2019-2020, UK consumer spending on previously-owned clothing for environmental reasons rose more than 25%. Another report by the European Environment Agency found that the main barrier stopping consumers from repairing products was simply the lack of repair services (rather than a lack of desire to engage with sustainable practices).
Regulatory landscape
Governments are also pushing businesses towards more sustainable practices. The UK's Ecodesign for Energy-Related Products and Energy Information Regulations set stringent rules on how much energy large appliances (like washers and dryers) can use. It also mandated manufacturers to make repairs easier by providing information and guaranteeing the supply of replacement parts.
The EU is also driving similar Ecodesign guidelines throughout the continent to make repairs ‘systematic, cost-efficient and attractive’ – something the European Parliament has been pushing for over a decade.
More recently, the text of the Ecodesign for Sustainable Products Regulation (ESPR) was approved by the European Parliament. These new rules will make products sold in the EU more reusable, repairable, upgradeable, and recyclable.
In the United States, progress is happening in this sphere mostly on a state-by-state basis. Right to Repair legislation has passed in different forms in 30 states in 2023, covering products ranging from farm equipment to cell phones.
These regulations aren’t isolated; they're part of a global effort to make businesses more accountable for their environmental impact.
New revenue models and possibilities
The new circular economy models are also opening up potentially lucrative new business models. Item-level traceability is a crucial factor in making these possible in a scalable and more efficient way.
1 - Rental services
Renting is no longer limited to cars or homes. From high-end fashion to heavy machinery, rental services are booming. Ralph Lauren, for example, introduced a clothing subscription service, which is set to bring a host of benefits to the business – valuable customer data, reduced unsold inventory, and recurring revenue streams.
With the US apparel rental market expected to reach $4.4 billion by 2028, it seems like a smart move. Item-level traceability by assigning unique digital identity contributes to rental programs by ensuring the authenticity and quality of rented products. It also helps the brand and its rental partner keep track of the chain of custody of the rental product throughout its lifetime.
2 - Repair and maintenance services
"Throwaway culture" is thankfully giving way to a repair-first mentality. Maintenance services not only extend the life of products but also create additional revenue streams. Item-level traceability through RFID, QR code, and atma.io can play a crucial role in tracking the condition of products, as well as sharing the product composition or makeup and its care/ repair instructions with consumers and repair partners. This makes the whole process more efficient and scalable and opens up new repair revenue streams for brands and their partners.
3 - Resale and second-hand markets
Platforms like thredUP, Depop, and Vinted are capitalizing on the growing second-hand market. Traceability can enhance consumer trust by verifying the authenticity and condition of products, and open up new revenue opportunities through commissions, fees, and partnerships. Similarly, when the end consumer buys a resale item through the brand, a unique QR label linked to a connected product platform like atma.io can provide educational information on traceability and carbon (saved) by bringing the resale process to life.
4 - Product customization and personalization
Consumers are willing to pay a premium for products that are tailored to their needs. Traceability data can be leveraged to offer unique customizations based on their previous product interactions, creating new opportunities to drive revenue with premium pricing or bespoke deals.
5 - Re-use
Deposit Return Schemes (DRS) are becoming more common, especially for beverage containers. Programs like these help reduce costs with material recycling, save a significant amount of carbon footprint that goes into manufacturing new products, and promote sales to conscious consumers.
Item-level traceability ensures an efficient and safe return of materials and helps give them an extended life.
It also makes the model more scalable and trackable with the digital ID technology ecosystem. Platforms like atma.io can calculate how many washes a reusable container has gone through and how much carbon footprint has been saved by reusing the product instead of creating a new one.
Pioneers of the sustainable product cycle
Innovative companies are leading the way in these new revenue models. One such example is adidas, which integrated atma.io's connected product cloud into its Infinite Play initiative to scale its ability to buy-back products and give them a second life.
There’s also the case of Texaid, which partnered with Avery Dennison to address the challenges of textile waste management ahead of incoming regulatory changes in the EU. Aiming to enhance traceability within the clothing industry, this collaboration helped Texaid efficiently process garments into the right resale or recycling streams.
Sustainable luxury designer, Mara Hoffman unveiled “The Dress That Changes Everything” last year. The dress features a Digital Care Label, powered by atma.io connected product cloud, made of cutting scrap from the garment and contains a QR code that consumers can scan to learn about the making of the dress, including its waste footprint. Through the Digital Care Label, Mara Hoffman encourages dress owners to return the garment to the brand's retail store so that it can be sent back to Circ for recycling after its long use.
The shift in consumer values and regulatory landscapes is creating unprecedented opportunities for businesses. Will your organization be the next pioneer?
Embrace the opportunities of the circular economy
Item-level traceability is at the heart of these novel revenue models, enabling companies to meet consumer demands for durability, repairability, and reusability. As we move toward a more sustainable future, progressive businesses have a pivotal role in shaping it.
Avery Dennison’s digital ID technology and our atma.io connected product cloud are well-placed to help. atma.io is a platform that maximizes the benefits of everyday items by giving each of them a unique digital identifier. It records, stores, and tracks the events related to each connected product, from raw materials to the consumer and beyond, making entry into the circular economy much more accessible to businesses and consumers alike.
Ready to revolutionize your revenue streams through item-level traceability? Book a free demo now to explore the endless possibilities.