When Circular Economy Models Transform Online Commerce
The circular economy is no longer an abstract concept reserved for environmental conferences. In Canadian e-commerce, several circular models have moved beyond the experimental stage to become profitable and scalable circular business models.
Unlike traditional linear approaches (produce-sell-discard), these functional circular systems create closed loops where resources circulate, retain their value, and generate recurring revenue. Here are three models that have proven themselves in the field.
Model #1: Deposit and Packaging Reuse
How This Circular Online Commerce Works
The principle is simple but powerful: instead of using disposable packaging, companies invest in durable containers that circulate between the brand and customers. Each package completes 20 to 40 cycles before being replaced.
Concrete operation:
The customer orders online and chooses (or automatically receives) the reusable packaging option. They sometimes pay a small refundable deposit. Upon receipt, they keep the product and return the packaging via the existing postal network. The company recovers, cleans, and recirculates for the next order.
Operational example: PickPack
Hundreds of Quebec businesses already use this system. A fashion e-retailer shipping 30,000 parcels annually replaced their disposable bags with 1,000 reusable PickPack packages. Result after 18 months: $4,500 savings, 85% reduction in packaging waste, 68% return rate.
Measurable business benefits:
- Reduced packaging costs in the medium term (amortization over 20-40 cycles)
- Immediate and tangible competitive differentiation
- Concrete ESG data for reporting and certifications
- Increased loyalty (customers engaged in the closed-loop logistics)
Challenges to anticipate:
Higher initial investment, need for package tracking system, dependence on customer return rate (generally 60-70% in mature phase).
Model #2: Product Rental and Subscription
The Circular Economy Model Through Use Rather Than Ownership
This circular business model radically transforms the customer relationship: rather than selling a product once, the company rents or offers a subscription where the product remains brand property and can be repaired, refurbished, then re-rented.
Sectors where this model excels:
Fashion and Clothing: Canadian platforms like Wear Your Wardrobe allow renting high-end clothing. A garment circulates between 8-12 different people over its lifespan, multiplying the value extracted per item.
Outdoor Equipment: Camping, ski, bike equipment rental. A Montreal electric bike company generates 3x more revenue per bike via rental than direct sale.
Electronics and Tech: Computer, tablet, phone subscriptions for businesses. Equipment is recovered, refurbished, and re-rented, creating genuine e-commerce reuse.
Economic advantages:
- Predictable recurring revenue (MRR - Monthly Recurring Revenue)
- Significantly higher customer lifetime value (LTV)
- Control of product end-of-life (repair, revalorization)
- Reduced overproduction (production adjusted to real demand)
Complexities to manage:
Sophisticated reverse logistics, cleaning/refurbishment processes, inventory management (available vs. rented), customer education on the concept.
Model #3: Integrated Resale and Second-hand
Functional Circular Systems Through Internal Marketplace
This circular economy e-commerce model directly integrates second-hand e-commerce resale into the brand ecosystem. Rather than letting customers resell elsewhere, the company facilitates and takes commission on these transactions.
Inspiring working examples:
Patagonia Worn Wear: The American brand (but model applicable to Canada) buys back, repairs, and resells its own used products. This division generates millions in revenue while strengthening the sustainable brand image.
ThredUp and Poshmark (inspiration for Canadian brands): Platforms that have demonstrated the economic viability of the model. Some Quebec brands are beginning to integrate these features directly on their site.
The winning hybrid approach: Sell new AND facilitate resale of own used products. A customer buys a new jacket, wears it for 2 years, then resells it via the brand's platform which takes 20-30% commission.
Why this circular business model works:
- Extends product lifespan (5-10 years instead of 2-3)
- Creates a new revenue source (commissions on resales)
- Attracts price-sensitive customers (entry point via second-hand)
- Reduces overall environmental impact while maintaining brand engagement
Prerequisites for success:
Quality products that last, rating/trust system between sellers-buyers, reception/quality control logistics, warranty policy on used items.
Combining Models to Maximize Impact
The Hybrid Approach to Functional Circular Systems
The most innovative companies don't choose a single model, they combine several. A clothing brand can:
- Use PickPack deposit packaging for all shipments (model 1)
- Offer a rental service for its premium collection (model 2)
- Facilitate resale of its second-hand items on its site (model 3)
This approach maximizes the value extracted from each product and package while creating a complete closed-loop logistics.
Measuring the Success of Your Circular Economy E-commerce
Key Indicators of Circular Economy Models
For deposit/reuse:
- Package return rate (target: 65%+)
- Average number of cycles per package
- Savings achieved vs. disposable after amortization
For rental/subscription:
- Monthly retention rate (target: 85%+)
- Revenue per product over lifetime
- Number of rental cycles per item
For resale/second-hand:
- Percentage of catalog available second-hand
- Average commission per transaction
- New customer conversion rate via second-hand
These metrics allow objective evaluation of your circular online commerce performance.
Where to Start Your Transition
Roadmap Towards a Circular Business Model
Step 1: Identify Your Entry PointWhich model best matches your products, clientele, current logistics capabilities?
Step 2: Start with a PilotTest on a product category or customer segment before generalizing. Packaging deposit via PickPack often represents the most accessible entry point.
Step 3: Measure RigorouslyCollect precise data on economic and environmental impacts to adjust and convince internally.
Step 4: Communicate the ValueClearly explain to your customers why and how to participate. Transparency on collective benefits strengthens adoption.
Circular Economy as Competitive Advantage
The three models presented aren't simply environmental initiatives. They're business strategies that generate economic value while reducing environmental impact.
Companies adopting these functional circular systems don't just meet consumer expectations, they create new competitive advantages: recurring revenue, increased loyalty, authentic differentiation, operational resilience.
Circular online commerce is no longer a futuristic vision. It's an operational reality accessible today for brands ready to rethink their model.
Integrate circular economy into your e-commerce - discover how PickPack can become your first step towards a circular business model with packaging reuse, an accessible and profitable solution from the first cycle.
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