Looking outside the box (that your online purchase arrived in)

October 25, 2017 • TECHNOLOGY

The emergence of online shopping is well known, but receiving less attention are the unexpected benefits to the recycling industry

In the next five years, the number of online purchases will double, creating an imminent surge in demand for paper products ranging from the boxes these orders are delivered in, to packaging paper, receipts, return forms and more. Following in lockstep with the remarkable growth of online retailers such as Amazon, we believe the waste industry is set to break out at a rapid pace.

Only 25% of the 11 billion tonnes of waste collected annually is recycled or recovered, with the remaining 75% being landfilled^[1]. As online shopping progresses, this issue is exacerbated in a waste management industry already suffering from inefficiencies. The amount of cardboard used by Amazon for their shipping boxes could cover the surface area of the U.S. two-and-a-half times every year^[2]. Worse, volumes are set to double by 2025, then double again between 2025 and 2050^[3]. But, in the middle of difficulty lies opportunity. Waste management is a US$1 trillion market today and trending higher at an exponential rate as waste shifts away from a mandatory public service towards a profitable business solution. Waste collection is still the largest contributor to industry revenues, on the back of increasing volumes and rising fuel and labour costs. However, recycling and material recovery are quickly catching up.

Japan has already emerged as a leader in adoption, making a reduction of waste a national priority in the early 1990’s. Since then, the country has doubled resource productivity (the amount of materials used as compared to output), doubled its recycling rate and reduced the amount of material sent to landfills by one-fifth.

Global growth is assisting in this as well. Asia and South America are seeing some of the fastest growth in this industry, in part due to a rising middle class now gaining access to online shopping as well as a shift towards urbanization. People living in large metropolis cities generally lead a more consumption-based lifestyle which leads to more waste generation. Socio-economic changes in technology are also having a major impact. Consider the number of outdated cell phones, laptops and televisions set to be discarded today as compared to only a decade ago. A safe and efficient solution to recycle and do away with these products offers a massive business opportunity.

Today’s ‘green-conscious’ consumers are demanding a greater effort towards sustainable packaging, seeking to reduce the environmental footprint across the full supply chain. After all, packaging is responsible for up to 30% of waste in developed markets^[4] . In 2006, Wal-Mart mandated a 5% reduction in packaging across all product categories by 2013. In less than a decade, the company saw US$3 billion in cost savings.

The growing trend of consumers choosing online shopping in place of traditional ‘bricks and mortar’ retail is becoming one of the major inflection points in today’s marketplace. Where Amazon went public in 1997 as a small online bookstore, today’s consumers are now using the site to purchase grocery items. And as online retail grows, AGF will be shopping for the future of recycling.