Why yield consumption schemes are about to blossom
Because both the desire from brands to do so and the tools to carry it out already exist. Yet for the moment, different firms take different initiatives in accordance with their core business, without considering the cyclic process as a whole. But mixing some of these approaches together would already enable firms to create a full vertuous circle of yield consumption.
Let’s take two examples of firms running trade-in programs, using their skills and knowledge.
Branding and customer loyalty
The first firm is Edifice, a Japanese Fashion brand that operated a suit trade-in program last year. Any suit given back by customers was given to a non-profit organisation, Mottanai, who would sell them on the flee market and give the money earned to GMB, a NGO promoting afforestation movements throughout Africa. Each customer is given a $60 coupon for his old suit. This precise, classical case is only about building the brand’s image ; customer loyalty is not at stake here since the $60 coupon reduces severly the margin to be made on a future sale, if there is still any margin. The initiative is a brand building one only, no rentability concerns are taken into account, so the yield consumption scheme is imcomplete.
A focus on profit
The other example is Bonanza, a fashion etailer who launched a fashion exchange two months ago. The concept is a more web oriented one, capitalizing on the etailer’s marketplace : Bonanza accepts women’s clothing in good condition, lets customers make a list of the clothes they want to send in, and give them an estimate of the mone they could make, to be confirmed once they receive the clothes. Bonanza then sell the clothes directly on their marketplace. In that case, the profitable dimension of the operation is at the heart of the initiative, but it has its drawbacks : clothes are bought at a very low price. As a result :
- People may not be very interested by the trade-in ; for example, a Ralph Lauren dress that trades around $100 and whose price can raise far beyond, will only be priced between $8 and 19$.
- People may feel cheated and feel like Bonanza is making money out of them ; there are costs on the etailer’s side that explain the low price paid for the clothes, but it does not appear clearly, and would be difficult for the customer to accept, anyway.
We see that another dimension of a yield consumption scheme, that is making the whole process a profitable activity rather than a sunk cost, appears here, but without a brand building approach, linked to a customer loyalty building program, the price to be paid by the customers themselves is far too high.
Yield consumption at the crossroads
These two examples, among many others, show that companies and brands are keen on finding eco-friendly ways of growing. And their various attemps show the different tools a campany can use to carry that out, though for the time being, I have never come across an integrated initiative dealing with all aspects of the problem (apart from APC whose Butler worn out series is a case study to learn from !) Yet bringing together the two schemes presented above would enable both firms to make the most of their trade-in program, and realise at last a full yield consumption scheme, with all the benefits that come along. What if Edifice invited their customers to sell their suits on Bonanza in an easy way, on an Edifice dedicated space on the Bonanza marketplace ? The whole sale would happen online, Bonanza’s role being limited to checking the product’s condition after it’s sold to make sure such trade never hurts Edifice’s brand image (in case a seller is not scupulous enough), and sellers would be paid back in coupons. That would generate revenue for both firms, while potentially integrating in a frictionless manner all past customers in the reusing scheme, boosting customer loyalty through coupons. That’s yield consumption !
We are absolutely convinced that this type of scheme, which mix different firms assets to integrate all aspects of a successful eco-friendly program, are feasable and will become increasingly widespread. Our own answer to this challenge, l’Arrière-boutique, has been thought for this matter from the beginning, and will shortly become live ; the platform itself will then be used as the link between brand oriented and revenue focused initiatives, and carry out for good the vision expressed above. Stay tuned !!