Innovative Companies with Sustainable Business Models: RePack

Company profile

Name: RePack / Peruste Oy
Founded: 2011
Founders: Juha Mäkelä, Jonne Hellgren and Petri Piirainen
Value proposition: Trashless life
Industry: Packaging materials
Main products: Reusable delivery packages
Sustainability: Repack produces and leases reusable packaging for companies.

Idea and company history in brief

Repack is a Finnish packaging materials manufacturing company that wants to reduce the amount of trash by introducing an alternative to disposable packaging materials: reusable delivery packages. Furthermore, Repack has developed a truly interesting business model. The company doesn’t sell the delivery packages it produces, but rents them out for companies. By renting reusable packages instead of selling disposable ones, the company makes sure that the packages come back and remain in use. In this way Repack also contributes to the development of a circular economy.

The idea behind RePack is simple. Let’s say you’re buying a new pair of jeans online. Upon purchasing you are presented two options for delivery: regular packaging or Repack. Depending on the store, you will have to pay between 0-5 euros extra for using Repack packaging. By choosing Repack, the jeans you bought will then be delivered in a reusable package that you can send back via mail (no stamps needed). After sending the package back you will receive a ten euro coupon for the online store where you bought the jeans.

Repack_Happy_Customer_Anna_pieni

The idea for Repack emerged in 2010 when the three founders of Repack, Juha Mäkelä, Jonne Hellgren and Petri Piirainen, were working on a product development project with Finland’s post office. The trio had already founded one company before, Peruste Oy, which works in sustainable product design. One of the founders, Juha Mäkelä, initially came up with the idea and after a year of consideration the three men decided to take action and begun doing market research by contacting online retailers.

Repack Team consisting of Jonne Helgren, Petri Piirainen and Juha Mäkelä

Repack Team consisting of Jonne Helgren, Petri Piirainen and Juha Mäkelä

According to Jonne Hellgren, these initial contacts were made in a true lean fashion, without having a single product or even a prototype to show to their prospective clients. However, there was enough demand for the idea and Repack was finally founded in 2011. Today Repack has a growing customer base of various Finnish retailers, including Globe Hope, Varusteleka, Isku and Martela.  According to Hellgren, the company is also planning its expansion to international markets.

Business model: Product service system

Value proposition: Trashless life
Customers: Online stores and retailers mainly in consumer goods business
Revenue generation logic: Retailers pay for using Repack’s packages on a pay-per-use basis

Below is Accenture’s framework of 5 different circular economy business models. Based on this framework, Repack has a product as a service business model. By transforming a product that was previously disposable into a service, the company has developed a product service system.

Accenture

Accenture’s 5 business models for circular economy. Source: Circular Advantage.

A product service system essentially means that a product is used to provide a service, for example when renting a car. Car rentals provide access to the benefits of having a car at your use without the burden of owning one. A product service system can also be a mix of various products and services, but the focus is always in providing a stellar customer experience, not on the products themselves. When a product is used as a service, the idea is to provide access to the benefits of using the product while retaining the burden of owning the product within the company. This way of thinking, also known as service-dominant logic, shifts the focus from products to understanding and serving the underlying needs of the customer.

In Repack’s case this means that the company’s customers don’t actually buy its delivery packages, but instead pay for the benefits of using them. The underlying need is to have goods packaged in a way that they can be delivered to the end user in a reliable and cost-efficient manner. Repack serves this need by providing access to reusable packaging while also relieving its customers from the trash that comes with disposable packaging.

Repack’s company customers pay for each time they use a Repack delivery package. According to Jonne Hellgren, retailers using Repack packages then decide whether they make the end user pay for using Repack. In most cases the end user pays around 1-5 euros, but receives a discount coupon she can use in the retailer’s online store.

It’s also interesting to note how Repack resembles Ecovative with its quest for reducing the amount of package material trash. While Repack has solved the trash issue by developing reusable delivery packaging, Ecovative has approached the problem by producing and selling biodegradable packaging materials. The two companies therefore represent the two opposite flows of nutrients in the circular economy model, one biological and the other technical.

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