Will consumers buy into the ‘milkman model’ to reduce plastic packaging waste?

Milkman neonThe latest scheme to save the planet from plastic waste was unveiled on Jan. 24, 2019, at the World Economic Forum in Davos, Switzerland. It has been called the “milkman model,” and on the surface it sounds impressive. However, when I drill down into the details, I’m not so sure it will achieve the intended results.

TerraCycle (Trenton, NJ) introduced its Loop platform, which involves shipping consumers their online-ordered goods in a large reusable tote and having consumers return the empty containers to be cleaned by TerraCycle, shipped back to the CPG fill plant and reused.

I asked TerraCycle founder and CEO whether consumers will be willing to pay for the shipping through a “subscription” to this service. Consumers will pay a deposit of $1 to $10 per container and shipping charges, which start at about $20, decreasing with every item added.

“I don’t have the answer,” Szaky said, going on to explain how this model was tested for several months in France and the United States by the company’s “consumer insight team” and will “appeal to millennials. People want to do what they can to help the situation of waste,” said Szaky.

Okay, sure, but will they pay for this? I have my doubts, given the fact that much research has gone into determining whether people will pay more for products packaged in more expensive biodegradable plastic. The answer is mostly no, but sometimes maybe.

Given the limited number of consumer products being offered on the Loop platform—P&G will sell 10 brands, including Pantene shampoo in an aluminum bottle—it’s doubtful that most people will be able to get their week’s shopping done in this manner. It’s noted, however, that the products themselves will cost about the same as those in the plastic containers sold in retail outlets.

According to a Periscope market survey by McKinsey in March 2018, at least 70% of the 2,500+ consumers surveyed (1,000 in the United States) undertake some form of online CPG shopping activity. American shoppers, however, lag behind France for online CPG shopping activity (40%), the UK (39%) and Germany (33%), with the United States coming in at 32%. 

While you can purchase just about anything online, from furniture to groceries and everything in between, the McKinsey survey found that consumers had “definite preferences when it came to the CPG products they were willing to buy online.” Non-perishable goods were more likely to be purchased online while items with a short shelf-life, such as bakery goods, were bought in store. According to the research, beauty and personal care products topped the shopping list for consumers in France (47%), the UK and Germany (47%) and the United States (38%).

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