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Responsible Electronics

Responsible Electronics


by Nidhi Gupta, Founder, Varehaus

We live in an age of devices, and there are bound to be an increasing number of devices that we cannot live without as we imagine the future. By 2022, the average household with two teenage children will own about 50 connected devices versus ten devices today, as per OECD estimates. To add to that, the rate at which we swap our devices for new models is getting dizzier by the year because of the attractive deals from service providers, the enticing new models launched almost annually by manufacturers and because it may not hurt the pocket as much anymore. Electronic products are, almost as if, designed for obsolescence.

What happens to the devices we no longer use or need?

Well, there are four main scenarios that you are probably following:

• Do nothing – Probably the most common scenario is that the device is just sitting unused in your home and soon you forget about it even being there.
• Dispose (unsafely?) – An unsustainable and potentially dangerous scenario is to dispose off the product in the dumping areas, landfills and even household bins. Few countries today have regulations and mandatory disposal processes for e-waste.
• Exchange/ resale – There are online marketplaces (e.g. Craigslist, Gumtree, and Carousel) and brick-and-mortar vendors to allow you to resell your usable electronics. There are also offers by service providers and manufacturers to exchange an older electronic product for a newer model, with some rebate.
• Recycle – How many of us would have actually taken the effort to dispose the electronic product at proper recycling places or to authorised scrap dealers? There are not only environmental issues with the above processes, but also commercial. Improper disposal not only goes direct to landfills and contributes to pollution; but may also be dangerous given there are batteries and other inflammable components. Lack of proper recycling channels make it difficult to be able to extract useful components and commodities (e.g. gold, silver, tin, and copper) from unused products or extract parts that could be reused in a newer model.

Why is this still a problem?

There are two main root causes of the above:

1) The logistics stops till the product reaches the consumer: Broken reverse logistics (from consumer to recycler to manufacturer), limited number of drop points to drop your used electronic and hardly any pick-up models to pick the used product from your home.

2) No mandated responsible entity for the reverse logistics for sustainable recycling or reuse or disposal of the outdated electronic products: Consumers have no incentive or regulatory binding to dispose products safely, few governments have mandated e-waste disposal or made manufacturers liable for recycling and disposal and as for manufacturers, they gain more profit with ‘obsolescence’ and faster new product launches.

How then can digitisation and logistics help?

Apart from the usual levers, like raising consumer awareness, government regulations to demand a recycling fee from manufacturers (e.g. WEEE directive), there are ways digitisation and logistics can potentially solve this problem.

1) Reverse supply chain: For efficient reverse logistics, we need a hub and spoke structure – collection nodes (either home collection or drop points where consumer can dropoff their products), sorting facilities (e.g. segregating usable products from scrap) and transportation to the right recipients (e.g. authorised recyclers, back to manufacturers, and registered scrap dealers). This can only happen if the manufacturers are made liable and hence have a reason to bring the relevant parties (e.g. logistics and recyclers) together to form and fund the supply chain network.

2) ‘Trash to Cash’ marketplaces or drop boxes: Online trade-in marketplaces fare much better in both ease-of-use as well as commercial returns to the consumer. The logistics model could vary or self-exchange (no logistics cost by marketplace).
• Pick up (higher logistics cost involved needs to be rationalised with economies of scale, vendor negotiation, etc.) : Baidu – UNDP recycling start-up connects consumers of electronics (incl. larger white goods) with authorised recyclers to allow sustainable disposal/ recycling. A similar C2B bidding-based startup in China (Aihuishou) scored a $60m series D funding in Sept 2016.
• Drop boxes (needs upfront capital investment and potentially limited to smaller sized electronics only): ecoATM, a start-up based in the US, invests in automated machines where the user identifies the electronic to be deposited and receive cash or credit in return
• Ship off (business incurs cost of sending shipping material, but much lower than pick-up logistics cost): Gone, a seed-stage startup based in the US, started with the pick-up model and in 2016 launched ‘Gone Lite’ where the customer is sent the shipping material and asked to pack the product and ship it off themselves

3) Shared economy: An alternative to owning expensive new electronics (e.g. special camera for that safari trip or a VR gaming device for a fun marathon weekend) is renting it when you want it. That is the concept for various peerto- peer electronic rental marketplaces such as Berlin-based Grover which has a subscription based model

4) Sustainable product development: In engineering-driven industries like automotive, industrial machinery, and medical devices, the contribution of spare parts sales and maintenance is almost 50-60 per cent of the total profits of the manufacturer. If spare parts for electronics become cheaper to replace and maintain, then we might see more sustainable, upgradable hardware in electronic products as well.
• Modular electronics: Even though modular phones have not seen success till date (e.g. modular smartphone Project Ara by Google was terminated in Sept 2016), there are start-ups working on similar concepts, which, if successful, will be revolutionary. For example, Nascent Objects, a modular consumer hardware startup, was acquired recently by Facebook. FairPhone, which attempts to make ethical and modular smartphones, raised $10m in crowd-funding in 2015.
• 3D printed spare parts: As 3D printing matures, allowing multiple materials to be used at cheaper total cost, electronic spare parts can be potentially manufactured in retail stores / warehouses close to the consumer; thereby also improving the reusability of electronics.

In the ever-busy world we live in, we need an incentive (like trash to cash) or a constraint (like regulatory measure) to think about sustainable electronics. The new digitisation models and logistics can help reduce the barriers to that.

About the Author

Nidhi Gupta is an experienced strategy and logistics professional. She has 10+ years of leadership and C-level consulting experience in Asia Pacific. Nidhi is passionate about digitisation and innovation in the supply chain and logistics industry. She is currently consulting with private investors in Asia Pacific and is part of an accelerator in Singapore co-founding a technology start-up in Singapore in the digitised logistics domain.