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Return on investment - business innovation from Rapanui

September 13, 2013

Co-founder Mart Drake-Knight takes us through Rapanui’s evolution, and details the company’s latest radical offering: a take-back system for its recycled and repairable rucksack, designed from the outset to come back to its makers, to be disassembled and fed back to the loop…

Fashion make-over

Started by brothers Mart and Rob Drake Knight, the Rapanui clothing company has, from its creation, looked at implementing virtuous cycles as part of its core business strategy. Far from a “do less harm” approach, the tandem focus on positive innovation and system thinking – looking not only at materials and energy, but also considering the whole supply chain and enabling business models.

Currently we make casualwear for 18-25 year olds from organic, natural materials in an ethically-accredited wind powered factory. Fundamentally this sort of covers a “natural cycle” – in that organic products can be biodegradable and our supply chains are run on renewable energy. There’s loads of tweaks in our supply chain too which improve efficiency, for example, the cotton ginning factory can use the cotton seeds to feed cattle down the road as the seeds are organic. Despite this, our biggest source of recognition is not the way that we make clothes, but the way we sell them: allowing customers to ‘trace’ the origins of all our items online or on interactive swingtags, and developing a user-friendly ecolabel that helps people make fast, informed choices at the point of purchase.

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With this work, we were invited to talk alongside Ellen MacArthur Foundation at the World Responsible Economic Forum in Lille in 2011.

Until then, our reference point (the limit of our thinking) was the status quo in the clothing industry – for us to change. The circular economy helped expand our philosophy, and gave us a fundamentally shifted viewpoint.

Put simply, we have been working towards an ideal of the system.
We did not realise that we fundamentally changed the system itself.

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The best way for us to realise this idea was to attempt to develop not just a product, but a system that follows the circular economy. In particular, the idea of using a technical nutrient appealed to us as it was so contrasting, interesting and opposite to the accepted version of ‘itchy brown socks’ or ‘earth mother’ environmentalism. A plastic product that outperformed a cotton one appealed to us as something that could raise eyebrows and highlight the knowledge gap. In that gap, we can insert a new viewpoint, one of questioning where clothing comes from and how it is made. And from clothing, on to other products or aspects of their lives.

Re-evaluate the system

As the principle is about changing the system not just changing a bit, it’s quite a large project. However it’s quite a simple philosophy: use waste as fuel, design a product that can be made again, power the system by renewable energy and incentivise material recovery.

Our product design experience in the past including a lot of traceability work. That helped us as we had a lot of experience mapping, tracing and thinking about supply chains.

A key issue was the financial model. With the current economy, doing this kind of stuff can appear almost a voluntary tax on the accounts – if you pay for someone to return it, you also then have to pay to deal with it. Meanwhile, your competitors do not pay for the waste they produced at the end of life, the cost of waste disposal is not ‘real’ cost even if it was, consumers do not connect the cost of waste disposal (tax) with the product at purchase anyway. In effect this means that a company like us either has to charge more (which goes against market forces), not make profit or find a way to make money from waste recovery to balance the books. Competing at the same time as all that? It’s not easy!

Real cost is a fundamental problem in our economic model that, if fixed,
would change the world overnight.

Anyway despite this hurdle, there is a lot of work being done around options.

The trick is to line up day-to-day business best practice with the goals of the circular economy. For example, it costs 8 times as much to recruit a new customer as it does to reactivate an old one. In this context, if incentivised material recovery is linked to a repeat purchase, it is just a cost effective marketing strategy.

The idea for a bag came from both the simplicity of its design, the suitability for a technical nutrient (plastic t-shirts are no fun!) and the fact that bags are cool because they’re long lasting, functional and simple: I like design like that and I’d had a drawing or two of one on my shelf for a while.

Design solutions

First we needed some recycled/recyclable waste. The cost (both financial and environmental cost) of transport around the supply chain was a concern, and dealing with a complex supply chain, in our experience, makes it harder to control what goes on. We looked for a supply chain that was small, local and included waste/recycling to scale up. Polyester was a first choice and an old business contact (Peter at Wightsails) came up. He established a network of polyester sail cloth waste recycling depots on the Isle of Wight at some sailing clubs. We took our pattern and ideas to Wightsails and designed a few sample products to test out, on the brief that the bag was designed to be deconstructed and made again at the end of its life. This led to its simple design. During pattern making, this philosophy helped us speed production up as we could strip down the product quickly, make changes and remake it without too much fuss – reducing costs.

The cost of transport, and running the supply chain on renewable energy was another roadblock. Our solution led to Good Energy, an energy company planting a forest of 200 trees via Tree Aid to offset the cost of the truck driving from the depots to the factory, and we also got our building electricity for a reduced price all in return for a joint PR statement. We solved a renewable energy problem, saved some money and got some quality exposure: all free.

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With our bag, we promised £10 store credit to anyone who returned the item at the end of its life. The success of this meant the “return on investment scheme” as we call it has been rolled out across the entire company incentivising customers who own any old Rapanui product to send them back instead of putting them in the black bag. They saved money on a new item, and we reactivated old customers for a small cost.

We’re also offering repairs, which is satisfying work, helps us monitor product durability and design improvements, stay in touch with customers and build lasting relationships.

We’ve built the bag to last, as financially it’s probably still cheaper to market the traditional way to customers which is a good thing: it’d be a shame for this to lead to planned obsolescence.

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Framework for the future

In terms of the further potential for this type of design, there was a chart that I saw once from the US state department with a set of scales, a picture of the earth on one side and dollar sign on the other, demonstrating the compromise between environment and economy. I think the circular economy is a much smarter, more real framework for us to live our lives by. It has demonstrated a way for companies to design smarter businesses that can profit by making the environment and the economy work together and that can only mean a better future. As a businessman, that’s my primary motivation to work – a better future – so for me the circular economy is one of our most valuable mental tools.