Unpacked Selling: A Zero-Waste Alternative to Single-Use Packaging but Is It Profitable?
Posted: 1 Apr 2021
Date Written: February 20, 2021
More than 28% of municipal waste comes from packaging (EPA, 2018), generating one of the main sources of solid waste. Although recycling may be a remedy to a certain extent, the difficulties in and high costs of collection, separation, and recycling, challenge its feasibility (BAFU, 2019). Hence, to prevent the problem at the source, companies search for ways to reduce or completely eliminate their product packaging, e.g., through unpacked (bulk) selling. While unpacked selling (generally without brand names) already exists in local markets, large producers' adoption is still new as implications of bulk selling on traditional sales are not clear. One recent and innovative implementation is Nestle's dispensers for cat food and coffee . But, how would unpacked selling affect these large producers' traditional sales, and what are the conditions under which unpacked selling would be profitable? In this study, we aim to answer these questions using a stylized model: The producer chooses whether to offer (i) only single-use package products or (ii) both single-use package and unpacked products; and corresponding prices. Consumers make their purchasing decisions maximizing utility, factoring in their valuations for product and packaging alternative separately. Our results show that offering both alternatives dominates offering only single-use packages in most settings. However, when the cost of single-use package products is low, and the consumers' valuation of packaging is high, offering only single-use package products becomes the best alternative.
Keywords: recycling, packaging, unpacked selling
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