Designing reverse logistics models for Social Impact
There is an Eastern European folk tale about a hungry traveller who walks into an impoverished village asking for food. Each villager refuses, saying they have barely enough for their own family. By the end of the tale, the clever traveller has organized a community soup pot that feeds them all when they each contribute the scraps they can afford to share.
In this economy, Charities need to make stone soup and be creative in drawing goods and revenue streams to support the services delivered. This is particularly true when it comes to logistics because increasing capacity is a capital-intensive proposition.
Take a look at three ways we expanded logistics capability without capital investment resulting in (total statistics from below) 10,000 pieces of furniture donated and diverted from landfills. This translates into over 500 units of empty housing turned into furnished homes.
The Three Models
Logistics with zero capital - creating a furniture bank
For the past three years, a furniture bank in Barrie, Ontario, launched and scaled their furniture supply without operating any trucks of their own. They leveraged the cloud technology of a larger charity to send removal enquiries to a local transportation company, Jeff’s Junk. Eliminating risks and high costs in the process.
The arrangement saw Furniture Bank book furniture removal leads on behalf of Jeff’s Junk. The referral fees paid by Jeff’s Junk covered the cost of the Furniture Bank to generate referrals, and make bookings. For Jeff’s Junk they had a local charity seeking these same goods to deliver them to daily. Everybody wins!
In the 3 years, this arrangement has been in operation, the reverse logistics carrier Jeff’s Junk received 77 trucks worth of commercial referrals from Furniture Bank’s sales, that supplied the new Barrie furniture bank (Redwood Park Communities) with over 3151 items of quality furniture to be provided back into the community for families in need.
Increase sustainable mattress supply without additional capital
All furniture banks need a reliable source of sofas, mattresses and bed frames. While some companies like IKEA understand the value of partnering with furniture banks for social impact, many see it as too complicated or expensive to deal with the charity. Often, businesses have reverse logistics drop off goods for the charities to sort, clean, dispose of, recycle and distribute at no cost, or expect to have the entire collection process done by the charity for free. For the charity this can create costs it is not financed to handle.
Furniture Link facilitated a hybrid arrangement where the mattress company hires the commercial reverse logistics firm (Bolt Logistics) for the collection of goods (mattress, sofas etc). In turn, Bolt Logistics delivers the items to the charity on a scheduled, organized basis, and pays the charity a reuse fee per item (not unlike a recycling fee) to help support the operating costs of the charity. Everybody wins again!
Retailers win because they have verified reverse logistics export handling of quick returns, but knowing the same items are being delivered to a verified charity – no grey markets are created. Bolt wins by earning new business able to provide a social responsibility service for returned items. And the charity wins with a reliable supply of goods with reuse fees to help support the costs of accepting more and more goods. This arrangement has enabled Bolt Logistics to direct over 1700 returned bed-in-a-box mattresses (from companies like Endy, Casper, Leesa, Hamug, etc.) into Furniture Bank for reuse.
Learn more about this partnership How Toronto’s Fastest Growing Valet Storage Startup Second Closet (now BOLT LOGISTICS) is Helping Furniture Bank Increase Social Impact.
Managing Growth Risk for a charity
Unlike businesses, charities are limited in how they can increase their infrastructure, finance expansion, and manage risks. Most charities are unable to add the expensive trucking assets needed to scale their charitable work. A charity needs complete certainty it can afford the trucks, hire the staff, acquire additional warehouse space while building the sales volumes to justify the spend.
Furniture Link brokered a number of partnerships between trucking companies and furniture banks to buy space on the trucking fleets at a bulk rate on non-peak days. The pay-as-you-go deals enabled charities to scale up without risk, while still providing reliable service to their stakeholders in both removal and deliveries.
For the commercial carriers, they fill up trucking space that would have been unused. For Furniture Bank, facilitated increased charity capacity without the long-term cost commitment, providing flexibility to scale activities without the permanent commitment to take on more costs of permanent trucks. Since 2019, when Furniture Bank started testing this model, 591 furniture collections were handled from homes, representing 6200 items of furniture collected by commercial partners. In Furniture Bank’s case it proved out that the sustained market demand was there, giving them the certainty to take on the financing for two more trucking teams and trucks. One of the many pilots associated with this method was with 1-800 Got Junk. Learn more about that project here.
Reverse Logistics for Social Impact
These three different commercial reverse logistics models collected furniture and other home essentials that made it to furniture banks in a financially sustainable manner. During these projects, over 10,000 items were collected, supporting over 500 families turning empty housing into furnished homes. These families come from a cross-section of Canada including – women and children leaving shelters, the formerly homeless, Indigenous people, those struggling with mental health, LGBTQ+, BIPOC, newcomers and refugees.
What's Next for Companies?
Furniture Link is collaborating with numerous retailers to begin new pilots with furniture banks across Canada to gather more goods through sustainable reverse logistics. With successful models in Canada, the goal is to extend them to support the North American Furniture Bank Network.
In the U.S. more than 12 million tons of furniture waste is genereated in a single year. With online furniture sales increased 191% during the COVID-19 pandemic, and a return rates of 20-25% for online purchases, there is huge volume of furniture and homegoods that could avoid destruction, incineration, or landfills and be directed to a national network of furniture banks that will ensure these good items change the lives of tens of thousands of families needing a furnished home.
The crisis of furniture poverty is growing. Approximately 13% of Canadians have unmet housing needs and are experiencing chronic homelessness. Within the GTA alone there are 25,000 households that require Furniture Bank’s programs and service each year. Creating a Canadian reverse logistics reuse model directed into Furniture Bank Network members would drastically reduce furniture poverty across Canada.
Join the movement !
Let’s make some magic and make something from nothing! Companies and reverse logistics companies can turn returns into comfortable homes without creating grey markets, cannibalizing sales or cost increases.
JUST DO IT.
Let’s grab all that trash and create real change.
@Wayfair? @Amazon? @SouthShore? @Structube? @UrbanBarn? @CanadianTire?