The inspiration: Dumpster diving
I recently read this excellent WIRED article on a professional “dumpster diver” in the US.
Matt Malone makes $65,000 dollars a year as a part-time scavenger from dumpsters behind retail stores in Austin, Texas.
Diving has yielded many interesting and lucrative finds for Morgan, such as printers, laptops, and gifts, with office supplies being (somewhat counter-intuitively) one of the most profitable sources.
It’s a great way to reduce the amount of waste going to landfill, but this is a niche hobby so the impact on landfill volumes will be minimal. This got me thinking.
What if there was a way to monetise this? Instead of having dumpster divers, could there not be a profitable business or social enterprise that would systematically give retailers the ability to reduce the amount of potentially-valuable waste from going to landfill?
Existing enterprise: FoodCloud
There is an existing version of this in the food retail industry: FoodCloud.
FoodCloud connects supermarkets and food retailers to local charities that can make good use of the food before it becomes unfit for human consumption.
This a win for the charity beneficiaries, environment and retailers alike.
If this could be done with other resource-intensive goods such as computers and printers, it would be like having an army of Matt Malone-style dumpster divers all over the country!
SecondChance: reducing retailer waste
The idea of SecondChance would be a for-profit version of FoodCloud for non-food products.
It would need better branding as that’s just a shorthand, but here’s how it could work:
- Retailers would upload any unsold goods that would otherwise be thrown away to the site.
- SecondChance would collect the goods for free and warehouse them.
- Local organisations or maybe even individuals could browse the site to look for bargains.
- They would buy them from SecondChance’s site.
- SecondChance would facilitate delivery to the end user after taking payment.
Risks and challenges
- It would probably be too tricky for individuals to be allowed to use the site, as it would be too expensive to have proper consumer rights for the goods sold.
- SecondChance would presumably have to have some smart buyers (or a very smart algorithm) to weed out the unprofitable goods as each collection would have a cost associated.
- The business model would be highly dependent on having no procurement costs at stage 1. As SecondChance takes off though, would the retailers want to charge for this?
- The business model is highly linked to the fees charged to retailers for discarding high-value items. If there are no fees or other penalties mandated by government in the area of the retailer, then the business case for participation in the SecondChance ecosystem would be diminished.
This is essentially a version of the Amazon business model but plugged into the back end of the retailer business process rather than manufacturers. Could it be something that Amazon would be interested in pursuing?
Without modeling the business directly, I suspect the margins would be too low to justify it for Amazon unless the cost of all goods were to remain at (or very near) to zero.
However, it is a good fit for their existing business model, with warehouses, delivery, and online retailing being the key infrastructure. It also marries well with their mission to bring goods to consumers as cheaply as possible.
Could an eBay business model work better? Would it make more sense to have the retailers simply auction all goods to consumers directly?
I personally think this would be too much of a challenge, as it would require a totally new shop area to handle the turnaround for the unwanted goods.
Arguably, why would the retailers even bother with listing the items online and then handling the traffic, when they could just resort to the low-cost alternative of having a very-steeply discounted bargain bin?
N.B. The name for this idea was changed from TrashNet to SecondChance on 11/02/2018 as I thought it better reflects the mission. Nobody wants to buy trash, so it shouldn’t be reflected in the company name!