#148. Every week on the podcast we’ll challenge a recently-announced business strategy to understand the upside and downside of the brand’s approach. We discuss Loop, a reusable packaging consortium’s decision to move into retail and whether or not the complex model will appeal to the masses.

Check out the full transcript below.

Richie: [00:00:02] Welcome to the Loose Threads podcast, where we challenge a recently-announced business strategy to understand the upside and downside of a brand’s approach.

Richie: [00:00:09] I’m Richie Siegel, the founder of Loose Threads, which analyzes and advises next-generation consumer companies, and FaceLift by Loose Threads, a retail incubator and accelerator for leading brands and retailers. For our latest analysis and insights, check out our free weekly newsletter at LooseThreads.com.

Richie: [00:00:24] Joining me for our discussion this week is Rebekah Kondrat, a partner at FaceLift by Loose Threads, and Caroline Tibbetts, who leads our research at Loose Threads. This week, we analyzed the growth of Loop, a reusable packaging consortium that’s trying to invent a new economic model for sustainable packaging. Loop recently moved into retail to showcase the brand it’s working with, since it needs to continue to scale to reduce prices. But can a complex and costly model lead the way for eco-friendly packaging? Here’s what we thought.

Richie: [00:00:55] So, just to explain the service briefly, it’s interesting to think of Loop kind of like a milkman, in the sense of, instead of using single-use cartons, they want to reuse all the packaging. So you put a deposit down on your first purchase, you buy the product, you use it. You then ship back the packaging, they clean it and then they send it back out to you or someone else to kind of use again. So, it’s meant to be this reusable kind of packaging service. The deposits are a little expensive—like, they range in price, but they could be $1 or $2, $5, depending on what the item is or more. And then, now, they’re trying to partner with Walgreens and Kroger to basically have a consumer retail-facing display for you to buy these featured products. And then, the final piece is, Loop is part of a consortium of Tide and a lot of other CPG conglomerates that are trying to put muscle behind this effort.

Rebekah: [00:01:42] This is a really lovely idea, in terms of how to reduce waste and all of that. Where my mind immediately goes is a couple of places, but, first of all: these are all name-brand products and they’re all in pretty small quantities. Like, the Tide thing does not look like it’s the two- or three-gallon bucket of Tide that I get for my family, right? So like, that kind of automatically, to me, rules out large family units. Like, a family of four for example probably wouldn’t use this service, like a Häagen-Dazs pint. “I need like, two gallons of ice cream for my family,” right? So. And again, like, a family of four, we fill up an entire recycling bag with plastic every week, every week. And so like, this is so great, except I would never do it, unless they had a giant Tide and a giant ice cream.

Rebekah: [00:02:36] Right now, the target seems to be these, either young professionals with disposable income, young married couples with disposable income, or older retired people with disposable income; “disposable income” being the common denominator, because you can’t buy anything larger in bulk. Like, the Costco shoppers of the world are probably not gonna utilize this product.

Caroline: [00:02:57] And you also made a really good point about the name-brand aspect, in that you or bargain shoppers often look for the grocery store brand, and you don’t buy Häagen-Dazs but you buy X grocery store ice cream, which is the lowest-price option. And buying Häagen-Dazs can get up to $30 for a $5 deposit, $7 for the ice cream itself and then shipping.

Richie: [00:03:20] I think, as Rebekah said, this is a really good idea with a lot of like, warped execution, so I guess I’ll start with the good stuff. It makes a lot of sense to build a consortium, right? ‘Cause the whole problem here is scale, and so by putting a lot of these brands together, you quickly can start to scale this solution. So I think that makes a lot of sense. Having some sort of brand name that underlines that these are a new kind of class of products, I think is fine. It’s a little confusing to have Tide by Loop or, like it says, “Tide” and it says “Loop” now, which is a little bit weird, ’cause most people don’t know what Loop is. Frankly, I don’t know if they actually care what Loop is, and I wonder if it actually just looks better for Tide’s brand to be a part of this than it is to call it a different brand, which then makes it less of a Tide thing and so forth. So I’ll give them like, good on the consortium idea, medium on the brand name.

Richie: [00:04:11] And then where it really starts to fall apart is both the price is—it doesn’t make any economic sense for anyone to actually use this, which is a problem. The size, which you talked about a little bit, which I think also just prohibits any sort of use. And then there’s always a contradiction of all the transportation.

Caroline: [00:04:29] Right.

Richie: [00:04:29] You get to this holistic question of, “What does it actually mean to be more quote-unquote ‘sustainable’?” And yes, we can re-use the packaging, but if I have to ship this thing back and forth every single time—and this is like a pretty common critique with Rent the Runway as well. Like, Rent the Runway is great, but then it also is driving up tons of dry cleaning, which is tons of chemicals that are involved in the process, tons of energy. And then there’s all the transportation as well.

Richie: [00:04:50] The last thing I would just say is like, I look at a company like Blueland, which, for those that don’t know, they make basically cleaning products and soaps, where you buy it the first time, it comes in a glass jar on the first buy. You keep it, and then when the item runs out, you order just a new tablet that dissolves in water you just fill up the bottle with. Shipping a tablet, which is literally the size of a quarter, costs nothing and is a really clean process. And then you literally just keep the jar at your house and just refill it with water. And I’ve been using the hand soaps for probably five or six months now. It’s great. You probably refill it—again, depending on how big the family is—you know, every few months or whatever. But you’re literally buying little tablets that come in the mail versus shipping back all this stuff. So that, to me, is such a more logical model in a number different ways. And yes, they’re trying to build a brand, and that doesn’t necessarily solve the problem for a lot of these bigger conglomerates, but there is like, an efficiency to the thinking that’s just missing in this solution.

Caroline: [00:05:45] Well, and also the wait times. So like, Pantene is one of the partners as well, and it’s like, you need your shampoo. What do you do in the midst? You just buy something on Amazon which will come tomorrow and uses more packaging, etc. So I think, yeah, the logistics aspect needs to be refined.

Caroline: [00:06:02] I also thought of you, Richie. You said that you use Prose. Would that be a model where it would work? Like, a subscription-service type? They use reusable packaging for the shampoo, and then you always had your refill by the time when you send out your old bottle.

Richie: [00:06:18] I think Prose is a great example of something that could work where you have like, your bottle, basically. Or maybe it’s two, because you need continuous service, effectively. And so, if they keep one and you have one—and again, I would pay three bucks extra or whatever just to buy my bottle at the beginning and kind of ship it back. Subscription is both better because it’s like, personalized, but it’s also harder because you need the continuous service. Versus again, I go back to Blueland, they’re literally gonna ship a tablet, and it’s so easy. I think there are limits to how many different products that can service, at least right now, because the ones that are water-based it makes sense, but I think if they need other things in them or it’s not as water-based, you have challenges there. But like, that’s the mentality that makes a lot more sense of like, instead of shipping the bottle back and forth, how do you make the liquid easily refillable or recreatable or something? Make it a powder, make it a whatever. Even if it’s not a tablet, it could still be bigger.

Rebekah: [00:07:11] I mean, that’s a good point. Maybe it’s the wrong thing to start with like, ice cream, ’cause you can’t, at least not yet, make ice cream in a tablet. But, you know, there are a lot of water-based products, as you said, that you could kind of, I don’t know, “tablet-ize”—is that a word? But I also think that what that does with the Blueland model is—so let’s say that I use the grocery store drop-off instead of shipping, ’cause you still have to pay for shipping is my understanding, right?

Richie: [00:07:37] The customer pays [for] everything.

Rebekah: [00:07:38] Right.

Richie: [00:07:38] I mean, that’s part of the problem.

Rebekah: [00:07:39] So you’re paying the deposit, you’re paying for the product, and you’re paying for the shipping, and none of those things are cheap. And, you know, as you said, Caroline, with Amazon, we’re not used to paying for shipping anymore. That’s like, atrocious. How dare you make me pay for that? But if I’m trying to avoid shipping by going back to the store, I’m already having to go to a store, you know? And I guess there’s the sustainability angle, but now I’m carrying a giant bag of like tin, metal, whatever it is, things into a store to deposit them. I don’t know. I just feel like it’s not…

Richie: [00:08:09] Yeah, it’s both more expensive and more work. And it has to be as expensive or less expensive, and as much work or less work. It can’t be more and more. And I think that’s why you have this, what will likely be a really big adoption problem. I fully agree they started with the wrong things. Like, ice cream, again, it’s in a paper pint anyway, so it doesn’t seem, in the grand scheme of the problem, to be the number-one offender, in a sense, versus single-use plastics and so forth. To the retail point, I don’t think putting it on a shelf in a dedicated section solves any of these problems.

Caroline: [00:08:41] Right. I think the angle with that was making it attainable to the masses.

Richie: [00:08:45] The other part on the retail—can you imagine trying to explain this to someone on a shelf? I mean, it took us 15 minutes to understand the actual model, and that’s probably a generous estimate. On a 5-by-7 card while someone’s quickly walking through a Walgreens, no one’s gonna stop to understand this. Or, even the people that do are likely gonna go home and be like, “What did I just agree to?”

Richie: [00:09:03] Part of me wonders, does this make more sense as a nonprofit consortium, in some sense, between these companies to just invest in sustainable innovation from a packaging perspective, and be able to plow just all the money in and then open source solutions and share them across the consortium? That, to me, is quite interesting, where you’d have each of the brands basically pay into it, write it off as a donation or whatever, and then they can all benefit from the solution. It’s just so over-complicated, and I feel like if they were focused on actually making better packaging or kind of packaging and/or materials innovation à la Blueland, that’s one way to go. I mean, Walgreens, again, can like, highlight sustainable products, but that’s not really a Loop thing.

Richie: [00:09:41] They’re not gonna build a brand, they’re not gonna put in a retail element; they have to figure everything out. And I think if you look at a company like Rent the Runway that has done, overall, a solid job at doing that, it has been a really up and down journey to get there—to build the brand, figure out logistics, have products. Like, it’s just a lot to manage, and it feels like it’s really unfocused, and I think there’s a huge risk because of that.

Rebekah: [00:10:01] Yeah. I mean, you’re absolutely right. How do you explain that, on a grocery store shelf, why I should buy this smaller, more expensive Tide?

Caroline: [00:10:09] From what I’ve read, it feels like they’re focusing so much on the aesthetics, and they think that that will draw people in—which, I have to admit, they are aesthetically pleasing, the Häagen-Dazs pint. And they take one year, as of now to create that design.

Richie: [00:10:23] Which is not a good thing. That’s the wrong thing to brag about.

Rebekah: [00:10:26] Well, right. It’s just more waste. Like how many protos did you go through?

Richie: [00:10:30] But also, just, no one cares. At the end of the day, like, I think we all appreciate aesthetic in some sense here to maybe varying degrees. It’s not gonna make me pay $30 for what should cost $5 bucks.

Rebekah: [00:10:40] I mean, I think the other thing to kind of go back and talk about, is it actually more sustainable because of all of the shipping and driving around? And, as of right now, at least, they are saying it is. But what happens when you want to expand this beyond very polarized urban areas? Or does it only ever stay there? And then the rest of middle America just continues to use their single-use plastic, and then what are you really doing?

Richie: [00:11:02] Is it actually a packaging problem or is it really a product problem? And I feel like, again, if I think about Blueland, they built a product to solve a packaging problem. And what Loop is trying to do is create a packaging product that really needs to solve a product problem, which is, “Why do all these CPG products require one-time-use packaging?” And I think that’s what’s almost backwards about it, is they’re going into it the wrong way, and therefore they’re coming up with solutions or answers that like, pretty obviously will never be adopted at scale. I don’t think it’s at [all] like, “We’re so smart that we saw this.” Like, it just feels really obvious.

Richie: [00:11:38] And then, again, a retail partner shipping in the grand scheme of things doesn’t solve the underlying problem. It arguably just makes it more clear that this doesn’t really make that much sense. Like, where would you actually start if you were gonna do this correctly?

Rebekah: [00:11:53] I’m just trying to think of like, what do I swap out, as in refill, into something else? A lot of cleaning products, actually, you can buy, I think, like, Windex concentrate and just add water. Like, I’m reasonably certain you could make that a tablet. I mean, I’m not a chemist, but you could probably make it.

Richie: [00:12:07] Blueland has, basically, it’s like a bathroom cleaner, a surface cleaner, and then, I think a window cleaner.

Rebekah: [00:12:13] Food is where it gets a little hard.

Richie: [00:12:15] Yeah.

Rebekah: [00:12:15] I don’t know—aside from beverages, which we’ve been doing in concentrated form for a long time—I don’t know what you could do food-wise.

Richie: [00:12:24] Well, I think of like, takeout. So like, Seamless and styrofoam and all that plastic. But there are a lot of companies moving towards just all-compostable packaging. Which, again, it’s still single-use, in a sense. It’s probably like, the least bad way to do it. But it seems there are other targets that are both, either achievable from what is physically possible right now or that you can mitigate—à la, what would happen if Seamless said, “We’re gonna give free delivery to all restaurants that support sustainable packaging?” ‘Cause if I look in my recycling container, it tends to be either grocery stuff or takeout stuff that fills up the plastic one.

Richie: [00:13:04] Thanks for listening to the Loose Threads podcast. You can read full transcripts of the podcast and join the newsletter at LooseThreads.com. Feel free to leave a review on i-Tunes, we always appreciate it, and thanks to George Drake, Jr. for editing this episode. We’ll be back with more.