Image: Conceptualization of circular business model innovation. Illustration taken from “Let's go thrift shopping: Exploring circular business model innovation in fashion retail” by Daniel Hellström and John Olsson.

Most people have bought clothes online and sent them home in a package. The new business model allows you, along with your clothes, to also have the opportunity to send on garments that you no longer use free of charge. Maybe you have a too small shirt, a pair of boots or a warm jacket in your closet but haven't really gotten around to doing away with them. But now you would get a smooth way to donate them, and in an app you can additionally see which charity is currently benefiting the most from the laid down clothes. You make your choice, mail the package, and can then track how much your chosen organization has raised for those in need. This is a very simplified version of the idea behind an award-winning paper on a circular business model from Lund University.“Let's go thrift shopping: Exploring circular business model innovation in fashion retail”.

The article is written by Daniel Hellström and John Olsson, researchers in packaging logistics at Department of Design Sciences onto Lund University. The work received award for high quality research in innovation during the ACIEK (Academy of Innovation, Entrepreneurship, and Knowledge Conference) conference in Madrid in the summer of 2023 and when the article was recently shared via LinkedIn, the post quickly received 3000 views.

The work started when Daniel Hellström and John Olsson participated in an innovation project on sustainable e-commerce. In that work they saw another research angle and the new business model is a result of that.

“When you do research, you often look back in time, but the methodology we have used is new and means a way to gain foresight in the form of insights into the opportunities and challenges of the future,” says Daniel Hellström.

The method used is called Engaged scholarship or Collaborative research and involves the participants in the project being engaged to co-create new knowledge. By involving all stakeholders in the project — fashion e-retailers, experts, people from aid organisations and consumer groups — in workshops and interviews, we have developed and validated a business model that can be part of a solution for the fashion industry of the future.

“In actively co-creating the circular business model, we can see glimpses of the transformation of trade towards a circular economy,” says John Olsson. Our study is based on interviews of actors, site visits, focus groups and workshops. It has become a large amount of data with 330 pages of transcribed material.

An important fundamental issue for the work has been to determine what drives the innovation process of circular business models.

“Some say technology, others profit interest, policy or sustainability,” Daniel says. When we look at our process, we do not see that it is any of these that are driving the players or the innovation. In our study, it turns out that consumer-centrism is the primary driving force for change. We start from how the consumer wants it, what their behavior will look like in the future and how the customer experience will be affected.

The business model is based, among other things, on the existence of a new digital platform with a service that makes it easy to donate clothes to others. In the business model, charities are paired with e-commerce for new and used clothing, so that the consumer can donate unused clothing in a smooth way while buying new garments.

“For example, it could be e-commerce that gives away a service where it becomes free for the consumer to donate and in this way they improve the customer experience,” explains Daniel Hellström. For the consumer, simply tucking the clothes into a pack and entering the app to choose to whom to donate. Among other things, the app should indicate what needs exist.

E-commerce is an important part of the business model. It is the e-commerce that sends the packages with ordered clothes but also ensures that the customer has access to logistics services that make it easy to donate clothes.

“For companies, it is undoubtedly the case that they buy supplies cheaper than what private individuals can do,” says John Olsson. When customers receive this service as a gift, this enhances the customer experience and it shows that they think a step further, take responsibility and get a more loyal and loyal customer.

Daniel Hellström and John Olsson have also calculated the emissions from the transport required.

“Of course, transport causes carbon dioxide emissions, but this should be compared to increasing the use of a garment,” says Daniel Hellström. We expect that it will even up in the case of a shipment of 40 grams of cotton, so it may be worthwhile to send a t-shirt, as long as it is used.

What did the consumers who participated in the study think?

“We have tested the business model on students. Students are often short of money but could still consider donating, says Daniel Hellström. When it is easy to get digital information about what needs exist, you are happy to donate. My hypothesis is that there are also great needs locally, and if we can get more local knowledge about what is needed, that is an advantage. There may be high needs in close quarters for children's clothing or sports equipment such as football boots, while others at a nearby location have the same items to donate. All you need is to know what is requested and then it is important to have a service that makes it easy.

So far, the app is only available as a prototype.

“We are confident that someone can do this now and we are hoping for funds to test the system. Contact us if you would like to participate in a future project. We see that here is the basis for something that can make a difference,” concludes John Olsson.