As per the World Economic Forum, many companies these days focus mainly on refining their products and services for the current customer base, while this approach ignores the potential of implementing circular economy practices. In the future, they might lag behind those who embrace circular economy as a way of doing business, just like companies in 1990 who didn't adapt to the apparition of internet and were overshadowed by those who saw the potential of the web.
Circular economy practices can be disruptive to traditional companies, because it doesn't favor the typical "take, make, use, waste" consumption habits, but rather includes "reduce, reuse and recycle", meaning potentially lower profit margins and fewer products sold.
Circular economy implies changing the whole business model of a company, rethinking the entire value chain and the product's lifecycle. Thus, companies who want to adopt circularity must not think about how to sell more products, but rather how to enable their products to be more valuable to consumers, so that they are in use for longer.
Despite bringing what may seem as financial losses, at least short term, this business model has great benefits in the long run, helping with things like customer retention and diversifying revenue streams. By engaging customers in this practice, they can become participants in the process, as well, bringing in products for recycling or refurbishing.
One of the services that became more popular as a result of the expanding of the circular economy concept is Product-as-a-Service (PaaS), which implies that people don't pay for a product upfront, but rather rent it over a number of weeks, months or years, based on its performance and their needs.
Businesses can benefit from this model by having a constant source of income, while establishing a relationship with the customers and extending the lifespan of their products. When a product may reach end of life status for one customer, it can be refurbished and sold to the next one who doesn't need the latest or the greatest and ultimately, it can even be recycled for the recovery of materials.
Companies need to understand that in the future, circular economy practices will mean more competitivity in the market and it will help them extend their customer base, while meeting the expectations of regulatory bodies.
By quickly adopting circularity as a concept in all business, we will ensure the greenest and most beneficial future for our planet.