Is Your Business Part of the “Circular Economy”? Examples from Apple and Service Businesses

Marketing Viewpoint by Ruth Winett

Is Your Business Part of the “Circular Economy”?
Examples from Apple and Service Businesses

Recyling is good for business and the economy.

My family still enjoys a used dining room set we bought for a fraction of its original cost years ago. But, what about used technology? Surprisingly, “refurbished products have become a major profit stream for Apple and an environmental victory,” reports Rachel Layne in a Harvard Business Week article on the “circular economy.” While “circular economy” applies primarily to companies with products, it can also apply in a different form to service companies.

IDC reports that used cell phones represent a growing market: “Worldwide shipments of used smartphones, including officially refurbished …smartphones, will reach 309.4 million units in 2023… a 9.5% increase over the 282.6 million units shipped in 2022.” In contrast, IDC expects “new smartphone shipments to decline 3.5% in 2023.”

Advantages of the Circular Economy

According to Layne, Apple finds that the advantages of refurbishing iPhones outweigh the apparent risks, such as cannibalizing sales of new iPhones. Refurbishing:

Makes Apple smartphones available to people who cannot afford a new $1,000 iPhone 15.
Recycles components made of expensive and even rare materials.
Reduces the number of phones containing rare elements and plastic that end up in landfill.

I see other benefits as well: Selling refurbished iPhones creates a bigger market for Apple accessories and subscription services. Importantly, people without computers but with refurbished state-of-the art iPhones can participate in remote Zoom classes, pay bills, and receive messages from their doctors. Smartphones also allow them to read and create documents.

Recycling takes a different form with service businesses:

Successful service businesses recycle and monetize what they know and what they learn from each client or customer. For instance, in serving one client, market analysts develop methods and information resources that they can sometimes reuse. Service businesses also approach clients with similar needs so they can reuse some of their skills and shorten learning curves. Here are more examples:

Most service businesses keep contact information: previous clients, experts who can help solve problems, industry associations, and conference speakers.
A CPA could develop reusable templates, such as a template for tracking certain kinds of business expenses. These could be customized for other clients.
Consultants could develop reusable templates for drafting proposals or reports.
An auto repair service could develop a database or list of repairs made and approaches used—especially for more unusual fixes.
Many companies post answers to FAQs on their websites to control calls to customer support. Unfortunately, most FAQs should be more robust!

Rather than cannibalizing the market for new products, refurbishing expands the market and is good for the environment. It also provides work for the people who refurbish goods. However, whatever the product, companies that refurbish need a continuing supply of used stock and a continued demand for their refurbished products. Educating people that refurbishing is good for the original owner, good for the producer, and good for the new buyer is part of the equation. To reuse methods and resources and not “reinventing the wheel,” service businesses should keep good records and share tips and lessons learned with colleagues to increase the organization’s efficiency and effectiveness.

Sources:

How Used Products Can Unlock New Markets: Lessons from Apple's Refurbished iPhones

Worldwide Market for Used Smartphones Is Forecast to Surpass 430 Million Units

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