Where quality, sustainability, and accessibility intersect
Globally, we are in the most prosperous era in history. Technology and advancements in labor efficiency have greatly expanded the production frontier, generating significant wealth and encouraging the rise of modern consumerism. A 2019 UN report revealed that global resource consumption had tripled from 1970 to 2017[1]; according to WRI, we are on track to double consumption again by 2050[2].
The effect? We are now extracting, creating, using, and throwing away more than at any other epoch in human history.
The traditional linear consumption model — take, make, dispose — wasn’t recognized as a problem in the mainstream until recently. But we have awoken to the consequences, which have occurred largely at the expense of our natural ecosystems and environment.
The solution? Widespread buy-in to the circular economy — where waste is designed out of the system through commitment to extending the useful lifetime of existing resources.
At Generation, we are focused on the idea of decoupling growth from resource depletion. This has huge potential in consumer goods, both in environmental and economic terms. Through adopting circular practices, we could reduce global GHG emissions by 39% in the next decade[3] and unlock $4.5 trillion of economic value[4].
There is growing appetite for sustainable consumption, which is leading to the emergence of circular solutions. Enduring innovations, however, will have to establish their differentiation beyond simply connecting two sides of a transaction. This is why we are so excited to partner with two companies which we believe are at the helm of this revolution and are distinguished in their approach.
BackMarket is an asset-light marketplace that brings together buyers and professional refurbishers of consumer electronics. The company aggregates different merchant offerings and matches consumers with the best product across price and quality based on the specified search parameters.
Vestiaire Collective is a consumer-to-consumer platform specializing in pre-owned luxury fashion. The company offers two logistics options: direct shipping from the seller to buyer or an authentication step where the product makes an intermediary stop at Vestiaire.
In both instances, the first-order sustainability impact is clear: redirecting demand for new goods towards existing ones helps to combat overproduction and wanton exploitation of resources. By making the second-hand purchasing experience as straightforward, transparent, and trustworthy as buying new, these platforms significantly lower the barriers to adopting sustainable consumption habits.
While the two companies operate in different spheres, they have exceptional alignment with our thesis that differentiation must exist beyond size of the network and that value-add must be built into the product beyond enabling a transaction. Because both businesses deal with high-value purchases, quality and reputation are critical to build and maintain — and we believe these will serve as true differentiators for the companies.
Penetration of second-hand and refurbished electronics has traditionally been stifled due to issues of trust, transparency, and convenience for buyers. With its proprietary algorithms, BackMarket grades the quality of each item on the platform, provides a single vetted recommendation, and offers its own warranty to the customer. Vestiaire also resolves the question of trust and transparency in an efficient way: its elective authentication service gives buyers peace of mind without the company having to hold inventory. As further testament to the platform’s quality, luxury retail brands have signed with Vestiaire to launch “brand approved” partnerships, establishing Vestiaire as the partner-of-choice for luxury fashion resale.
Over the course of several years, we have had the privilege of watching BackMarket and Vestiaire grow into the exceptional companies they are today. Both Thibaud of BackMarket and Max of Vestiaire are visionary leaders with commitment to their sustainability mission and user-centricity. They are complemented by teams of capable and experienced functional leaders. We are pleased to be part of their journey and to support them as they transition our world to a more sustainable future.
[1] https://www.resourcepanel.org/reports/global-resources-outlook
[2] https://www.wri.org/insights/5-opportunities-circular-economy
