Second-hand market contributes to the circular economy

The company Godsinlösen ensures that damaged goods are repaired and given a new lease of life. Collaboration with insurance companies develops a circular process of damage cover, which entails damaged products being collected, made use of, repaired and replaced. Even for consumer complaints derived from transport companies and e-commerce, new paths are being created for damaged goods which would otherwise have been thrown away.

Godsinlösen (GIAB) is a company with expert knowledge of reuse and returns logistics, and has developed a circular concept that generates profitable business from damaged or discarded products. By extending the service life of these products, the company is contributing to the realisation of the concept of the circular economy. The idea came during a collaboration between Godsinlösen’s founders – Christian Jansson and Patrik Zalewski – and one of the major insurance companies.

Jens Thulin works as a circular-business developer at Godsinlösen – a job title of which he is presumably currently the only holder in Sweden. Photo: Aktuell Hållbarhet

“Together with several of Sweden’s biggest insurance companies, we have developed the circular damage cover service (‘Cirkulär skadereglering’). In simple terms, this means that insurance policy holders must relinquish the product or products for which they are claiming compensation. If a policy holder wishes to claim compensation for a faulty TV, mobile or laptop, the product is sent to Godsinlösen. The service entails fault-verification, fault-prevention and the reuse of faulty goods. As far as is possible, we try to salvage the product, or we utilise components that can still be used for future sale. If this isn’t possible, we ensure that the waste is disposed of in the correct manner”, says Jens Thulin, circular-business developer at Godsinlösen in Staffanstorp.

Mobilcirkeln™

“Mobilcirkeln™ is a service that we have developed within circular damage cover. This essentially means that the insurance policy holder is compensated with a replacement mobile telephone instead of being given the money to buy a new one. The concept is a distribution service for faulty telephones, involving collection, fault-verification, the performance of the correct remedial action appropriate to the fault, and compensation for the claimant. Depending on the fault, model, time period and the insurance company’s cost framework, we develop the best possible solution for the case in question”, explains Jens.

“It could be a question of repairing the claimant’s own telephone or perhaps the customer will be given a replacement device – that is, a professionally remanufactured mobile of the same model and level of performance as the faulty telephone. All components used are original parts. Certain parts of the telephone are brand new, direct from the factory, whilst other parts are spare parts that are being reused. If the cost of repair is too high, or if the telephone cannot be used as a trade-in device, it is rejected. In this case, the claimant will receive a cash payment instead and the faulty telephone will be dismantled so that usable components can be reused or recycled. The whole process happens quickly. Ordinarily, the customer does not have to wait for more than one working week from the time we receive the faulty telephone until they can collect a fixed telephone from their nearest post office, or until they have received alternative compensation.”

“Godsinlösen does not repair any telephones at its site in Staffanstorp – collaborating instead with a network of external global agents for both repairs and replacement devices, such as (for example) Apple, Samsung and Sony. Our suppliers are carefully chosen so that we can guarantee sustainability, quality and cost”, says Jens Thulin.

Profitability by means of practical sustainability work

“This concept reduces both environmental impact and costs. One recycled mobile is equivalent to a reduction of waste of more than 80 kg and a reduction of more than 60 kg of carbon dioxide emissions. Godsinlösen provides the customer with a report detailing the environmental savings that have been made. The system is primarily used by the insurance companies, but it also works well for agents within other sectors. Circular damage cover generates both financial and environmental savings as it works to combat the development of our throw-away culture while, at the same time, the service works to prevent the overexploitation of the insurance system.

“Of every ten claims reported, around three claimants decide to abandon their claim when they are asked to relinquish their faulty goods. This means that around 30 percent of payments are never made, which results in a financial saving that will ultimately benefit the policy holders. With Mobilcirkeln™, this has meant that, during 2016, approximately 7,000 claims for faulty mobile telephones were terminated before compensation was paid – with customer satisfaction for the insurance company intact”, affirms Jens Thulin.

“The basis of our business model is to help companies and organisations to convert the theory of the circular economy into practice in such a way that increases financial profitability. Providing the link that turns waste into a resource has proved to be profitable, and our work with returns logistics is an important factor in this context. Our services build upon the distribution of profits. We take payment for logistics solutions, warehousing, reconditioning, repairs and sales. In the event that there is any money left over, we share this profit with the customer. These principles can also be applied in other industries, and we use the same circular concept to work with, for example, obsolete IT equipment”, says Jens.

“Other interesting areas in which we are working include the processing of goods from transport companies and e-commerce companies. If, for example, the door of a freezer gets dented during transport, the recipient rejects the delivery and the transport company has to pay the cost. By working together with us, the freezer can be given a new lease of life and be used, instead of being thrown away. In the same way, customer returns and rejected items from e-commerce companies can be sold onwards if they are processed in a considered manner. We sell these upgraded products in our Returhuset store, via our sellers or on the Tradera or Blocket resale websites.”

“Godsinlösen’s basic mantra is that these products shall have as long a life as possible. In those instances when it is unprofitable to sell the products onwards, we create new usage areas. I am convinced that the market for the circular economy will expand, and the demand for different services will increase accordingly. This could, for example, involve logistics companies that collect and distribute products, resale and sales platforms that sell the products, or companies that have special knowledge about repairs and the reconditioning of parts and components. Circular solutions represent new paths enabling the creative engagement of customers and the establishment of long-term relationships.”

Remanufacturing is the next step

Godsinlösen’s CEO Christian Jansson believes that the circular economy has moved on from being merely a buzzword to now being a reality within business practice. Already established as experts within the reuse of goods, the next step for the company is to also become experts at remanufacturing.

“After the end of the year, we are planning a merger between Godsinlösen and one of Sweden’s most prominent companies working with remanufacturing. The objective is to develop a company aimed at – either independently or as a sub-contractor to key industries – driving the development away from a linear economy and towards a sustainable economy. We are already in the planning stage for an eventual merger of these companies, and the prospects for the future seem very exciting. The question of energy is also of major significance to the circular economy, and the development of business areas within renewable energy and energy storage is already well underway”, concludes Christian Jansson.

Research and development project

Godsinlösen participates in several research and development projects – both nationally and internationally. One of the most important of these is REES (Resource-Efficient and Effective Solutions), which is based on the philosophy of the circular economy. This project is funded by MISTRA and was launched in 2015, with the purpose of exploiting knowledge and innovative thinking in order to promote the development of a circular economy. The consortium comprises several universities and a number of businesses. Godsinlösen has, for a long time, also been collaborating with Lund University and the International Institute for Industrial Environmental Economics (IIIEE). Among other aspects, this also involves project work and life-cycle analyses.