Every day, more than 28k tons of single-use plastic gets dumped into the world’s ocean. Over 86 dump trucks full of discarded and used clothing are either dropped in a landfill or burden. And over 109k tons of used electronics, a weight equivalent to more than 68m laptops, are discarded.
India accounts for about 18% of the world’s population and 12% of global municipal waste generation. The country’s population is continuously rising, and there are expectations that the waste generation in India would also see significant growth in its waste generation in the upcoming decades. Consequently, it creates a challenge in its management (1).
If these dumps are left unchecked, it will spell an environmental disaster. However, it can also spell big business opportunities.
According to Statista, the ‘Waste collection, treatment, and disposal activities, materials recovery’ industry in India would amount to approximately 3.5 billion USD revenue by 2024 (2).
Revenue of ‘Waste collection, treatment and disposal activities’ Industry in India from 2012 to 2024.
A new kind of entrepreneur is emerging to clean up the world’s oceans and landfills. They are using unique business models to unlock new supply chains and turning trash into treasure in the process.
The History and Business Model
We humans have been dealing with trash for thousands of years. The first documented landfill was in 3000 BC when Knossos, Crete, dug large holes to dump the garbage.
After about 1000 years, China develops composting and recycling methods, and 1.5 years later, Athens created a law that required the disposal of garbage at least one mile outside of the town.
In 1350, the Black Plague emanated sanitation workers’ first uses in great Britain, rakers, who would rake up trash weekly.
Fast forward to 1976, when the United States formed the Resource Conservation and Recovery Act that set the standard for recycling and waste management for years to come.
Today, waste management is a two trillion USD global industry growing at 5.5 % y-o-y, with the US accounting for one trillion USD (3).
Venture capitalists have started to take note, and funding in recycling technology alone has tripled over the last decade (4).
The Business Model
The business of waste management makes money in three primary ways: Waste collection, recycling, and end of life.
About 55% of waste management revenue comes from fees of waste collection from residential, small containers, and glass container services for homes and businesses (5).
Facilities sell recyclable materials such as paper, glass, and metals to manufacturers. And finally, materials that don’t get recycled or reused get treated and disposed of in a landfill or waste-to-energy plants. Landfills collect tipping payments from businesses, governments, and individuals, while energy plants sell energy directly to consumers or other plants.
Giants such as Waste Management, 15 billion USD per year, or Republic Services, 10 billion USD per year, vertically integrated these processes. However, half of the United States’ waste industry is fragmented, with more than 20,000 small businesses at the local level.
China dominated the scene starting in 1990, importing over 70% of the world’s trash, almost 7 million tons every year. The business was lucrative, and Zhang Yin, China’s first female billionaire, made her fortune from recycling paper scraps from the United States (6).
In 2018, China and other countries in Asia banned almost all incoming waste over environmental and health concerns stemming from poor disposal and hard-to-recycled materials.
Consequently, there is a bunch of trash with nowhere to go.
It is a major challenge combined with an overall growing and environmental awareness and care. There was a wave of destruction towards the entire life cycle of waste.
‘Reduce, Reuse, and Recycle,’ the phrase, familiar to all of us, traces its roots back to the 1970s environmental movement. The three parts framework was originally designed to explain how the EPA would manage hazardous waste.
Fifty years later, the framework still gives a fitting guide to the three main areas of innovation and opportunity taking place across the industry.
Waste Less and Win Customers
Every day, more than 28k single-use plastics tons end up in oceans (7), not just in the form of water bottles but also toothpaste tubes, packaging and shipping materials, grocery bags, and more.
And the zero waste moment is about cutting the problem to its source by reducing single-use plastic use. As the number of eco-conscious consumers increases, more people are looking for zero waste options that offer the same conveniences they are used to without all the waste.
Businesses are now rushing to fill the void.
One of the most intriguing niches in the zero waste space is D2C companies that sell everyday items to consumers without wasteful packaging. These companies are reimagining products in new forms to make shipping and storage possible, like mix it yourself soap and cleaning sprays, shampoo bars, refillable deodorant.
Several companies are selling reusable containers for each product to supply buyers with eco-friendly refills.
There is another opportunity worth exploring in men’s and women’s lifestyles and events.
Several D2C leaders in the waste-free industry include unisex lifestyle brands. There is room to target men or women specifically and build the next Dollar Shave Club, Dove, or Old Spice.
We know that events and gatherings can also produce lots of trash, and these days zero waste weddings are becoming more popular. There is room to develop D2C product lines that cater to people planning important events such as gender reveal, baby showers, birthdays, graduation, anniversaries, and even funerals.
Several grocery stores are adopting and reviving the milkman delivery model. Customers can order their food online, which is dropped off at their doorsteps, packaged in reusable bags and containers. When the containers are empty, customers can leave them out on the doorsteps for the zero-man to pick up during the next delivery. While such concepts may be first but they won’t be the last.
For those looking to add technology to the re-emerging trend, there is room for startups. One such idea is customers summoning roving convenience stores on wheels straight to the doorstep like a mashup of Walgreens and Uber. Opportunities for new entrants to stand out include exclusively offering zero-waste products.
Entrepreneurs can make it easy for companies to provide consumers cardboard-free deliveries by running a series of package consolidation centers that receive, unbox, and condense orders from multiple sellers into single reusable shipping before forwarding these packages to the end buyer.
They can then recycle the original packaging materials and cut down on the waste from sending billions of disposable materials to millions of individual doorsteps.
One of the most interesting parts about Olive is its revenue model. They don’t charge companies or end-users. Instead, they make buyers sign up for free and use a Chrome plug-in during online shopping. It makes an affiliate commission on all sales made via its plug-in.
Such models allow brands to go green without added expenses. Already hundreds of participants have adopted the model.
Apart from these, there are also additional opportunities for entrepreneurs thinking about getting into space: Fragile products and Apartment complexes.
Companies can work with cosmetics with the same model, which often comes in breakable containers and need different logistics. One can also offer services exclusively to apartment complexes owners and help them save money by receiving, sorting, and distributing all tenant packages from a centralized facility.
More than 85% of textile goes into landfills each year (10), equivalent to one garbage truck filled with clothes dumped or burned every second.
Increasing consumer awareness about sustainability and a shift in purchasing power towards the younger generation makes second-hand shopping a priority.
The resale market is among the fastest-growing retail segments globally, and there are expectations that it would overtake the 44 billion USD fast-fashion industry altogether by 2029 (11).
It is worth highlighting that the resale market has recently started to gain pace, and there are plenty of opportunities for new entrepreneurs. Some of the key takeaways for anyone thinking of building into the segment include supply chain, tracking, and database.
The resale business would have to invent a new supply chain through sourcing goods from individual owners instead of factories. The important point here is to reduce friction and make it easy for owners to get rid of their stuff. One can also offer free clean-out kits with prepaid postage to make it easy for people to send their unwanted goods.
Notably, these products don’t come with any barcodes. Hence it isn’t easy to track one’s inventory and keep it moving through the system properly. Hence, one can set up the software to automate the inventory intake, pricing, and sales process.
Apart from software, businesses would also need a large database of the demand and average sale price for different second-hand clothes and stuff. It would help them acquire inventory more strategically and can even be turned into a paid resource for other resellers in the furniture.
There is plenty of unexplored potential in the recycling business as the current recycling recovery is only 32% of the available materials (11). Since China and other countries in Asia imported so much garbage until recently, the West lacks quality recycling facilities and falls victim to major insufficiency.
The demand for recycled materials is continually surging (12). And several brands are also moving towards sustainability goals aggressively. For instance, Coca-Cola aims to make its bottle with about 50% of recycled materials by 2030. Currently, it is at 20%.
Entrepreneurs have several opportunities to make the existing supply chain more efficient. There are different areas ripe for innovation.
According to the available data, more than 90% of the world’s waste is collected at the wrong time (13). When trucks collect trash from containers too early, it wastes time, fuel, and money. If these trucks come too late, overflowing containers would need more resources for cleaning and collecting with the potential to cause illegal dumping.
Entrepreneurs can optimize waste collection with an intelligent waste management system through AI-enabled smart containers, routing software, and fleet management. It would also allow entrepreneurs to help the government and businesses save money via optimizing pickup routes.
The world is pouring more than 124 billion USD into smart city initiatives and implementing software, hardware, connectivity, and services to the urban ecosystem (14). The Worldwide Smart Cities Spending Guide (15) also includes ‘smart trash collection’ as one of its primary causes. It indicates that there is an opportunity to develop technologies working directly with college and municipalities campuses.
Several companies’ annual reports, including Waste Management and Republic Services, highlights that labor is the highest cost in the sector. Waste Management spends 18%, 2.7 billion USD for operating costs on labor, and Republic Services spends 21%, 2.1 billion USD.
Such high labor cost cuts the margin thin and makes the recycling industry less attractive.
However, in the upcoming years, the rising challenge to the issue is robotics. Entrepreneurs can use robots with a vision system to identify materials and sort the trash. Such a system would save about a significant 70% on labor cost, equivalent to saving about 1.5 billion USD a year for Republic Services.
In short, entrepreneurs who can find disruptive ways to cut these costs would find willing clients while also making the world a cleaner place.
It is worth highlighting that electronics goods recycling is a 16 billion USD industry growing at 8.7% y-o-y (16).
Entrepreneurs can take e-waste like computers, modems, and cables, clean any data, refurbish, and resell them to households and businesses. They can easily reach consumers through Amazon Renewed’s large distribution channel.
It is worth highlighting that only 17.4% of e-waste was collected and recycled in 2019. Indicating a tremendous blue sky for the multi-billion industry.
Electronics recycling businesses primarily focus on products like printers, laptops, and phones because of the specialized nature of restoring.
There are different products that such companies are not accepting, and cross-referencing to other refurbished platforms such as Amazon Renewed indicates that opportunity is lying in major household items like ovens, blenders, dryers, smoke detectors, and thermostats.
One can partner with waste collectors, property managers, and consumers to prevent these items from getting dumped.
One of the biggest challenges in the waste management industry is keeping employees safe. People tend to forget that the waste industry is extremely risky for people and properties. It is an uninsurable mess.
There are different hazards, such as chemical and biological, and injury risks from hard manual labor.
According to Europe’s Occupational Safety and Health wiki report (17), arthritis and other musculoskeletal disorders are 2 to 4 times more common in trash haulers than other workers. And it is one of the most two common reasons for absenteeism among employees; musculoskeletal disorders, 22.5%, and stress, 22.6%.
Contracts, Monopolies, and Mafias
Several municipalities offer exclusive contracts to large companies when it comes to trash hauling. It gives them a monopoly and stifles competition and innovation. And there is always the mafia issue.
The problem arises when these big trash companies have exclusive agreements with cities that they run operations. No one else is allowed to do curbside pickup even privately without infringing on these agreements.
There are plenty of opportunities for entrepreneurs even if they don’t want to go to war against the big trash companies.
Getting the Trash
Entrepreneurs may not be able to haul trash in the presence of big companies, but there are several monetization opportunities related to getting trash from households to their curbs.
On the service side, trash collection firms are on the rise. Several startups send crews into apartment complexes to pick trash at people’s doorsteps and bring it to the dumpster.
Property owners market it as a perk to residents, mark up the service and keep the difference. Meanwhile, crews are not competing with garbage companies since they bring trash to the existing garbage cans.
On the more technical side, one can make interesting developments in the smart home segment with self-hauling garbage cans and others, representing additional opportunities.
Dealing with the Bad Smell
We would all agree that the smell of unwashed garbage bins is a problem. Especially in India, where the combination of heat and garbage makes it impossible to sit outside and enjoy their years, especially during the hot summer months.
It is where garbage bin cleaning companies can rise and offer one-off cleaning, subscriptions, and other services such as power washing.
Entrepreneurs can offer different solutions to business owners in the space, such as truck-mounted bin-cleaning rigs, stationary bin cleaners, financing, route-mapping software, and marketing.
Compared to the average Indian, an average American produces about eight times more municipal solid waste. The average European produces far more e-wastes than average India. Most Indians also use fewer disposable materials compared to major western companies.
Still, the west looks shiny, while most Indian streets look dirty.
That’s why India needs more startups and policies to make Indian streets to be clean. They would reduce the Indian centralized waste management system’s burden and ensure maximum resource extraction from waste along with safe disposal of residual waste via waste to energy projects for poorly managed engineered landfills. It is also important for India to build dedicated waste management colleges and universities to cater to the rising demand for skilled professionals like qualified environmentalists and engineers to realize the clean India goals.
India would need to spend a lot of money to build an effective waste management infrastructure, but clean India would effectively attract more tourism. It would also save more in its public health care and avoid those city floods in the monsoon because of the drains choked by plastic.
Moreover, it would create new jobs, and people will start looking at waste as an opportunity to create wealth.