What is w-commerce?

Often opportunities for building a sustainable business are hidden in plain sight. Waste management could be one such sector which is belatedly receiving the attention it deserves.

Waste management in India can be big for the simple reason that waste being generated, by one sixth of humanity, is enormous. More the consumption, more would be the waste generated, more are the opportunities for innovation in waste management, which is unorganised and hyper localized across India.

Simplistically, waste management would involve two sets of parties. On one hand there are waste collectors (neighbourhood kabadiwalah would be one), waste aggregators and then there are recyclers. Recyclers are specialised as each category of waste (such as plastic, glass, metal, electronics) would have its own supply chain. Thus,the acronym w-commerce simply refers to the digitally enabled trade between waste management stakeholders.

Waste management in India differs from the west culturally and economically. In India we tend to extract value out of the waste whereas in the west people would pay for waste management services. It would be surprising for many to know that there might be over 50 lakhs garbage pickers in India and 1.5% of population livelihood is connected to waste management.

With renewed thrust on public awareness on cleanliness through the swatchta abhiyaan in recent years, there exists a possibility of moulding societal behavior on waste management, provided awareness campaigns and incentives are sustained for the long run.

Building on these trends, one of the successful startups in the waste management space is Recykal founded by Mr Abhay Deshpande. Recykal is a B2B waste marketplace. Two interesting concepts from their business model are worth knowing.

First, a relatively new concept in India, is deposit refund system (DRS). DRS is an incentive system aimed at encouraging consumers to bring back their waste for a refundable deposit that is collected at the time of purchase. E.g. If I purchase a plastic mineral water bottle, a depost of Rs 5 is charged, which I get reimbursed when I return the bottle. Advanced economies may have a substantial chunk of their waste recycled through DRS but even a 10% waste collection through DRS in India would be big. Linked to the DRS is the ability to create a network and manage designated collection centres or machines. With DRS hyperlocal partners will collect, process, and sell waste on the platform.

Second, EPR (Extended Producers Responsibility) is an environmental policy approach in which a producer’s responsibility for a product is extended to the post-consumer stage of a product’s life cycle. This entails the shifting of responsibility (physically and/or economically; fully or partially) upstream toward the producer and away from municipalities. Recykal helps brands in achieving their sustainability targets with offerings such as EPR registration and fulfilments, plastic takeback, certified disposal solutions, and awareness programmes, for which Recykal charges a fee.

As per the reported figures, Recykal claims their GWV (gross waste value) traded on their platform is ~ ₹750 Crores, with a 5-8% in gross margins on marketplace transactions between waste collectors and buyers (recyclers). Margins with companies to enable their sustainability targets are upwards of 20%. Recykal had raised $22 million (around Rs 165 crore) in funding by investment funds managed by Morgan Stanley India in 2022.

It would be interesting to see how Recykal grows and achieves their stated target of achieving GWV of over $ 1 Bn in the coming years.

Startup Funding Summary

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