Digital Society School (DSS) - Wibautstraat 2-4

Circular Business Models 101: Create a service system

An Ultra Personalized Product Service System is a new and potentially more sustainable way of producing products. In this case, a product is sold as a service rather than just an object to their customers. This means that the company retains ownership over the materials and has an incentive to recirculate them. Governments are increasingly passing new laws that put pressure on companies to change, for example by requiring stricter repair policies (Source). This is further driving this change in the industry.

Here is a quote from the Ellen Mac Arthur foundation that aligns with our vision for circular fashion:

“A circular economy for fashion creates better products and services for customers, contributes to a resilient and thriving fashion industry, and regenerates the environment. It prioritises the rights and equity of everyone involved in the fashion industry and will create new opportunities for growth that are distributed, diverse, and inclusive.”

Turning a product into service requires a more complex variety of stakeholders and web of communications. For example, reverse logistics is one of the concepts to crack in getting materials back from customers to the original producers. It comprises the sector of supply chains that processes anything returning inwards through the supply chain or traveling ‘backward’ through the supply chain. Though it has long been a neglected area, growing market pressures, such as online retail and customer expectations, are increasing the strain on this area of supply chains. (source)

The question is whether the large fashion market incumbents will innovate in this area. More likely, it will be up to start-ups to create this technological disruption. When looking at the players in the fashion market it helps to make a division into three categories: Fast Fashion, Premium Brands, and Luxury clothing. What sets these categories apart is the pricing of the products. In each of these three categories, there is waste throughout the whole value chain. The cheaper the product, the more often costs are externalized by way of water waste, electrical and transport waste, exploitative labor conditions, low recyclability of used clothing, etc.

In this context, Franch adopted the anti-waste law in 2020 that will also require fashion manufacturers, distributors, and stores with unsold inventory to donate or recycle it instead of incinerating it or putting it in a landfill. (source)

Therefore, changing the fashion industry requires us to look critically at the business models, and those are all centered around design.