Why Swap.com is a Slam-Dunk for Positive Environmental Impact

By Alexander Lidgren

By Alexander Lidgren

SWAP.com is becoming a household name in the US. Yes, we are talking about a Finnish tech company taking over the massive US online re-sale market.

After three years of extremely rapid growth it is now the largest consignment store for used items in the US.

Swap.com is a shining star in our portfolio. It is an online store that gathers secondhand items from sellers and then retails them freely to buyers. To the buyers this means no hassle of combining orders, no worries about trusting sellers — Swap.com handles payments, delivery and any returns that may occur, and with more than 2 million items online, it also means customers can easily find anything they want, which is not typically the case when you are shopping second-hand.

For sellers, it means they can simply put everything they have into a box and Swap.com makes sure it is picked up and put online at the right price, with the right description, picture, everything! When their stuff is sold they get paid and Swap.com takes a commission.

Got it? Good. Now, let me tell you about something completely different and the reason we work hard to make sure they become a multi-billion-dollar company — their positive environmental impact.

Out of all our portfolio companies, Swap.com had the largest combined positive environmental impact when we analyzed their effect on carbon emissions, fresh water savings and pesticide use last year.

During 2016, second-hand items shopped on Swap.com saved approximately 86000 tons of CO2 from being emitted to the atmosphere, which is the equivalent of 18 000 US cars taken off the road during a year.

Swap.com also made sure 15 billion liters of fresh water wasn’t used, which is the equivalent of approximately 6 000 Olympic-sized swimming pools. And they made sure 2444 kg of pesticides did not have to be used at all.

Stunning numbers, and as the company keeps growing rapidly they are having a lot greater impact already this year.

Why, you may ask?

For starters, the environmental burden of your clothes is high. Secondly, Swap.com is a high-volume play and are already turning over a significant number of items. Finally, their huge impact is due to them enabling the re-use of an item, which is resource efficiency at its best.

We know instinctively that it doesn’t make sense to throw a garment away because we have all heard about what goes into making our clothes — fresh water in large quantities, fertilizers, pesticides, dyes and colours leaking into aquifiers, energy use in production, transport… makes you tired just thinking about it!

Environmental managers and other, often unsung heroes, of course are doing their best to replace environmentally harmful substances in agriculture, and reduce the use of energy and natural resources and so on, but in many cases they are fighting an uphill battle. We produce more and cheaper stuff that is transported longer distances and used for shorter periods of time. It´s like mopping the floor with all the water faucets on, orr even more accurately: it’s like mopping the floor with faucets on, pouring contaminated water into the environment.

Downstream recycling makes sense. If we use stuff longer, the environmental impact of making stuff goes down accordingly. This saves resources and energy use all the way through production to the mining of natural resources, and makes it easier to come up with sustainable solutions to manufacture items in the first place. Creating a working secondary market for fashion means we can produce less but better.

This does not fit the business model of ‘fast fashion’, but it fits the business model of Swap.com perfectly, which is why we have invested in it.

I wrote at the beginning that Swap.com’s focus is on the mass market of secondhand items and it really is. You can find everything on Swap.com, not just higher priced items but also the big volume of stuff that typically would not even make sense to sell online (because the cost of transport and handling would eat up any margin).

How they do it?

Well, for starters you need to be good at handling a lot of items in an efficient way to get +2 million items in and out of a fulfilment center, and you need to be good at marketing to find that someone who wants the sweater you no longer need, or locate a bunch of kids of similar size as yours were two years ago.

Swap is both.

The company operates a three-football field-sized fulfilment center outside of Chicago. They sort through these clothes so you don’t have to, take nice photos, price items exactly where the demand is and markets them to the right users. The software that handles inbound items was built by the development team that sits in Finland and a lot of this is what cuts handling times. But there is more to it.

Every step of the process from categorising and pricing to photographing and packing has been scrutinised to find innovative ways of making them more efficient.

The other important step is marketing and return customers. The second is incredibly strong for Swap.com and the Chicago based marketing team lead by Rich Lesperance (who built the online marketing group of Walgreens.com), is quickly turning Swap.com into a marketing machine. Online marketing is as much about creativity as it is about ad buys and market plans, and Swap.com is proving that they are just that — creative.

Last time I wrote about Swap.com I was proud to write that you will find something like one million used items on the site.

Today you will find more than 2 million unique items.

And if you are wondering if this can really be as big as we claim, that is more unique items than you will find on Amazon…