Description
Consumers are looking to adopt a circular economy, based on renting and buying second-hand. Anna Balez, founder and CEO of Lizee, shares her insights about consumer preferences with us.
Customers demand solutions for their problems. Subscriptions can be one solution, but they are not the only one. This interview looks at the differences between renting and second-hand from a customer, operations, and company perspective.
This episode is the third in the series PaaS Decoded, 16 conversations about the fine details of product-as-a-service.
Video Impression
People
Anna Balez, Founder & CEO Lizee
Patrick Hypscher, Co-Founder of Green PO, Expert in Sustainable Business Models
Chapters
00:00 Intro
01:37 Wear the Change
03:03 Can Renting be the only Circular Strategy?
08:52 What are the operational differences between renting & takeback schemes?
11:38 How to handle product variance
15:09 Transparency is needed to inform about the product condition
18:41 Are products or customers the decisive factor for renting?
23:26 Does Circularity fit into every Company’s Strategy?
26:41 Make sure that customers can trust your brand
29:30 A Circular mix Everywhere
31:12 A call to all people enthusiastic about circularity
About Lizee (from website):
Lizee provides a robust, highly efficient logistics framework that enables brands to easily implement and manage resale, rental and trade-in programs.
Further Links
Transcript
[00:00:00] Intro
Anna Balez: We had some very, very interesting discoveries with some of the brands we are working with of some products that we didn’t expect that were going to be rented. With some brands we rented underwear. Can you imagine that? Underwear?
Patrick Hypscher: Welcome to the third episode of PaaS decoded, 16 conversations about the fine details of product as a service. In the last episode, Shuchir explained how HP scaled the HP instant ink proposition around the world. In today’s episode, we will also reflect on the proposition, especially in the context of customer behavior. But we start by contrasting, renting with second hand and take back scheme operations.
Patrick Hypscher: She has a degree in engineering and sustainability management. She researched glacier temperatures, managed projects for climate change strategies and ecosystem services. More than 10 years ago, she launched TailMe, a renting service for children and pregnancy clothes. Afterwards, in 2019, she founded Lizee, a circular platform for retail. Welcome, Anna.
Anna Balez: Hi, Patrick. Thank you.
[00:01:37] Wear the Change
Patrick Hypscher: Anna, what was the last thing you rented?
Anna Balez: Actually it’s clothes because I rent a lot of clothes in Belgium actually. So it was a a shirt. So to be precise, white shirt.
Patrick Hypscher: Okay, cool. And, and how, how does your personal decision making process look like? So when do you rent a product and when do you buy a product?
Anna Balez: So I rent a product when I know that I’m going to, to use it, not so much. It’s very basic, but this is what I do. I rent a lot of clothes because I’m always having some important meetings, networking events where I am on stage. And I really love not to have the same outfits.
And renting is a very good solution. I really love it and I rent basic stuff, but in a very high quality. I love silk. I love linen very high quality linen. So for me, it’s very normal to rent this kind of outfits. I, most of the time when you see me on stage, I have something that I rented.
So yeah. And when I buy. Yeah, of course, I need to be consistent. And when I buy it’s mostly secondhand. Yeah, I, I barely buy new yeah, yeah, almost nothing, I guess, new. Yeah, it’s, it’s on second hand when I know it’s gonna last a bit. But even my washing machine, I rent it. So you see I don’t buy so much.
[00:03:03] Can Renting be the only Circular Strategy?
Patrick Hypscher: nice. That makes even me happy. And let’s, let’s switch to the business side. You, you started Lizee as a rental platform, if I’m not mistaken, and now it’s more about circular retail in general. What’s the difference for you and why did you make that change?
Anna Balez: Yeah. So as you said, the beginning I started my circular career with rental because I was young and very, very optimistic about the world. And then I thought everyone we’re going to do like me, I mean renting instead of buying and instead of accumulating stuff. But I was wrong actually, because no yeah, I was wrong because everybody’s not ready to rent because it’s really a big change and it’s understandable. You cannot change like that. It takes time. It takes a lot of marketing sensibilization also operations and yeah, logistics. So, yeah, there is a big step between what I would like the world to look like and what is the reality. But when you are young, you know, you think you can change everything in, in a, in a second.
So I grew up and then I learned, I met a lot of people like you, like some people really interesting with different views and what I saw and what I I see discussing to retailer’s CEOs mainly to have their own view of the business and being more in depth into a business plan and into financial goals.
I really, I really, I really think now that we need to have a more a systemic view of circular economy. I mean that this is not a mono solution that is going to to make it to make it grow, to make it available for everyone. So for me, because we are working with retailers, this is this is a world that I know the most. So people who sell stuff to other people.
What I think is that in their own strategy on their own path to circular economy there we do omnichannel, what I say, it’s an in store circular economy, online circular economy, second hand buy back and also rental, short term rental, long term rental.
It’s really like now there are, yeah, there are so many brands of everything, like, and I’m really pretty sure that in the close future you will have a lot of way of using a product, like you can buy it second hand and then resell it. But when you want, you have no pressure on the, on the timing, or you can be sure you’re just only going to use it for a weekend. So you rent it for a short term or you want to test it, so you’re going to rent it for a few months, but it’s the contract you have with the, with the brand.
But yeah, I really, truly believe that fortunately we’re not the same. Not yet, but we are not the same. I hope so. Sorry, it’s not going to happen, but so, so we have different needs.
We have different needs as individual, but also in in our lifetime, we are, yeah, we are students, we are a family. We are alone. We are, we are friends. Yeah, we are, yeah, we have so many needs in our lifetime. So as a retailer, you cannot have an only one stop solution. It’s not possible.
And as you also say very well on your LinkedIn poster you don’t have one solution for one. Retailer, which have many kind of products with different weights, different materials, different complexity in terms of reparation and and quality control. So yeah,
it’s complex. And I think this is the beauty of circularity.
It’s not simple, sorry, but it’s not simple, it’s complex. But but it’s, it’s, this way it’s, it’s so passionating because so many people can work on it and can create so many jobs to figure it out, figure every piece and yeah, build this new circular economy, of course. Yeah.
Patrick Hypscher: Okay. Got it.
Anna Balez: I hope it’s clear because yeah,
Patrick Hypscher: You basically said that you have the secondhand, you have a takeback, you have short term and long term rental. Is there anything beyond that, anything I was missing?
Anna Balez: Yeah, this is exactly what you have and you have in store and online also a way of, of doing things. And for every brand, every retailer the mix between all this business model will be different. You cannot copy a recipe from another brand to yours because actually, you’re not the same. And this is why you are, you created another brand because you don’t want to be the same as your neighbor.
And this is the same. So you will maybe do 55 percent of second hand, 10 percent of, of rental uh, short term, and I don’t know, 2 percent of, of long term, I don’t know. But yeah you need to create your own circular DNA. I’m, I’m really convinced about that. And. You need the time, you need resources, you need yeah, you need people that help you on that.
And I think some brands are really understood that very much in Germany working with Vaude. So helped me to pronounce it Vaude and
Patrick Hypscher: Yep. Mm hmm. Mm
Anna Balez: And I, I really admire what they’re doing because so we are working with them on second end, end rental and they’re doing also repairs. And they are creating their own stories on that. And it’s very powerful and strong. And I think they are going to, to go very far with it. And and really building the new way of doing retail for the next 20, 50 years, for sure. I, I I’m sure in 50 years, we will talk about Vaude as an example.
[00:08:52] What are the operational differences between renting & takeback schemes?
Patrick Hypscher: Mm hmm. Yeah. Yeah. I can see that. Let’s look a bit at the, let’s say, operations behind the scenes. So let’s assume we have someone in mind who considers starting with renting and starting, for example, with take back scheme. If we look at the operations, where do you see some key differences between renting and takeback scheme?
Anna Balez: Yeah, actually there is, there are, there are, sorry, a few differences. So we started with rental and with rental you will have back and forth 20 times, 30 times. And you need each time to do a quality, quality control and to sort it regarding the the quality of course, and if it’s need repairs uh, light repair, light repair, sorry strong repairs.
So for me, second hand it’s just one back and forth and so, so this way for us was very easy to go from rental to second hands because we are already at the operations and the main goal and the main objectives and challenge is to make it profitable. Everyone is talking about that.
Profitability, profitability because of course if you compare to, to manufacturing something new
for a lot of products, it’s less expensive to make it new than to refurbish. Which is a bit weird. But this is how it is now. So yeah, 100, 200, 150, maybe 100 years ago also to manufacture stuff was really heavy, was long and complicated, and yeah, the quality was really high.
But for some product it was complicated. But then processes and industrial, um, management and process operations came and now it’s super easy to manufacture a lot of products. Which is part of the problem too, huh? But just what I want to say is it’s also circular economy is on this same path.
So now for operations, it seems complicated and, and costly and not profitable, but like, Companies like, like Lizee, or we are a lot of people doing that now in the world. And which is very promising that we are really working on operations to make it efficient. And I’m really sure that doing second hands, so buyback and rental, will be profitable in the next years. It’s coming, like it’s already profitable for, some product categories, but it’s going to be profitable for, for a lot of products in the coming years, which is a very, very good news, I think.
[00:11:38] How to handle product variance
Patrick Hypscher: You said that for you, it was easy to go from rent renting to second hand. How do you deal with the volume of product variance? So, when let’s, let’s stick to the example of shirts. Yeah. If I, as a, as a brand, as a retailer say, I start with 10 shirts and rent them out. I know that I only will get these 10 shirts back and I only need to repair, uh, these 10 shirts.
Whereas when I start with a take back scheme, I might get, I don’t know, 100, 500, 2000 shirts back. And yeah, some of them are just different and have a different complexity in my operations. Is is it something you see as well and how to handle this difference?
Anna Balez: Volume is, is something we need to manage, but this is something the industrial, operational, logistic world is really used to, to manage. Like, yeah volume is is You have, you type on, on Google, or if you look on, on some, if you do some research on volume logistic management, you have much, much more much, much more, much, much more companies and article on that than on refurbishing
Patrick Hypscher: It’s also the variance. So having 10 types of shirts and then a thousand pieces per shirt per day is different than having 500 different shirts and then 10,000 pieces per shirt. Or is it no difference?
Anna Balez: Yeah, there is difference. Of course, it’s true. That’s what I was saying before. We are all working on it right now to create this big database because it’s all about data and about to recognize very quickly what’s you have, what’s, what’s it’s like.
So there is all this, um, recognition so that of, of products. Yeah. Yeah. That needs to, needs to be needs to be more, more and more efficient. And I really see that so many people are working on it right now that this volume challenge is going to be tackled. But what I need to say, and I, I need to be honest. Everything will not be treated back. Of course, there are some stuff that’s poor quality, that we cannot treat it because it’s, it’s a lot of money. So that’s why some, at the end, recycling, will be, one of the solutions.
That’s why just a parenthesis when we oppose recycling and reuse and all this, we need all of this, all of this value chain. And this is what you said that on the intro where I truly believe we cannot solve this, this circular economy scale just with one businessmodel. We will need recycling at one point because we produced so, so, so much, too much that we, we need a solution like that.
So as you said, volumes with data, we can we can solve this problem. For a lot of products, there are so many already some companies working on that to to do automatic recognition to have big database where you can link to E. A. N. And and building that to make it to make it easier, of course, but you will need to consider that at some point some of the products need to be recycled of course.
So it’s, it’s a, it’s a balanced solution.
[00:15:09] Transparency is needed to inform about the product condition
Patrick Hypscher: If we stick to the operations, one other aspect is the condition of the article. Is it both for heavy use, but also for subscription, is it as new or do you see traces of, of use. And, if we look at the customer and you said initially some customers are not ready yet and they want to have a lot of information about the condition of the product before they either decide to buy it secondhand or rent it. Do you see any difference between rental and secondhand there when it comes to, identifying the condition of the product and then also making that transparent to the customer? Or is it the same between renting and secondhand?
Anna Balez: Yeah, there is no difference. What I want to say here is, as you, you said the word transparency. It’s like, The willingness to pay for something with all or something with yeah, which you see it’s used. But it’s why Vinted exists. So I just bought some pants for my son with holes on it.
But I paid it, I don’t know, 20 euros, and I know he’s going to make more holes on it very soon, and it’s for the weekend, and he’s doing rollers, so that’s why. But I know what I am paying, I know what I’m going to receive that’s why I’m using Vinted. With this, it’s, it’s Volcom actually, because he loves Volcom.
So he wants a Volcom, you know, this brand like Volcom skater brand for, for young
Patrick Hypscher: Yeah.
Anna Balez: So he wants this brand, but the use I want as his mom, him to have is with the hole on it, because I know he’s going to destroy it very soon doing roller on the, on the, on the street. So. So I’m ready to pay 20 euros for that.
But in the other end I went to Vestiaire Collective, which is much higher criterias to buy no old Volcom pant for him uh, to go to school. But I’m going to pay 60 euros, something like that, but I’m ready to pay, to pay for that because I know what I’m going to receive.
What I see is that with rental, we really had this experience with Decathlon where could see it was used, but the price you are going to pay for it just for a weekend, because you need it so much. You need a tent, a light tent to go for camping just for the weekend. And you are going to pay 25 euros, 30 euros. You don’t care if it doesn’t like new you really don’t care. You want to sleep actually in a good condition and not have a heavy bag. So you are, you are, you are okay for that. But if you are going to go to a wedding and you are on the, on the first line of the wedding and you are going to be on every photos you need an outfit which is perfect. So are you already to pay 100 euros for that. for me, transparency is key willingness to pay. And so what is technology and operations on one end, and it’s very deep marketing and understanding of your customers in on the other end, and then you fit the both.
Yeah, and this is what we have some lack of understanding of customers right now. What do they really want? How do they use products? In which, as I say, in which circumstances do they need uh, new products. So, yeah, there is a lot of jobs for circular marketers, I would say, or customer behaviors studies here.
Because, yeah, we, we need, we need that to know, um, which price people are ready to pay.
[00:18:41] Are products or customers the decisive factor for renting?
Patrick Hypscher: Let’s stick to the marketing side and the difference between rental and second hand. Are there any obvious circumstances where you say in that situation you should do secondhand or in that situation you should do rental for the customer?
Anna Balez: It depends really on on the way of living. But you have people that have the way of living for renting. And some people that have the way of living for second hand. Yeah, I mean, you would be very surprised that so many people rent cars like Mercedes or BMW, just to show off during weekend. It exists a lot.
Patrick Hypscher: Hmm.
Anna Balez: But they invest time to do that because it’s bring them some joy or some kind of, yeah, happiness, of course. But they invest time on that because you need to go to the station and to rent it and, you know, to do all the papers and then to go back on the Sunday.
And some people are just going to, to buy second hand for other reason, because they don’t have this the same way of living. I don’t know if it’s very subtle for me, the difference, but and, and this is also showing that we have a lack of studies, on customers behaviors between secondhand and rental.
Anna Balez: And yeah, of course, it’s a way of living of people, but it’s also yeah, the product itself, for me, can be either rented or, sold secondhand. For me, every product can be both, and it depends on the customers.
I really repeat that all the time.
Patrick Hypscher: Okay.
Anna Balez: But yeah, it’s very subtle and now, yeah, I could discuss about it for, for, for a long time, but we don’t have time for that.
But there are so many examples where you could have the example for the rental and the counter example for the secondhand, and vice versa for every product.
So, yeah, if I’m sure some student could do this kind of, of studies, very interesting studies on, on products and second and versus a rental.
Patrick Hypscher: So you’re what you’re basically saying is it’s not so much the product itself, or at least not only it’s always in combination with the needs of the customers or the lifestyle and the beliefs of the customer. Is there also a combination? I Think, for example, the let’s stick to the cars.
So there are people who have the rental lifestyle over the weekend for cars. And then when it comes to let’s say construction power tools, uh, drilling machines and some special equipement. They might have the secondhand lifestyle where they say, okay, I buy it secondhand and two weeks or two months after I used it, I’m ready to sell it secondhand.
So, so is it it really specific to the person and then independent of the product? Or can the same person also have a, in one area, a rental lifestyle, and in another area, the secondhand lifestyle. Yeah.
Anna Balez: That’s why it’s open. It’s such an open topic. And it’s, it’s, fascinating because as you said, it’s not linked to the person, it’s linked to his lifestyle and his needs at a specific time or his setup environmental setup. Of course, it’s things to, to, to a lot of criterias that Yeah, I never read any studies about that, never.
And I’m sure there is something to do on personas. Of course, this is basic marketing studies and we should learn to the students now that there are many new ways of spending money. So many new ways of selling an experience to someone. Because it’s experience actually, all that is experience when you are building your house and you’re going to resell the product is you’re going to be something with your ends and you need it.
And you want to save money. I don’t know what your needs behind it. Maybe you want to prove something to someone or there’s so many ways of this, but. You need the product only for, for a few weeks and you don’t know how long it will take to you. There is also this on your life you don’t know if you are super efficient and you know yourself perfectly, you say, Oh, I just need it for a weekend because I’m so good at it and I’m going to do all the work for the weekend. So you are going to rent.
But if you say, eh, I need to learn how to fix this and this. So I don’t know if I am going to, to to be to be good enough. So you’re going to buy secondhand because yeah, in a lifetime you don’t know or you are going to rent with solution. You, you see and we are just at the beginning of, of the understanding of on that. It’s very passionating what’s going on right now.
[00:23:26] Does Circularity fit into every Company’s Strategy?
Patrick Hypscher: Yeah, yeah, absolutely.
Do we have the same, let’s say, variance on the company side, so that there are, let’s say, different strategies and different goals of company side where it’s a good fit for circular strategies, whereas as some companies might say, no, this is not for me. I’m, I mean, what I have in mind is let’s say fast fashion.
Do you see a overlap of a fast fashion strategy with a circular strategy? Does that exist? Or is it also that companies need to make a choice what direction they want to go?
Anna Balez: It’s a very metaphysic question because when I’m thinking about that, companies they have to play the game. We are all in the same game right now. So they have to, to be part of it. And so they have to make choice. As you say, they have to, to truly have the vision of what they want to be in the next 10 years.
I do not see, um, non compatibility between fast fashion and circular economy. You see, for, for me, if you are a strong leader of a fast fashion company, and you have a clear vision of, okay, In 10 years I’m going to be here and I have to tackle the stock management, for example, because this is about that as I produce so much, I have to tackle this topic. Could be with a mix of second and recycling and a new product. But they can tackle this, but they are going to change, of course they are going to change, but if they have a plan, they are going to start somewhere.
The fast fashion as we know it now is going hopefully disappear, but to have access to clothes at a very low price is not going to disappear, but it’s going to be done differently. And fast fashion leaders, I know some of them, are fortunately are starting to think about that. In 10 years, people are going to spend the same amount of money and they are going to, to have the same I don’t know what would be the social media in 10 years, but the same TikTok video with TikTok is going to exist in 10 years, but with the same outfits and same number of likes. But behind the scene it would be different, the operation would be different.
And, yeah, I don’t have a crystal ball. I don’t know. I have some ideas, of course, but it would be a mix of you know, business models that would be very clever and would really, really well done. Of course we are going to use AI, but it’s a tool. It’s a, it’s a tool. Okay. We are going to use blockchain. We are going to use so many tools we have now with this we are going to use.
And I’m, I’m really focused also on all social aspects of circular economy. You can recreate jobs locally. There’s so many, so many ways of doing it right now when you mix up technology and social stakes.
We are on it and that’s why it’s so exciting where we are right now. So exciting. We are building it. Yeah, I’m really looking forward. If what I said right now is going to, to be true in 10 years.
[00:26:41] Make sure that customers can trust your brand
Patrick Hypscher: I will send you a meeting invite for in 10 years and then we can listen to the conversation again.
Anna, I have three final questions. I want to ask them to all of the 15 guests of this product as a service series. The first question is: What is the main thing you need to make sure as a brand or as a retailer before you start a renting proposition.
Anna Balez: yeah. Do not overthink it first. Because as I said, we do not know how people are going to react. No, but it’s, it’s really true. We had some very, very interesting discoveries with some of the brands we are working with of some products that we didn’t expect that were going to be rented. With some brands we rented underwear.
Can you imagine that? Underwear
Patrick Hypscher: That’s a surprise.
Anna Balez: I know, I see your face. Surprised but actually it was for pregnancy and we tested it twice. It worked because there is a need and so that’s why these are some very interesting examples.
Or another example is that some people are spending more money by renting than, than they could have spent if they would have buy it.
Which is something that in a capitalistic mind is really not working. Like if you have done a commerce school, like a financial school for you, it’s like brain, it’s not working.
We proved it is a case. Some people, and I am the first one, I spent more money now on clothes that I was, that I was doing it before. Yeah. So people spend more, more money. So, so that, that’s why it’s very interesting.
And I always give the example of hotels. So, sheets, you really sleep on rented sheets, linen but you never, think about this, but it’s super intimate, like it’s really close to your body and you trust it, you trust the brand, you trust the hotel or whatever, and you trust the stars. Also there is all the label around it. It’s very constricted and you trust it. So that’s, that’s where I see the future of circular economy. So, so the brands need to ask the question I am trustable from my customers.
For example, Decathlon is super trustable. Like people trust rent so much that they can rent sleeping bags. No problem because people trust them so much. So I, I like the one in the market that can be trustable enough. And then if you are trustable enough, you can rent underwear. This is what they need to ask the first question.
So you are not going to run something, something we are not trustable on, of course because it’s your DNA. So, which is a very good news, continue to do what you are good at.
[00:29:30] A Circular mix Everywhere
Patrick Hypscher: Great. The second question is also about the future. What are the significant trends in circular renting for the next five years? Yeah. Yeah.
Anna Balez: Yeah. As I said, when I was twenties, twenty five, I was so sure about it.
Yeah, ten years after, I’m not so sure about it. Yeah, I’m sure it’s going to be multiple. Yeah, it’s true. It’s when you, when you grew up. I’m not so sure about which circular model. I’m sure it’s going to be a mix, as I said it’s going to be a mix of business model and it’s going to be realized a lot on our capacity to rethink completely the value chain.
We have to break some stuff. Yeah. We have to, the courage to have the courage to break some stuff. This is how it’s working. Life is working like that. You break stuff and you rebuild. So yeah, what I see is that there will be some major brands, some major retailers, which are going to do massive circular stuff. I’m sure about that because we start to see which ones are going to do it. And some people are going to say, wow, okay. Why I was doing before it’s like shop Spotify or Deezer Spotify. You were like, how, I was doing it before? Now I can listen to whatever I want, when I want . Before I had to think about it and to, ah, I had to go to buy a CD.
I’m sure that in 10 years we’ll be the same. And some brands, some new brands, some new retailers are starting this way. And we will have the Spotify of Circular Economy in 10 years. Again, we really need to do this invitation in 10 years to see if it’s true.
[00:31:12] A call to all people enthusiastic about circularity
Patrick Hypscher: Good one. And then a last question, a bit more about today. So, Circularity.fm is about sharing knowledge and also connecting people, also connecting to people who are listening. Maybe you have milestones you want to reach or opportunities you want to unlock these days. I’m pretty sure you have. Who should get in contact with you? Whom are you looking for to collaborate or support?
Anna Balez: I’m looking for a circular enthusiastic people. Yeah, I truly believe there are some leaders, retailers or brands, which is very interesting to speak to with them. Of course, circular, enthusiastic, and I know some of them already. And for us, it’s so nice. Give me so much energy, but you have also some people on, as I said, on the marketing side, on university side also that are really enthusiastic about this and think about many, many ways of, of changing everything, which is really super good.
So I love circular, enthusiastic persons, which are specialized in a topic and they want to see it on the circular point of view. Because give us so many new, new thoughts and we can integrate it to the process to the, you know, to the operational and, and the industrial process.
But for me, yeah, everyone, which is, which have new ideas new thoughts about it. Yeah, I would be very pleased to talk to, because, I don’t have so much time, but I take the time. It takes the time. And I, I really try because for me, it’s it gives me so much energy to do it and, um, and yeah we can open so much opportunities and this is we built a new economy when you connect people that you say, when you connect the dots.
Patrick Hypscher: So if that sounds like you, then don’t wait for 10 years and reach out to Anna immediately. Yeah. Thanks a lot, Anna.
Anna Balez: Thank you, Patrick. Thank you. It was very interesting.
This was the third episode of PaaS decoded, 16 conversations about the fine details of product as a service. If you liked it, share this episode with colleagues or on social media. If you missed a question or topic, please send me an email so I can improve the conversations for you. If you learn something from this episode, please provide a review via Spotify or Apple podcasts. That helps others to discover the podcast and don’t forget the most abundant, renewable resource is your imagination.