How free recycling helps Best Buy stand out from its competition | The Daily

Computers and peripherals are ready for recycling at the plant of one of Best Buy's partners. Electronic Recyclers International. PHOTO: Lance Cardoza for The Daily

Practically everyone has them. They’re those household items that shouldn’t go in the trash and can be really tough to recycle.

It could be a cumbersome tube TV in the basement. Or maybe it’s a drawer full of out-of-date cellphones, or even that long dormant fridge in the garage.

Retailing giant Best Buy will recycle them all — for free.

Though battered by a CEO scandal, store closings and withering online competition, Best Buy has turned recycling into an unlikely success story. Begun three years ago, the chain’s nationwide program earns a small profit by selling mountains of broken gizmos and defunct appliances to partners who dismantle the gear and harvest valuable commodities.

“It’s profitable,” says Leo Raudys, senior director of environmental sustainability at Best Buy. “But just barely.”

What’s more, in many regions, it’s one of the only options available to consumers to dispose of hazardous e-waste. When they launched the program nationwide in 2009, Best Buy executives were uncertain if the program could ever break even. First year costs were projected to run $5 million to $10 million.

“We didn’t know what we were getting into,” says Raudys. If costs stayed that high, he added, the program might have been scrapped. Though Best Buy declined to share more recent cost figures, the fact that it covers its costs — and then some — has helped extend its reach, Raudys says.

At its launch, the chain required consumers to buy a $10 store card to drop off recycling. But last November, Best Buy dropped the fee.

As the program has matured, a few streams of revenue have grown to offset Best Buy’s costs.

First, a small percentage of the waste is recovered and resold. Operational cellphones, for instance, are often reconditioned as replacements.

A larger stream of revenue comes from the recycling companies with which Best Buy partners. They return a share of the value of the recycled plastic, gold, lead and other materials to the retailer. Prices for such commodities have been volatile in recent years, but have been climbing over the long term.

Big, well-known electronics brands also contribute materials to Best Buy’s recycling operations. Twenty-five states have issued rules requiring manufacturers to recover a minimum percentage of what they sell, Raudys said: “Our network can deliver efficiencies that [the electronics makers] can’t match, so they buy access to it.”

As its recycling operations have grown, Best Buy has steadily driven down key labor and transportation costs to collect and haul the waste. Best Buy has also been able to negotiate higher rates from its recycling partners as the volume of waste has grown.

In the cutthroat business of electronics retailing, Best Buy’s take-back program distinguishes it from competitors such as that can’t match the service.

Whether recycling actually lures additional customers to Best Buy’s storefronts remains unclear, though. It’s difficult to identify incremental sales that happen because of the recycling policy, says Raudys. “We see this as a service.”

To avoid the export of hazardous materials, Best Buy pays third parties to audit the practices of its recycling partners. The aim is to enforce a corporate recycling policy designed to match or exceed state and federal guidelines.

Scrutiny of how e-waste is handled rose sharply following revelations in recent years of companies exporting e-waste to poor countries.

The majority of waste collected in the U.S. for recycling is sent to Asia and Africa, says Jim Puckett, executive director of Basel Action Network, an e-waste watchdog group. “It is often smashed, burned, dumped or processed in conditions that endanger the health of workers,” he adds.

Best Buy works with three e-waste recyclers: E Structors in Baltimore; Regency Technologies in Cleveland; and Electronic Recyclers International, or ERI, in Fresno, Calif. Appliances are processed by Regency Technologies and Jaco Environmental in Snohomish, Wash.

Currently all three of Best Buy’s recyclers meet an industry-backed code of conduct for e-waste known as R2. Just ERI is currently certified under the more stringent e-Stewards code, created by the Basel Action Network and other environmental groups.

“Only e-Stewards is consistent with international agreements barring export of hazardous e-waste to developing countries and forbids using municipal landfills or incineration for hazardous e-waste,” says Puckett.

Only about half of states have e-waste rules, although Best Buy accepts recycling nationwide. For the rest, Best Buy’s take-back program is one of only a small number of options available.

There’s a big need for more such programs, if the growth of Best Buy’s program is any indicator. It is expanding by 10 to 15 percent per year. In 2011, roughly 4 million customers dropped off 86 million pounds of electronics and 73 million pounds of appliances.

Since its debut, Best Buy has collected more than a half billion pounds of recycling, divided roughly evenly between appliances and e-waste.

That puts the retailer on track to hit a target of 1 billion pounds of consumer goods in just a few years.

Gizmos continue to multiply as they fall in price. And as they are replaced ever more quickly, the need for an easy recycling option is only growing. Best Buy is well positioned to mine this growing mountain of digital detritus for cash, and divert more waste from landfills in the process.

A worker wraps computers for recycling at Electronic Recyclers International. PHOTO: Lance Cardoza for The Daily

Electronic equipment is converted into scrap metal at an e-waste facility. PHOTO: Lance Cardoza for The Daily


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