Tag Archives: electronics

The Daily

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

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 Or maybe it’s a drawer full of out-of-date cellphones, or even that long dormant fridge in the garage.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 Amazon.com 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.

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Originally published 2012-04-30 by The Daily, an iPad-only venture created by NewsCorp. Original publication URL: http://www.thedaily.com/page/2012/04/30/043012-biz-best-buy-recycle-aston-1-4/

GreenBiz

How Best Buy makes money recycling America’s electronics | GreenBiz

Retailing giant Best Buy (NYSE: BBY) has seen its recycling take-back program grow from a costly gamble into a fast-growing business that’s making a little bit of money. “It’s profitable. But just barely,” said Leo Raudys, senior director of environmental sustainability at Best Buy. “People still don’t believe it.”

The skepticism comes from the fact that the program is not only free to consumers, but they can also drop off just about any kind of junk that runs or ran on electricity. A dead tube TV? Check. The cell phone you dunked? Of course. That leaky washing machine? Yep. Best Buy takes appliances, too.

So how does the company cover its costs and a bit more? I had the chance to catch up with Raudys last week during the Sustainability Operations Summit in New York City, where he spoke on a panel titled “Successfully Tackling Waste.” Afterward, Raudys talked about how Best Buy turned the potentially thorny problem of collecting recycling into a self-subsidizing operation.

At its launch in 2009, the chain required consumers to buy a $10 store card to drop off recycling. But last November, Best Buy dropped that fee.

Today, the program generates two streams of revenue. First, Best Buy takes a cut from its recycling partners. When truckloads of old TVs, PCs and dryers go to its processing partners, the plastic, gold, lead, nickel and other materials recovered from the dismantled waste is sold to be remade into new materials. And while volatile, the prices for all of these commodities have generally been heading up over the past few years, raising the share that comes back to Best Buy. A very small percentage of the waste, Raudys estimates, ends up recovered and refurbished.

Secondly, Best Buy collects revenues from its partners: big, well-known electronics brands. “25 states have rules requiring that manufacturers recycle some share of what they sell every year,” Raudys said. “Our network can deliver efficiencies that [the electronics makers] can’t match, so they buy access to it.”

Best Buy has also been able improve its margins by steadily lowering the costs of collecting and transporting the consumer waste by improving workflows and boosting volumes, he said. Higher volumes of waste let Best Buy win more competitive rates from its recycling partners as well.

But does Best Buy see any extra sales from customers lured in by the recycling service? After all, when faced with roughly similar prices for a flat panel TV from a number of retailers, many customers would opt for the vendor who can take away the old set. The benefit of the program remains unclear, however. Raudys explained it’s difficult to identify sales that happened because of the recycling policy. “We see this as a service to our customers,” he said.

It could have been a costly, unsustainable service, though. “The program was projected to cost $5 million to $10 million in the first year,” Raudys said. “We didn’t know what we were getting into.” If costs stayed that high, he said, the program might’ve been scrapped.

The program’s most tangible overhead costs are labor and storage space, to process the waste at its stores. There’s also the cost to truck pallets to recycling sites. Less visible costs for Best Buy include auditing the processes of its recycling partners. Raudys said the company hires third-party inspectors to enforce a corporate recycling policy that aims to match or exceed state and federal guidelines. To avoid the export of hazardous materials to low-income countries, Best Buy’s program includes physical inspection of shipping containers and paper auditing.

E-waste handling practices remain a controversial challenge. Scrutiny of e-waste practices increased in the wake of embarrassing revelations — most famously a 2008 investigation by CBS’ 60 Minutes program — that exposed recyclers who were sending e-waste to be dumped or processed in primitive, dangerous methods.

Experts say the problem has improved but still persists. “At least half of the e-waste collected in the U.S. for so-called recycling is exported to Asia and Africa where it is often smashed, burned, dumped or processed in conditions that endanger the health of workers,” said Jim Puckett, executive director of Basel Action Network, an e-waste watchdog group.

Three partners handle Best Buy’s e-waste. In the western U.S. materials go to Electronic Recyclers International (ERI) in Fresno, California. In the Midwest, old gear flows to Regency Technologiesin Cleveland, Ohio — and in the East, E Structors in Baltimore, Maryland handles the e-waste. Appliance recycling is done by Regency and Jaco Environmental in Snohomish, Washington.

Puckett would like to see all of Best Buy’s e-waste handlers meet the e-Stewards certification, a program co-developed by BAN 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,” he said.

Of Best Buy’s three e-waste handlers, only ERI is currently e-Steward certified. But all three meet the R2 code, an industry-backed standard.

In the absence of federal or state regulations for e-waste, Best Buy’s take-back program is one of only a small number of options available. Just 25 states have e-waste rules, although Best Buy accepts recycling nationwide. “There are many places in the country where there are no alternatives,” according to Puckett.

The program’s growth, meanwhile, suggests there’s a big need. Since the program began, Raudys said, Best Buy has collected half-a-billion pounds of recycling, including both appliances and e-waste. And given that the volume of recycling is growing by 10-15 percent per year, Best Buy is likely to hit its goal of 1 billion pounds of consumer goods soon. Last year, some four million customers dropped off nearly 86-million pounds of electronics and 73-million pounds of appliances for recycling (see table, below).

Best Buy’s global recycling operations

Best Buy’s efforts come against a backdrop of intensifying efforts to improve e-waste recycling nationwide. Last week,Staples announced a deal with HP to take back all sizes of computers, monitors, desktop printer/scanner/copier devices, handheld electronics and various other retired gizmos.

The number of recycling drop-off locations for consumers nationwide grew to nearly 7,500 from just over 5,000 in 2011, according to the First Annual Report  of the eCycling Leadership Initiative (ELI), a program created by theConsumer Electronics Association, a consortium of major electronics manufacturers and retailers.

ELI participants arranged for the recycling of 460 million pounds of consumer electronics last year, a 53 percent increase over the 300 million pounds recycled in 2010. And the group is aiming to drive that figure to annual rate of 1 billion pounds by 2016.

Photo of Best Buy store sign by Lynn Watson via Shutterstock.