A Former Walmart Exec Wants to Help You Buy Less
An unlikely team comes together with a startup that aims to change retail by becoming the marketplace for the “sharing economy.”
A decade ago, Andy Ruben was in charge of global strategy at a company that environmentalists love to hate: Walmart. Adam Werbach was a firebrand activist who had served as the youngest-ever president of the venerable green group, the Sierra Club, at age 23. It’d be hard to imagine a more unlikely pair sitting together in a San Francisco office in 2013. But today Ruben and Werbach are founders of a six-person startup with a grand plan: to reduce waste and change the retail economy by getting people to stop buying $200 billion worth of stuff every year.
Their company, Yerdle, launched in San Francisco in November—on Black Friday—and in New York a month ago. A person logs in through Facebook and enters a well-designed marketplace populated by photos of items their friends and their friends’ friends would like to give away or loan them for free.
The idea is that people will check Yerdle before making a new purchase, and might pay Yerdle to get a shipment from a friend. The $200 billion figure is the pair’s own estimate of the percentage of the $1 trillion in durable retail goods purchased in the U.S. each year that might instead be sourced from an individual’s own extended online social network. When I signed in I saw things like a colander, a PlayStation, and a “giant litter box.”
“Just because someone is going to have a Halloween Party, it does not mean that a global supply chain has to be kicked into gear with every item being manufactured, transported and procured,” says Ruben. In his various roles at the world’s largest retailer, he managed these very supply chains for its store brands and also led a charge to move store services, like grocery shopping, online. Every pound of product corresponds on average with more than 70 pounds in waste, he says, a problem he grew to care about when launching Walmart’s first sustainability initiative in 2005. That’s also when he met Werbach, who had just given a controversial speech “Is Environmentalism Dead?” and started to adopt practical green strategies like working with companies.
Sharing and reusing goods, whether the motive is saving money, reducing waste, or pure generosity, is far from new. Thrift stores spawned eBay and Craigslist and, now that smartphones and Facebook have entered the picture, companies like AirBnB and RelayRides are making it easy for people to rent, rather than sell, their rooms and cars to strangers.
Markets that make consumption more collaborative and resource-efficient have lately been termed the “sharing economy.” A number of startups just like Yerdle are now trying to make the sharing model work beyond high-ticket items. The challenge is attracting regular users and making it as easy as possible for individuals to transact with each other rather than with efficient, convenient, and cheap global conglomerates.
A major barrier is that the convenience of shopping and joys in acquiring something new is deeply ingrained in U.S. culture. The lower value the good, the higher the barrier to changing these habits, says New York University professor Arun Sundararajan, who has been studying the growth of the sharing economy for years.
About 12,000 people have signed up for Yerdle, and 25 percent of them have been coming back every week. When one of the site’s users wants a particular good, the site connects the giver and the taker via e-mail to arrange the exchange.
There are plans to improve and expand. Soon, for a fee, Yerdle will include a one-click option that would send a shipping label to the owner of an item to pop it in the mail. Yerdle is also collecting data and designing algorithms so that, through Facebook’s platform, it could expand a person’s “trusted network” to go beyond first and second degree connections to include, says, people who attended the same college in the same city.
Ruben believes the resource sharing and rental will eventually become a larger part of the consumer economy, and views Yerdle as a long-term bid to help the retail industry evolve more quickly with this trend. He is thinking about why stores and brands may soon be eager to partner with or even acquire his startup and the path for it to become more than a niche service.
The biggest incentive, he says, is customer loyalty, which is hugely important in an industry where the top 10 retailers change every three decades. Montgomery Ward and Sears were on that list a mere 30 years ago. Walmart is No. 1 today. He is convinced that one day it will be Amazon. The more useful services a retailer can provide, just as Amazon Prime gives subscribers free shipping and movie rentals, the more loyalty it will attract.
If sharing catches on, services like Yerdle could be simply another must-have loyalty feature inside the retail wars, he believes. He imagines people will one day open an app and check whether a friend has an item they could borrow or keep. Amazon already has a service for people to resell their belongings. Similarly, General Motors is working with the personal car-sharing startup RelayRides.
Ruben believes brands known for quality, like the clothier Patagonia, might also buy into the idea, since a service that values reusing something over buying a cheap, disposable item increases the appeal of paying more upfront. Yerdle is now planning a back-to-school promotion with what Ruben says is a well-known, high-end brand that will offer a discount for users who sign up for Yerdle.
Today, Yerdle is no more than a small site with lofty goals, but the team’s connections could help as it raises its first venture capital. And NYU’s Sundararajan believes the time could be right for some service like it to catch on, though he believes integrating with Facebook heavily is a strategic risk because any budding competitor can do the same.
Ruben and Werbach share the same aims these days. As Werbach puts it: “I don’t want to just make some products 20 percent better. I want to kill 20 percent of the stuff we buy.”