Digital technology has enabled companies to offer an alternative, more sustainable, deposit-free, recyclable packaging system for take-out food. Suppliers rent out their packages to restaurants, and end users simply pick up the takeout they want, then return the package free of charge within a specified time. The restaurant cleans used packaging and then reuses it. This article explores how one of the pioneers of this new approach, German company Vytal, makes the new system work and offers five lessons learned from their experience.
The packaging and delivery of traditional foods faces a serious sustainability issue. Consumer beverage packaging accounts for up to 48% of municipal solid waste and up to 26% of marine litter, and the inefficiency of traditional recycling and reuse programs via cash deposits that drive perceived price hikes , are difficult for food suppliers to manage, and do not encourage customers to return containers quickly or at all.
Digital technology and AI have made it possible to commercially offer an alternative, more sustainable and deposit-free recyclable packaging system for takeaway meals. Suppliers rent out their packages to restaurants, and end users simply pick up the takeout they want, then return the package free of charge within a specified time. The restaurant cleans used packaging and then reuses it.
One of the pioneers of this new approach is the German company Vytal, which sources food containers from partner suppliers who manufacture the packaging to Vytal’s material and design specifications and rent them out to takeout suppliers. on a pay-per-use basis. We’ll take a look at how Vytal makes the system work and offer five lessons learned from its experience.
Leverage the power of data
Key to Vytal’s success is that its packaging containers are printed with machine-readable QR codes, which allows Vytal to collect product data throughout the supply chain. Vytal uses the data to train a machine-learning algorithm that predicts container needs for each network partner and creates load-balancing routes for the exchange and delivery of needed packaging between partners.
This allows Vytal to manage the call from partner restaurants and optimize logistics planning. The algorithm predicts how many bowls and boxes of each type of container each partner will need over the next seven days, which then automatically generates a trade order in Vytal’s system. The order then enters the route planning system and is automatically dispatched to the delivery cargo bike drivers on the day of fulfillment.
Accurate and timely forecasts of the quantity and type of packaging required and robust predictions of consumer return behaviors reduce the need for alternate products, optimize storage, avoid ad hoc transportation, minimize manual labor at sites of the partner and maximize the utilization rates of the containers and therefore reduce their impact on the environment. In addition, it allows Vytal to optimize transport planning. Ad-hoc deliveries and redistributions by Vytal riders are significantly reduced while utilization of Vytal’s cargo bike fleet is maximized.
Customers benefit from reduced waste generation with no expense incurred and little effort as used containers can be returned without washing to any participating partner site. Partner restaurants benefit from a reduced need for plastic packaging, reduced packaging costs and consumer behavior insights provided to them through Vytal’s online platform.
Vytal’s Growth Journey
To be able to develop this model, Vytal needed to invest in three essential dimensions of its activity: their user base (the number of end consumers and partner restaurants), their online platform and data (the functionality of the smart reusable system and the ability to track product and customer behavior data), and the production of their product offline (different types and volumes of food containers).
Vytal’s initial platform technology only offered the ability to check in and out of food containers via scanning QR codes. But it was user-friendly and quick to use, which Vytral said would make adoption easier. Cologne, Munich and Berlin were the top three local markets of choice, selected based on offline partner density and potential for online data network effects. Although consumers were easily convinced of the benefits of Vytal’s online-to-offline platform, it was initially more difficult to onboard restaurants as they often lacked the digital infrastructure to connect to a platform. online form such as smart devices, QR code scanners or point of sale systems. .
That changed during the 2020 pandemic, which accelerated digitalization in the restaurant industry as well as demand for home meal delivery. Vytal has increased distribution of its online platform to restaurants in its key cities, and consumers have seen increasing availability of Vytal’s service at restaurants of their choice. At the same time, it secured a partnership deal with Germany’s largest food delivery chain, which further propelled consumer adoption and provided additional leverage to convince other restaurant partners to join. associate with Vytal.
The rapid increase in the number of users has provided vast amounts of data, and the ability to leverage it has now become the primary focus of Vytal’s management team. Acquiring a team of digital engineers has enabled Vytal to develop new features for its online platform, and the creation of an operations team has enabled Vytal to seriously engage in the big data analysis, allowing them to rethink their product strategy, which now includes new food containers. types and the recruitment of external container producers as suppliers.
Today, Vytal has more than 3,500 partners throughout Germany and has delivered more than 320,000 usable packages for exchange between partners and consumers. This alone prevented the use of more than 4.7 million disposable wrappers. Impressed by the rapid adoption of supply partners and high consumer adoption rate, a popular fast food chain is currently planning the Germany-wide rollout of Vytal’s online-to-offline platform after a successful pilot project.
The Vytal experience offers five key lessons about scaling online-to-offline platforms:
- Just start. Bilateral platforms generally attract consumers before attracting suppliers. As Vytal discovered, simple functionality makes it easier for consumers to sign up, which over time increases the pressure on partners to join the platform.
- Ensure reliable offline product quality from the start. Since building an offline product capability is capital-intensive, it’s important to get it right. An initial key requirement for Vytal was to ensure the bowl was usable for up to 200 back cycles. Likewise, it was decided to print microwave and dishwasher safe QR codes on the bowls instead of digitally more powerful but less robust RFID chips. This established a proof of concept.
- Get big data fast. Starting in three high-density offline market environments (Cologne, Munich and Berlin), Vytal quickly obtained sufficient volumes of user data to analyze user behaviors and adapt their online and offline product components to better meet the needs of consumers and partners. . This led to the addition of new container types and an overhaul of the app’s payment function to improve usability and ensure user satisfaction, which in turn builds consumer loyalty.
- Avoid being the middleman. Platforms do not necessarily have to act as an intermediary in the supply chain. In Vytal’s case, most fulfillment processes are direct interactions between the consumer and the restaurant, which means the company needs fewer than eight full-time equivalent employees to manage its 3,500 food supplier partners.
- Jump on your opportunities. By proactively increasing its access to production capacity at the start of the pandemic, Vytal was able to position itself to benefit from the transition of restaurants to take-out delivery models. In 2020, it achieved a 12% weekly growth in its container usage.
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The last two decades have seen the rise of third-party platform giants such as Alphabet, Microsoft or Amazon, which act as outlets and delivery orchestrators for multiple categories of goods. But as companies like Vytal recognize the potential of digital to add value to their specific product categories, they will increasingly need to develop bespoke platforms tailored to their supply chain needs. Vytal’s approach suggests how they can successfully do this.