Startups and big corporates: a partnership for success

Probably everyone is familiar with Apple’s garage startup history. What had been a crazy vision back then, is now one of the world’s most successful companies. Speaking in startup terms, Apple was a pioneer: an innovative idea that society was not ready for yet. While startups are often good at spotting new trends and changes in consumer behavior, it is the big companies that have the money and market share to make an impact. This is where the advantage of startups cooperating with big corporates lies: established companies usually have a broad customer range and can provide the necessary financial backing. However, when they need to adapt to changing consumer demands, they can either develop the necessary know-how themselves or they can buy in the expertise from an external provider which is often more cost-effective. Startups offer these specific core competences and, since they usually don’t have that many customers, they can provide customized solutions.

Startups: drivers of change

Apple is only one example of a startup that was a pioneer in a new business field. Startup founders often develop their ideas when confronted with the challenges of existing business models. For example, 2014 Green Alley Award winner RePack was working on a load carrier project with the Finnish Post Office, where the team spent a lot of time in the logistics warehouses. Seeing the rise of e-commerce and all the single-use packaging being delivered, only to be used once and thrown away, Chief Designer at RePack, Juha Mäkelä had a brainwave: he came up with the idea to apply the Finnish bottle deposit system to e-commerce packaging to reduce waste. That was in 2011, when sustainable packaging and plastic reduction were still secondary topics on the global agenda.

Nevertheless, RePack developed their idea and created a deposit system for packaging in e-commerce. The system gives online retailers the chance to reduce their packaging waste: they can use RePack’s returnable packaging service, including a customer reward system, and swap any disposable shipping box for a reusable packaging solution. These shipping bags are made of recycled materials and can be reused up to 20 times. The empty packaging can then be returned free of charge by mail and the customer receives a reward for returning the packaging. However, it is not enough to have a good idea, the challenge for invention is to come up with it at the right time. Just look at the invention of the car. While the first steam-powered automobile was invented as early as 1769, it took more than a century to mass-produce the first automobile.

A strong partnership: RePack and Zalando

Fortunately, it did not take that long for RePack to be accepted by the mainstream retail business. In 2019, the Finnish startup announced their cooperation with fashion retail giant Zalando. The online platform aims to become a sustainable fashion platform. The company is committed to generating 20 percent of its gross merchandise volume with more sustainable products by 2023, as well as continuously strengthening and only working with partners who align with its ethical standards. Zalando’s own brand ZIGN will be fully committed to sustainability by the end of 2020. One aspect of Zalando’s sustainability commitment is reducing the amount of packaging it produces.

Christof Trowitz, Business Developer for Austria, Germany and Switzerland at RePack explains: ‘We established business relations with Zalando already a couple of years ago. And when the time was right for them, we were able to offer our expertise and best practice experiences.’ For Zalando that meant starting a test run with RePack’s sustainable packaging. Between October 2019 and February 2020, around 20,000 deliveries from the warehouse in Brunna, Sweden were sent out in RePack packaging. Along with Zalando, RePack has also started working together with Otto, Tchibo and the Avocado store.

‘In addition to our turnkey packaging system, our customers also receive customized advice on logistics and marketing. When it comes to communicating with consumers, there are very different approaches,’ explains Christof Trowitz. ‘For example, the Avocado store is Germany’s biggest marketplace for eco fashion and green lifestyle goods. Their consumers make a point of buying sustainable products which makes them more likely to also go the extra mile with sustainable packaging. Companies whose consumers do not focus particularly on sustainable purchasing options need to communicate their new packaging system differently.’ RePack is currently evaluating the test run with the Avocado store by asking consumers about their experiences with the new packaging system.

RePack CEO Jonne Hellgren sees the advantage of cooperation between startups and big corporates based on their respective assets: ‘We believe that the world needs to transform the existing and predominantly linear economy into a circular one: innovative, disruptive and fearless startups with a strong will for change can work with traditional corporations that buy into these ideas, and make the change possible on a larger scale. We see that corporations often need the impulse for change from outside. We are grateful to the Green Alley Award for raising awareness, promoting fresh ideas and therefore making this kind of cooperation possible.’

Awards and accelerators for promoting change

Sulapac, a Finnish startup and another Green Alley Award winner, develops sustainable packaging made of wood and natural adhesives. In 2019, Sulapac and Stora Enso announced the launch of the first biodegradable drinking straws. The straw decomposes fully, without leaving any permanent microplastics behind. Moreover, it comes with outstanding usability: it doesn’t get soggy and can be used for up to 24 hours. Stora Enso develops and produces solutions based on wood and biomass for a range of industries and applications worldwide. The cooperation was initiated through their 2017 accelerator program for startups, for which Sulapac was chosen from among 120 participants. A year later, Stora Enso signed a joint development agreement with Sulapac to license their materials and technology.

The startup was looking for a strategic partnership and when the accelerator program came along, they immediately decided to take part. As a new player in the material industry, the program was an important steppingstone for the startup at the time. Their ambition from the very beginning was to become a global player in the industry, so they wanted to find a partner who could help them to scale up their business internationally as fast as possible. Sulapac also saw the extensive knowledge that Stora Enso could offer in terms of raw material purchasing, logistics and large-scale material deliveries.

‘For a small startup, achieving global reach is not easy, and therefore it is valuable to partner up with big players, like we have done with Stora Enso, for example, to accelerate our international roll-out and make a bigger impact faster. In terms of realizing our mission – saving the world from plastic waste – we believe in the power of cooperation in a wider sense: we have to take an interdisciplinary approach and work together with all stakeholders across industries and sectors to drive the circular economy,’ explains Sulapac CEO Suvi Haimi.

Sulapac’s approach is successful. The startup not only cooperates with Stora Enso, but also with luxury brand, Chanel, whose corporate teams are studying the possibilities the Sulapac material offers for the design of Chanel’s future cosmetic packaging to reduce their carbon footprint. The two companies are investigating new opportunities to use Sulapac’s innovation in the cosmetic packaging designed for the most demanding luxury segment. The cooperation supports the startup’s long-term ambition to become the new standard for sustainable materials.

Best practice examples from the US

Another best practice example of cooperation with mainstream retail companies comes from the former American startup, TerraCycle. They launched a program called Loop which follows the milkman principle: the products are delivered in multi-use containers and, once emptied, picked up, cleaned and sterilized, are re-used without creating additional waste. The delivery system includes products from companies such as Procter & Gamble, Unilever, and Nestle – all of whom redesigned their packaging to participate.

Coca-Cola and Electrolux offer two further examples of entrepreneurial cooperation: Coca-Cola collaborated with two expert co-founders to co-create an on-demand stocking platform to improve supply chain visibility; and Electrolux worked together with the Swedish startup Karma to fight against food waste. Electrolux and Karma will be working together to find innovative solutions for the future of food.

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