Reaconne has launched a service that contributes to the reduction of product loss by simply having customers shop for products that are being discarded without use. We interviewed President Hattori, and Ms. Sasayama, PR manager, who aim to improve the sustainability of the consumer goods business and the global environment, about the current situation of discontinued daily consumer goods, the background behind the creation of the service, and its future prospects.
（Interviewer：SMO Mikiko Saito）
Saito: Can you tell me the story behind why you started Reaconne?
Mr. Hattori: After graduating from graduate school, I joined a major daily necessities manufacturer and worked in R&D, developing kitchen and bath detergents. My first realization was that one of the downsides of the mass production business model of making lots was that there are unused items that are not being sold out and were thrown away. After that, I was transferred and developed a business to see what could be done with unused and discarded items, and then I used the company's internal system to launch Reaconne in the form of a secondment start-up. It has been in operation for about a year.
Saito: How much of the products are discarded?
Mr. Hattori: It’s about the same for all of the items placed in drugstores including toiletries, cosmetics, processed foods, and bottled beverages. With roughly 270-billion-yen worth of product value being burned annually, it is quite a lot of volume.
Saito: There’s also the cost of disposal, right?
Mr. Hattori: Yes, I think it’s expensive because of the cost of transportation to the disposal site and the labor involved.
Saito: Did you start Reaconne because you thought it was wasteful to leave the situation as is?
Mr. Hattori: Yes. Usually, products are piled up in lots of cardboard boxes and transported to each drugstore., However, what I actually saw was that whole boxes were being burned, with products still in those nice cardboard boxes. I wondered why they throw them away when they can all be used. I wanted to find a way to make them usable as much as possible through the Reaconne business.
Saito: Can you tell us about Reaconne’s specific solutions?
Mr. Hattori: There are two patterns of disposal that amount to the 270 billion yen. One is the pattern of unshipped goods in very clean condition, which are stacked in clean cardboard boxes at the manufacturer's warehouse never to leave, and then transported directly to the disposal plant. Reaconne buys this kind of backlogged stock and sells it to other customers through a service called "Reaconne BOX.” Selling at low prices to the general public can cause brand damage, so we are looking for a solution that changes the market, such as selling laundry detergent to specific businesses that wash their own towels, such as gas stations and sports teams. We are currently looking for a solution in the form of changing the market.
By grouping customers, we can also minimize brand damage, such as the impression on the manufacturer's side that they are selling at a low price all the time. However, if we do this, we will not be able to sell the next product, and we will not be able to lower the price because it will lead to brand damage. We want to create opportunities to sell to different customers.
The other type of disposal is shipped from the manufacturer and returned from the retailer's storefront or warehouse. Since display space is limited, they are often replaced with new products that retailers want to put on the shelves. Since there is no room to sell the old products, they are returned to the manufacturer and basically burned. Of course, it is not that the manufacturer does nothing, as some of the products are sold in-house, but there are two backgrounds: those that have been released to the public and those that have not been released at all, and we are preparing solutions for each of these. For items that have been shipped from the manufacturer, we are creating opportunities for the general public to buy them by prioritizing incentives and points for products that would otherwise be returned.
Saito: It is surprising that there are so many products that never see the light of day. How exactly can we buy them?
Mr. Hattori: When a manufacturer introduces a new product or renews a product, it is a common time for old products to be returned, so we are using LINE to build a system that notifies customers before the new product is released so that they can buy it. It's a shopping experience that allows you to get incentives and points.
In a sense, the business model of products in drugstores is to win space on the store shelves with their "newness" and have customers buy them, so renewal is an important marketing action. I would like to create a scheme to encourage customers to buy the products before that happens.
Saito: You mentioned how you saw the products being burnt, but were there other reasons why you wanted to start a business?
Mr. Hattori：I know it is true for all manufacturers, but isn't it strange indeed to burn products that incorporate high-quality technical elements without being used at all? I think there are definitely people who would use them. So, we are trying to get people to use them as much as possible.
Saito： I'm sure there are many people who sympathize with what you say and want to support it, but are there any companies that are actually already participating in this project?
服部さん：We are currently purchasing products from some major manufacturers and promoting sales to the general public, and we are also interested in several consumer product manufacturers, including beverage and confectionery manufacturers, although this is a story for the future.
They are very interested in joining Reaconne as a side business, and I think there is a lot of potential for Reaconne to expand the company by having people who have a passion for the company join as a side business.
Saito: It is a good way to work. We are a branding company that focuses on "what we exist for and why we do what we do," which is called Purpose. Does Reaconne also have Purpose stated clearly?
Mr. Hattori: As of now, although we have 13 people working for Reaconne, including those working as a side job and interns, I am the only one who works full time, so I think we need to make clear what we are thinking. But to be honest, the company has not been able to create something clear. What we want to do is simple: we want to do something about the waste of unused materials being thrown away, so we need to create our Purpose from there.
Saito: As the company grows larger and larger, it would be good if the core idea is clearly stated.
Mr. Hattori: At what stage should Purpose be made?
Saito: When you look at many growing and successful companies, at first, it's okay because the president themself is Purpose. However, I think it is better to have a clear purpose once people do not have a deep connection and cannot associate themselves with the president. I am sure that you have your own Purpose within yourself. I think there are different timings, but I think it is good that you are constantly thinking about it over and over in your mind. Also, if you involve everyone in the spelling out process, it will permeate, and there will be a sense of participation, so I think it is a good idea to do that together.
Mr. Hattori: It means that all employees are going to make Purpose together.
Saito: That's right. I think it would be better suited to the corporate culture if everyone thinks together, becomes like an evangelist, and spreads the idea. It is better to have everyone working together than to have a strong top-down approach. Especially since there are many stakeholders and we have to involve various people, it spreads in many directions, not just to customers and ourselves. That's why it is interesting.
As a change of subject, this year in France, the "Clothes Disposal Ban" came into effect, prohibiting companies from disposing of unsold new clothes. I think this is a good direction, but I am against the idea of degrowth. I believe that we must continue to grow, and what is important is what we can do and how we can coexist within that growth, so I really sympathize with Mr. Hattori's way of thinking.
Mr. Hattori: I also believe that there should be competition. Competition is the way to improve products and find out what the customers' problems are, and I think it is natural to increase production in order to win the competition. However, there is no doubt that we need to do something about overproduction, so I think we should work on both sides of production and sales, and in order to coordinate these aspects, Reaconne will provide the means to sell the products we have made to the end. In the future, we would like to contribute in terms of supply and demand forecasting by providing feedback to manufacturers on what products were sold to whom and with what products.
Saito: In addition to the goal of not making too much, I think it is important to support the load of the process of getting there. You mentioned earlier that there are actually two categories of sales methods, but how are they actually proceeding right now?
Mr. Hattori: For the general public, we are starting with a service using LINE to create a shopping experience with customers, and we just released the Reaconne Box for businesses at the end of last month. We are thinking that there will come a time when we will focus on one or the other because of how much we can manage.
Saito: So you are in a period of trial right now. Can you tell us about the reaction from the customers' side?
Mr. Hattori: We have about 6,000 users registered and participating in our service on LINE, and we believe that there are two main attributes of customers. One is the simple "I'm happy if I can buy at a discount" type, and the other is the "I choose those who are aware of food loss and can contribute to solving this issue.”
Saito: How's the launched Reaconne BOX going?
Mr. Hattori: Right now, we are in the process of starting sales to small and medium-sized businesses such as gas stations, as well as to clubs and youth sports teams. These are people who do their own laundry and use a lot of sunscreen. We are trying to get customers to use the product for two reasons: it is cost-effective and it contributes to the SDGs.
Saito: It sounds like an unmixed blessing! Do you have any ideas of what you would like to see in the future, or what you would like the world to be like in 10 or 20 years?
Mr. Hattori: Nowadays, we are excessively focused on making products that we are trying to make them cheap and get as many customers as possible to buy them, but it is difficult to take care of what happens after we have overproduced. Even if we adjust production volume based on demand forecasts, I think there is a limit. The economic scale of the disposal of unused products is as large as 270 billion yen, as I mentioned at the beginning, but it is only 1-5% of the total sales. Therefore, we would like to create a world in which manufacturers compete with each other to provide value to consumers through their products for 95% of the total sales, and cooperate with each other through Reaconne to avoid discarding the retained stock and returned products, which is the remaining few percent.
Mr. Saito: Will it eventually involve not only daily necessities but also others?
Mr. Hattori: Yes, I think it can be applied to other industries as well.
Reaconne PR Ms. Sasayama: There is a non-profit service that gives away leftover cosmetics stock to single mothers in financial need. This is similar in terms of effective use of inventory, but it is healthier to return as much as possible to sales, and I think there are a few more monetization points left in the inventory.
Mr. Hattori: That's exactly what I think, too. From the manufacturer's point of view, the pattern of donation as part of support reduces the cost of burning, but there is no cash return. It is not sustainable, and it is damaging for the manufacturer, so I think it is better to go with a system that makes the money go around properly. In England, there is a convenience store that is only open to low-income people, and they say that you can buy items at 70% off, but the company says that it is better to support a system that reintegrates people into society than to give products away. I really sympathize with the company's point that it is psychologically good to create an environment where people cannot afford to buy something unless they pay for it, and I would like to create a cycle where selling rather than giving is the first goal. We are still in the early stages of this project, but we would like to work together with manufacturers who share our vision.
Saito: It is important to create a system that will last for a long time. Thank you very much for your time today.
Takashi Hattori
Completed the Graduate School of Engineering at Chiba University in 2012, and the Graduate School of System Design Management at Keio University in 2021.
Joined Lion Corporation in 2012.
Engaged in R&D of bathroom detergents, dishwashing detergents, and other products.
Then worked in the new business development department, where he created ideas using design thinking. Founded Reaconne Inc. in 2021.