Reusable packaging startup bags $3.1M to pick a fight with single-use packaging

Quick pop quiz: Is it better to recycle your cardboard boxes, or use a sturdier packaging bag that can be used again and again until it meets its maker again? Returnity‘s bet is the latter, and the company just raised $3.1 million from Brand Foundry Ventures, with additional investments from XRC Labs and others, to continue the work the company has been doing with Estée Lauder, New Balance, Rent the Runway, Walmart and others — and to further expand its operations.

“And it’s been a pretty long journey. We originally actually started out as a reusable shopping bag business that happened to have James Reinhardt (the co-founder and CEO of ThredUp) as a customer, buying reusable shopping bags. His challenge to us was if we can make a reasonable shipping bag. That’s where it all started,” recalls Mike Newman, CEO at Returnity. “We’ve been on this journey ever since. We had this reusable shopping bag we came up with, and we thought it was really cool, but it didn’t really go anywhere because we had to learn that packaging is really about systems — and not about product. If you don’t have a system to support reusable packaging, they just end up being press release programs. They don’t scale; they don’t sustain. A big part of our journey as a business — and I think for the reusable concept in general — has been that if we don’t build scalable, sustainable options for reuse, we’re never really going to make a dent in the packaging.”

The company is taking on an enormous challenge — more than 20 billion parcels are delivered every year in the U.S. (100 billionn worldwide, trending toward twice that over the next five years), resulting in an enormous amount of wasted materials. Reusable packaging makes sense, especially in industries where there’s a natural send-and-return model; the fashion rental industry, regular grocery deliveries and other businesses with regular delivery or pickup models, for example. Now, if you recall, there was a huge reduction in the amount of rental business that happened for a while — people weren’t renting high-end fashion clothing to sit in isolation in their living rooms, and Returnity had a brutal awakening in 2020.

“We were poised for enormous growth in 2020. And then 80% of our revenue disappeared overnight, due to the pandemic shutdown. We really had to figure out how to be relevant beyond inherently circular businesses. If we hadn’t done that, we wouldn’t be where we are today,” says Newman. “That was a very painful part of our journey, but a necessary one because it forced us to confront some of these basic questions of how we work for brands.”

The company has a sizeable stack of pilot programs and case studies it is celebrating, too — including some with some seriously hard-hitting clients. For Walmart, the company supplies reusable bags optimized for home grocery delivery service and manages the cleaning and resupply of the packaging. For New Balance, it leads reusable shipping packaging deployment for the New Balance Team Sports initiative, creating an efficient and environmentally friendly system to ship samples to and from partners. This reusable packaging replaces 10,000 shipments of single-use cardboard boxes, and the company claims this reduces emissions up to 63%. It worked with Aveda to create its Returnable Shipper Program specifically for Aveda’s one-litre bottles. For Happy Returns, the company changes how goods are moved between stores and warehouses with its “Return Bar” network. This means that shoppers can exchange and return e-commerce items without printing, packaging or person-to-person contact.

Returnity is creating reusable packaging solutions that prevents huge amounts of cardboard and plastics going through the recycling loop. Image Credits: Returnity

The investment will help Returnity “double overnight,” adding account development bandwidth, improving the back-end and improving the product and marketing in ways the company hasn’t been able to date. Standardizing its onboarding process means that the company is ready to start growing in earnest.

“We have three groups of customers. We have a set of customers who have been with us for years, like Happy Returns and Rent the Runway, who are just often using it and loving it. We have a second group, which is the likes of Walmart or Estée Lauder, where we are just through the pilot programs, and we are ready for the next wave of growth. And finally, there’s a long list of early-stage brands that we’ll be able to announce over the coming months that we’re just getting started on that journey,” says Newman. “This round will let us really build out that pipeline and accelerate the work we’re doing for companies who are looking to reuse as an important part of their future, but haven’t been able to get started yet.” 

Editorial note: An earlier version of this article omitted XRC Labs as an investor Returnity. Its participation in the round was added to the article. In addition, an earlier version based on a draft press release showed Sustainable Oceans Alliance as a participant in this round. SOA decided not to make an investment in Returnity, and a reference to them has been removed from this article.