The Supply chain 2020 folks have an interesting discussion regarding the unintended consequences of banning plastic bags in San Francisco. The alternatives of both the paper bags and compost-able bags are not any better than the existing bags. The only difference being they degrade, may be a little faster. And of course, the paper bags have the additional side-effect of the industries trying to produce the paper bags. And they leave an open question of what can be the best possible solution. I left a comment indiciating the use of cloth bags. Traditionally India had a healthy use of cloth bags. Of course, these days with rapid industrialisation and consumerism, the days of cloth bags seem to be dwindling fast.
To my comment, Roberto Perez-Franco asks about what can be the possible incentive for the retailers to provide cloth bags to the customers. Given the cost of the cloth bags, the question of who does the retailer pass the cost to ? Does the retailer absorb the cost of the cloth bags – this is definitely infeasible, unless there are government sops for retailers for doing it. And think about it, even if the sops to the retailers, this proposition is tough to implement and has a very high scope of misuse. So, realistically, the sops to the retailers is ruled out.
This means the retailer has no choice but to pass the cost to the customer. Trace back a few steps and think about the problem. Why in the first place does the consumer assume that the cost of the carry bags isn’t something he/she has to foot the bill for ? Somehow the notion of the carry bag being a freebie has taken route in the consumers’ minds. I am not sure of the antecedent of this, but given the impact it can have, I think there is a definite need for change in this idea. So, continuing on the proposition that the customer foots the bill for the carrying of the goods bought at the store, the incentive for the customer is that, the bags can be redeemed for cash. Yes, cash, and not necessarily points / credit in the store. Another moot point is to allow the standardization of the bags, so that the redemption can happen at any store.
Continuing on the above, the cost of the bag is the one matter which becomes important. This is so because, what if the bag returned by the customer is damaged ? Do you return the same amount as an undamaged bag ? How many cents/rupees/the countr’s currency will the bag price be reduced ? This again can be worked out with a simple idea, the monies returned will be a reducing sequence on a percentage. For example, if the bag costs 4 INR, the percentage drop for any damage will be in the tune of 50 paise. There might be cases that either of the parties might get a benefit, but overall (think longtail) the damage will even out.
The advantage for the retailer is that the same bag can be reused – so all the retailer has done is given the bag on credit to the customer, minus the 45 day credit card sort of limit. And what is the advantage to the customer ? Well, there isn’t any economic advantage to the customer, but this whole exercise is not to give any gains to the customer. The only part on the customer is to return the bags, and that can be made a practice by user education. And one can provide an incentive too – the customer if he/she returns bags in good conditions, over a period of time, can be provided discounted goods in the store. The long term impact though, will be on the environment with atleast a percentage reduction in the plastic consumption.
Coming to the sops to the retailers, what the governments can do is to provide sops to the retailers if they sourced the bags from local industries. For example, in India, the cottage (the small scale, generally rural) industries can get a fillip from this heightened consumption. As most of these cottage industries operate at minimal pollution levels, the environmental impact might not be very high. And also given that the number of bags in a store is going to be generally constant (assuming a steady inflow and outflow of the bags), there isn’t a high demand on the local industries, so the environmental impact, I believe, will be minimal. If you have examples of mathematical models on this, please do share.
What becomes the next interesting thing is to model the inventory of the cloth bags with the retailer. What about the storage space of these ? They will consume floor space for the retailer – what is the incentive for the retailer to host these bags? And the inflow-outflow of these bags will become an inventory problem. Does anyone know of any papers pertaining to this kind of, or related to these flows. If so, please do share, I’m interested in applying the models to the specific problem. And of course, you are free to leave your comments below about this idea.