The Access model
In the access model profit is generated by maintaining owner of the products. In this case this is not only to use (critical or future critical) materials again – the value of these bicycle lamps is too low for that to make that viable. Within this system, money is generated by recharging the batteries within the vending machines. The value (energy) that is consumed by the user is regained and sold again. Since the deposit covers the main risk of losing the entire product plus all the materials, the fee for charging should cover the labour, the vending machine and should be the main generator of profit.
Percentage that passes the quality check: 85%
Business Model Canvas
For the launch of this bicycle lamp, first a pilot is needed. This pilot could be done in combination with the TU Delft. With the potential of 20.000 employees and students, I expect that at least 2.000 people take use of this service within the first year.
Production and material
A HEMA bicycle lamp costs 3.90 and has a margin of at least 70%. The costs of two of those bicycle lamps are approximately 1.17 EUR. For the redesign less housing materials is needed and an induction charger + a permanent magnet is added. I estimate that this will not costs anymore together than 3 euro. If 2.000 people take use of this service, at least 2250 bicycle lamps need to be within the cycle. The production and materials costs of this is 6750 euro and this is a starting costs. I expect the bicycle lamps to be returned on average in 4 months. When every four months new bicycle lamps are put in the cycle (expected loss + the ones that did not pass the quality check), this would cost 1575 euro per four months. In the first year, to start up this project costs are 11475 euro for 2.000 people using it.
A vending machine would costs approximately 8.000 euro per machine. For the pilot at least 2 machines are needed (one at the TU Delft and one at the train station for example) – 16.000 euro. This is an investment that needs a return within 4 years.
The deposit is an incentive for people to return the bicycle lamp. If this high enough, this will bring up the return rate of the bicycle lamps. If it is too high though, it will be a barrier for people to buy the bicycle lamp in the first place. At the moment I set it at 15 euro, but because this is not made for profit this could be lowered at all times. At least the fixed costs need to be covered with this. We expect an outflow of 10% per cycle which is relatively high. We use 30% of this outflow as a direct income per cycle. That is about 225 bicycle lamps per year when 2.000 people take use of this service. This provides us with 3375 euro income per year.
The charging fee should be significantly lower than the 4 euro bicycle lamp of HEMA and high enough to generate profit on. I decided to go for 2.50 euro per set of bicycle lamps, because it is low enough for people to not experience a barrier in returning it and will be enough to create an income flow. When the system is too dependent on the cash inflow of the deposits, this will not be a circular system – that would be a linear system. When money is generated from these loops, a circular system is founded. When 2.000 people charge their bicycle lamps every 4 months, this will 15.000 euro income per year.
The total income per year (for 2.000 people) would be 18375 euro and to keep this system flowing every year an investment is needed of 4.725 if the vending machines are already paid. When the profit is actually generated (after the vending machines are paid) investments are needed to launch in a new town and to create a repair facility for the bicycle lamps. Because labour is too expensive for these low value bicycle lamps, an industrial approach is needed. Up till then the bicycle lamps for repair are stocked or directly recycled. When the launch in for example Amsterdam takes place, a lot of bicycle lamps are needed. If the investment in the industrial repairment takes place, these bicycle lamps can directly flow into the system of Amsterdam.