September 20, 2022

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News

Introducing TrueCircle Trade

We’re thrilled to have launched TrueCircle’s second product, TrueCircle Trade, a digital B2B Marketplace which dramatically transforms the material trading process between MRFs*/Sorting Plants and Recycling/Reprocessing facilities. Since our soft launch a few weeks ago, we’ve facilitated >£1.1m of successful transactions across Europe.

Our motivation for TrueCircle Trade

TrueCircle’s first product, TrueCircle AI, enables facilities to track continuously and improve the quality of their output materials as well as maximise recovery rates. Within months of installing TrueCircle, many have been able to record significant improvements in these metrics.

Naturally, facilities started thinking about integrating our transparent TrueCircle AI data into their selling process to share it with potential buyers and ensure they were maximising their revenue. Before TrueCircle AI there had never been any reliable quality data available to buyers, which has led to facilities constantly underpaying for high quality material; there was no practical way to validate a claim that a seller’s output was consistently high quality.

We were also hearing regularly from our customers that they were frustrated by their overall trading processes, which involved lots of manual admin and offline work. It was at this point we realised we could optimise their whole trading process and address the inefficiencies that were holding them back. Recyclate trading of this sort is a $10bn industry in Europe alone, and it is ripe for technology led innovation.

Why exactly do recycling facilities suffer in today’s offline trading process?

Like many other offline B2B physical goods industries, the trading process hadn’t yet been brought online. This leads to bad outcomes for both sellers and buyers but let’s focus below on how sellers today are suffering:

Foregone revenue / tonne

With only a handful of offline offtakers, sorting plants were beholden to the prices that this limited buyer pool could offer. With such a small pool, any issues at offtaker sites (e.g. their own customer relationships, downtime) have a dramatic negative impact on the revenue/tonne that the sorting plant is generating.

In falling markets especially (like we have experienced in the last few months), this problem has been accentuated even further. If one’s small buyer pool decides to stop buying (which happens in falling markets), the seller struggles to sell material at all or if they manage to do so, at a heavy discount.

Even in rising markets, sellers weren’t maximising revenue because, without reliable quality data, their offtakers were refusing to pay premiums for their consistent high quality. Similarly they weren’t able to refute quality disputes in any convincing way and so were experiencing revenue leakage.

Administrative cost / tonne sold

Waste transactions are complex regulated transactions which have a number of administrative steps:

  • Most sales occur as unofficial weekly or monthly auctions with sales teams calling bidders several times to accept initial bids and then follow up for updated bids.
  • Buyers typically visit seller facilities on a monthly or weekly basis to perform random spot checks of materials and negotiate pricing.
  • Once deals are agreed, transportation needs to be arranged.
  • Given waste movements are regulated by most countries, there is also a considerable amount of documentation that needs to be generated by both parties for a transaction

In today’s world, these tasks are generally performed offline by people. This is often split across multiple teams at recycling facilities, taking up time from sales, purchasing, operations, logistics, and admin, which could be better utilised to generate greater long term value for their businesses.

High risks of non-compliance

The combination of a heavily regulated industry and an overreliance on manual work means risk of non compliance is high (e.g. documents not being filled out correctly or not being reported correctly to the official bodies). The severity of non-compliance if discovered is now much higher as the relevant authorities are rightly cracking down on breaches far more heavily than ever before.

Enter TrueCircle Trade

We’ve set out to digitise the end-to-end material trading process, underpinned by reliable and transparent quality data. To do this, we’ve applied our deep experience developing transformational online products in several other complex and regulated industries, such as retail banking.

Given we are hyper focused on the recycling industry, unlike other broader marketplaces like Amazon, we’ve been able to invest in building highly specific efficiency tools that simplify trading teams’ day-to-day interactions with new and existing customers. Our efficiency tool set currently includes:

  • Automated auction and bid management.
  • Continuous credit checking of buyers and sellers.
  • In-app compliant chat functionality for direct communication between buyer and seller.
  • Automated load scheduling.
  • Automated documentation completion and notification.
  • Extended payment terms.
  • Continuous material certification thanks to TrueCircle AI.

It was very important for us to give our customers access to a wider pool of verified buyers to show them the benefits of buyer diversification. Even large multinational players are typically dealing with a pool of only c. 5 buyers per output material and as a result only do business with a fraction of the addressable market. For example, the number of buyers (Recyclers) for recycled post-consumer plastic in Europe was about 650 in 2020 and is growing by 13% year-on-year given increasing demand from FMCGs to use recycled material in their new packaging. Our buyers have also benefited from a wider pool of verified suppliers, allowing them to build up a more diversified supplier base and demand higher material quality.

We’re super excited about the additional features we have in the pipeline to enhance the marketplace even further. For example, we are positioning ourselves to launch the industry’s first transactional pricing index with exact quality references (the only indices that exist in the industry today are journalistic indices without quality references). This is crucial to give sorting plants motivation to improve their output quality. We also look forward to embedding Scope 3 emission tracking into TrueCircle Trade so that TrueCircle participants can be sure they are doing business with suppliers/buyers who are actively reducing their own emissions.

This is a combined effort from tech builders and industry experts

In building TrueCircle Trade, we’ve been very conscious about combining technology expertise with real industry experience. We’ve added to the team former MDs of Sorting Plants and Recycling plants as well as individuals who have built and run service businesses for the waste industry (e.g. freight forwarding). We think great things can happen when these different types of people collaborate.

Inspiration from other industries

There is a wave of technology enabled B2B marketplaces that are sweeping across other core industries that have, until now, been hamstrung by a completely offline way of trading.

We were inspired by the way that they have been able to connect new buyers and sellers by fostering new trading relationships. We have also been inspired by the way in which they have optimised how long standing buyers/sellers transact with each other.

Here are just a few that we’ve been inspired by and continue to learn from on our journey:

  • Metalshub — B2B Marketplace for the metals industry
  • Rooser — B2B Marketplace connecting fishermen and restaurants.
  • FruPro — B2B Marketplace for fresh produce
  • Breedr — B2B Marketplace for livestock

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