Algramo: Lowering Prices by Eliminating Packaging Waste

1. Almost all plastic packaging is designed for single-use. Ellen-MacArthur Foundation(EMF) notes 20% of single-use plastics can be replaced with reusable packaging-a USD 10-billion opportunity. Currently, single-use plastics are flooding our oceans, even atmosphere with microplastics-we want to help solve this crisis.

2. We created Packaging-as-a-Wallet (PaaW) that communicates with our IoT-connected-vending-machines (ICVM) to dispense FMCG products into reusable packaging. Our ICVM are mounted on electric tricycles to provide Uber Eats like home REFILL for FMCG products. Currently piloting our technology with Unilever and Nestle. Home REFILL eliminates reverse logistics=huge economic/environmental savings.

3. Our elimination of packaging waste and reverse logistic provides major savings-currently our Unilever detergent is 30% cheaper than Walmart price. Cost savings and customer reach of our FMCG partners, means our solution has potential to easily lock in millions into our convenient lowest cost distribution system.

There is a massive global movement to reduce the impacts of mismanaged plastic waste. The movement to stop ocean plastic and the recent binding UN agreement signed by 186 countries are clear evidence of a massive trans-global desire to more intelligently use plastic packaging. With the status-quo, by 2050, there will be more plastic than fish in our oceans-by weight. A recent Nature publication noted 363 pieces of microplastics/m2/day raining down on a remote French alpine region. Other studies are showing micro/nano plastics in many water supplies and in many food chains and these are bonding with EDCs and carcinogens.

EMF just noted at least 20% of single use packaging can be replaced by reusable packaging solutions and this represents a USD 10+ billion market opportunity. Algramo is dedicated to forming a nexus to bring together stakeholders to help catalyze reusable packaging systems on a globally significant scale. We will bend linear packaging systems to save our customers money and keep packaging in the economy and out of our environment. We are now piloting our distribution system in Chile, with Unilever, Nestle and other brands so we can scale our system out of Chile into global supply chains. 

Our solution is based on Algramo's first 5 years of selling life's essentials in reusable packaging. This initial system was focused exclusively on Santiago's BoP communities. This system reaches 2,000 family owned convenience stores (FONS)-who reach ~325,000 end-customers. 

This reusable packaging system saves low-resource families about 30% on the cost of life's essentials and virtually eliminates packaging waste. This system is based on a mix of vending machine (with limited technology) and simpler exchange system where customers swap used packaging (packaging has a deposit) for new packaging unit that is filled with products.

We are still dedicated to the above system operating with Algramo branded products, in BoP communities. However, we are now pivoting and co-developing the technology we have been using for the past 5 years-in our BoP distribution-to be evolved/integrated into the supply chains of global brands-to scale our reusable packaging system, into new markets in Chile and then into the world. Our system provides major environmental and economic benefits. This makes our system appeal to almost anyone, but our system is especially sticky with lower-resource customers who value lower prices or to customers who are keen to eliminate packaging waste.

Our reusable packaging system is based on 3 key pieces of technology. 1. Packaging as a Wallet (PaaW). We have packaging that uses RFID technology to connect packaging to our platform so consumers can easily electronically deposit funds onto their Algramo e-wallets. Our system takes payment from all major Chilean banks and standard credit cards, as well as 4 emerging fin-tech platforms. PaaW also ensures people keep and take care of their packaging-a key to eliminating reverse logistics of reusable packaging. It also means we can invest in robust custom packaging designed to last hundreds of reuses.

2. IoT Connected Vending Machines (ICVM). Our ICVM enable communication between PaaW and our platform. This enables cashless payments. It also tracks how much plastic offsets a unit of packaging creates as it is reused. This is essential as brands reward loyalty with a sustainable consumption credit for each liter of product purchased-currently Unilever is providing customers with a 300 peso discount for each liter of detergent purchased-an 11.5% discount on future product. The cost of future product is 2,600 pesos/liter-a 30% discount on the regular price at Walmart. Additionally, we offer a superior higher quality packaging, free home delivery and the option to buy 200ml at the same price as buying 3,000ml. The ICVM on our tricycles are modular and designed to also be used in retail or even apartment buildings so brands can offer their products for the lowest possible prices in convenient locations that are part of the day-to-day of their customers.

3. Electric tricycles. Our tricycles, with a 350kg payload, provide for an app paged Uber Eats like delivery and home-based REFILL of FMCG products. Our tricycles are financed by one of the world’s largest energy companies and we are exploring setting up PV solar powered fast charging stations to help Chile integrate electric mobility into its economy.

We have post doc students interested in supporting Algramo’s pivot to bring its reusable packaging system into the world. These students are developing a franchise strategy so we can rapidly scale our impact into the world. 

Our solution mixes business model innovation with cross industry collaboration that connects the dots with several technologies to enable a game-changing reusable distribution system that has the attention of many global brands and organizations like the UN, WEF and EMF. We have the team, ideas, knowledge and partners to offer a solution to help brands replace about 20% of single use plastic, with reusable packaging. Our reusable smart packaging distribution system also lowers cost and eliminates packaging waste for unconventional products as diverse as beer, yogurt, wine and pet food-and many other products. In each product type we have some of the world’s most respected brands keen to have our technology remove packaging waste, reduce cost and maximize customer convenience.

We are taking the success of selling millions of unit worth of our own Algramo branded products in reusable packaging and integrating this technology and distribution system into the supply chains of our partners. We are providing tested effective reusable distribution systems for the supply chains of the world’s largest brands. Many zero waste stores exist. But to our knowledge none have co-developed their packaging and distribution system, from day one, with corporate partners. This is our secret sauce: from day one we co-develop the packaging and distribution technology to the precise requirements of each brand. We use RFID, IoT, electric tricycles and a platform to provide safe secure distribution, at the lowest price with maximized convenience.  

Business model innovation: We engage diverse industry partners who instinctively work competitively and push win-win precompetitive collaboration. We work to connect competing brands to world-class technology providers, academics, with impact focused finance to catalyze reusable packaging systems on a globally significant scale. 

Our revenue creation is innovative in that its structure promotes long-term win-win successful financially sustainable relationships between Algramo, our brand partners, technology providers and most importantly our end-customers. Brands contribute significant CAPEX investments on tricycles and ICVM. They also provide a guaranteed minimum monthly revenue to ensure Algramo is able to meet cashflow requirements even if first year product sales are not sufficient to cover operational expenses.

TECHNOLOGY: We do not have any exceptionally innovative single uses of technology, however, collectively how we connect technology dots to synergistically amplify impact creates game changing innovation-especially considering the broad range of world-class partners that we bring together. Our key existing technology: Packaging-as-a-Wallet(PaaW)/RFID packaging, ICVM and electric tricycles connected to an app. Key future technology: Natural Language Processing, AI based predictive supply chain management and consumer insights and Blockchain-(global leader in ICT keen to provide). A key benefit of our technology is it provides brands with the confidence their products will be distributed safely/effectively (technology can greatly increase product traceability/reduce contamination concerns), and in a manner that creates maximized value and convenience for Algramo, our brand partners, technology providers, end-customers and society.

Our solution is the product of 5+ years of our tested business model now reaching 2,000+ stores and ~350k end-customers. The packaging waste aversion and cost savings of ~30% earned Algramo significant notoriety-in 2017 we were awarded Chile’s Top Social Enterprise. In 2018, Algramo was awarded one of 2 global awards Deloitte-with the D2i Fellowship. D2i provided Algramo with US $625k in pro-bono consulting to create a theory of change on how our business model could be optimized to maximize its scalability and impact.

From extensive Deloitte consultants we formulated our current pivot to move Algramo from selling its own branded products in Chile, to a co-developed technology platform to enable global brands to sell their products in an Algramo style reusable packaging system-but with significantly evolved technology in both the packaging and distribution system.

Since Algramo is offering a zero-waste packaging solution, we conducted significant research into why zero waste stores fail to scale. From interviewing CEOs of leading European zero waste stores, the most common challenge noted for failing to scale was not having buy-in or products from global brands. Our TOC is if we have an efficient system that eliminates packaging waste and by doing this creates the lowest possible, most convenient consumption, we will have a vast array of brand partners and these brands will enjoy a dedicated and growing customer base. 

Algramo has been developing its distribution system for 6 years. Our 1.0 technology, selling Algramo branded products serves 2,000 stores reaching ~325,000 end-customers.

Our 2.0 technology-improved ICVM that are being integrated into mobile electric product delivery. ICVM have the capacity to significantly increase the number of people with access to Algramo-FMCG branded products. In one year, we project having 45 electric tricycles. Forty-five tricycles can potentially reach 1.5 million customers. If we capture 5-10% market share we will add 75,000–150,000 new customers. We project Algramo Walls-(retail ICVM) to connect 50,000 customers in the first year.

Year one=350k(Algramo1.0)+75k-150k(electric tricycle delivery)+50k(retail refills)=475,000–550,000 customers.

Our business model uses technology that enables exponential growth. Year 5 is difficult to project as our partnerships are brands and service providers with global reach. If our franchise strategy works well, we have potential to be operation in 10+ countries and 100+ cities. If this optimistic projection occurs our technology could potentially reach 100+ million customer. This would enable our reusable distribution system to bring Algramo-FMCG products to 10-20 million customers on a monthly basis.

Being conservative, with poor platform development, many setbacks and slow grow we may only scale into 3 countries in 5 years and reach only 20 cities. Under a pessimistic model we would have potential to reach 50 million customers. With 5% serviced we would reach 2.5 million customers. Our 5-year projections will likely be in between conservative and optimistic projections putting our monthly users between 5–10 million customers.

Use of funds for our Series A in year-one, is growing our team to have essential resources for rapidly developing and optimizing Packaging-as-a-Wallet, ICVM, electric tricycles and the distribution platform. We are currently working with several PhD researchers (business intelligence/marketing/circular economy) and top US Deloitte consultants to develop a franchising strategy to scale Algramo’s distribution system to global markets. Next 12 month focus is fully developing technology in Chile with projected international expansion in late-2020.

High profile international development organizations are interested in supporting Algramo with connections and resources to help Algramo scale its impact and partnership development. We also have a Dutch NGO interested in piloting Algramo into Indonesia and India. This impact focused NGO has non-dilutive capital to pilot Algramo’s technology in new markets. We are keen to find additional values aligned stakeholders to help spread Algramo globally.

We are in discussions to explore integrating REUSE credits into a global plastics trading scheme underdevelopment to enable brands to showcase sustainable packaging solutions that go beyond recycling and into reuse as a tool to offset the need for recycling. WRAP in conjunction with EMF & Chile’s National Government created the world’s third national Plastic Pact-[https://www.ellenmacarthurfoundation.org/news/chile-joins-plastics-pact-network]. Algramo is keen to explore collaboration opportunities with WRAP that promote pre-competitive packaging solutions in Chile.

One significant barrier is bringing together and motivating diverse stakeholders to work together in a manner that uses circularity to maximize value creation of our distribution system. Our system is dependent on bringing together stakeholders who are resistant to working pre-competitively-this creates co-innovation risks to carefully manage. We need to create shared value and enable competitive collaboration to maximize value creation for all stakeholders. We are seeking support from experts like WRAP/EMF to help promote/implement our technology. We are featured in EMF’s New Plastic Economy Reuse Report: https://www.ellenmacarthurfoundation.org/news/new-plastics-economy-reuse-book- The above initiatives have significant experts across industry and government who can help Algramo overcome barriers.

Financially, we need $2 million to have our technology fully developed and ready for expanding into new markets. Technology will be developed and optimized in Chile starting mid 2019-technology will be ready for international expansion in later part of 2020. Expansion strategy will be guided by entering markets with favourable waste-management and circular economy policy that promotes circular business models by providing financial, technical, legal and cultural factors that remove market barriers to implanting Algramo’s reusable distribution system. Primary expansion markets: the EU (London-Amsterdam-Paris) Latin America (Mexico-Colombia-Peru) and Indonesia.

To maximize both short- and long-term growth we need to engineer our distribution system to create an optimized balance of convenience, exceptional user experience and cost savings. The more we increase convenience, while decreasing product cost the more effectively we will be able to scale our distribution system.

To bring together diverse stakeholders across the plastics value chain our focus is to show each stakeholder that we can maximize value creation and reduce costs, for everyone, by intelligent competitive collaboration that evolves Algramo’s co-created distribution system. Key stakeholders Algramo brings together include NGOs, brands, packaging producers, retailers, customers, technology providers, researchers and government. Collaborating with packaging experts can help us create maximum shared value for our stakeholders and will help overcome implementation and growth barriers.

Technology wise, our biggest challenge is realizing that the entire distribution system relies on a complex array of technology, from packaging as a wallet (PaaW), to IoT connected vending machines and the platform that drives our reusable packaging distribution system. In a platform the system is only as strong as the weakest link within the system. Beyond having key technology operating optimally we need to engineer positive double-sided network effects into our platform, so we create maximized value and competitive advantage for the brands and products sold in our distribution system. Since the technology is so critical in our system, it is essential that we have the world’s best technology providers powering our distribution system-this is a key reason we are pursuing Cisco as a primary technology provider. In addition to world-class brand partners, we are also using world-class legal, marketing and public relations companies to create maximized value and demand for our reusable packaging distribution system.

We are a for-profit social enterprise who is a certified B Corp.

Please note, Brian Bauer is the team leader for Algramo's MIT Solve application. However, for Algramo, the leader of Algramo is its founder and CEO, José Manuel Moller. 

Algramo 1.0–selling Algramo branded products to 2,000 family owned stores employees 25 full time staff. Most work in warehouse or delivering products. 

Algramo 2.0-focusing on raising funds and partnerships to take 1.0 technology to the next level only has Brian & Jose-Manuel. But with our Series A funding we will hire 8 new full-time staff over the next year to accelerate Algramo 2.0.

We also have 3 PhD students and currently 5 Deloitte consultants supporting Algramo 2.0-all pro-bono.

Our team has 5+ years of experience selling our own branded products in reusable packaging. Our innovative business model enables low-resource families to save ~40% on the cost of life’s essentials-by using reusable packaging-which eliminates packaging waste. Algramo branded products sold in reusable packaging new reach 2,000 FONS and can benefit ~325,000 end-customers. Our reuse rates have grown from a dismal less than 10% to greater than 80%.

This success helped Algramo capture interest from Unilever (and now many other brands) to explore working together to sell Unilever-Algramo co-branded products. Algramo has been incubating its relationship with Unilever for over a year. Since Unilever is an industry leader in many key areas, we are able to ensure our distribution system has world-class standards.

Our system enables low-resource families to buy small product quantities at bulk prices=major social impact benefits.

We also have a world-class lead investor who is helping us raise funds to bring the potential of our distribution system to reality. Our lead investor, who focuses on Circular Economy, is also very connected with many key FMCG brands and retailers to help us connect to new brand and retail partners. Once we have key brands and retailers in place, our investor can help us understand how to effectively work with our corporate partners. All of the above factors, connections and opportunities position Algramo to reach our goal of catalyzing reusable packaging systems on a globally significant scale.

Unilever Chile-has been instrumental in co-developing our distribution system. Starting in late May of 2019, Unilever’s central office in London became more supportive and interested in Algramo.

Deloitte supports Algramo with pro-bono consulting from top US consultants-via the D2i Fellowship. Key focus is helping us partner with global brands, optimize the business model and develop a franchising strategy. D2i were doing onsite support in Chile for the week of June 25,2019.

We can now disclose Nestle as soon using our distribution system for pet food. We have 10 global brands in our partnership development pipeline.

Early stage discussions with one of world’s largest plastic resign producers and plastic packaging producers to make a new customized plastic designed for maximized longevity.

Cisco is keen on using Cisco Connected Goods for Circularity technology in our distribution system.

Three impact focused business school PhD researchers from high profile universities.  

WRAP interested in engaging industry players in Chile’s Plastic Pact to work on pre-competitive collaboration for packaging in Chile.

Early stage discussions with global industry lead initiative to trade REUSE credits in their plastic credit trading scheme.

UNGTSI-Founding member of United Nations Green-Technology-Startup-Initiative

Key customers and beneficiaries are any end-customers who wants to purchase their consumer goods  for the lowest possible price and/or customers who value purchasing products without producing packaging waste. Our business model is based on having FMCG brands fund the majority of CAPEX on technology development and depending on CAPEX investments we negotiate margins for the co-branded products that we sell in our distribution system. Beyond the benefits of cost savings for consumers, eliminating packaging waste is especially beneficial to brands keen to sell products in markets where governments are placing restrictions on single-use packaging.

The technology in our packaging as a wallet (PaaW) and IoT connected vending machines (ICVM) capture precisely how many times each packaging unit is reused by customers-creating excellent gamification opportunities to lock customers into sustainable consumption-especially easy to do when our system offers products for the lowest possible costs. Furthermore, our packaging and vending machine technology and our app can validate reusable packaging credits for the 350+ companies who have signed up to the New Plastics Economy Global Commitment that obligates companies have most, often all, of their packaging recyclable or reusable by 2025. Our reusable packaging system also enables government to avert the need and extensive environmental and economic costs of recycling single-use packaging. Tax payers and the environment win every time one of our reusable packaging units enables consumption without packaging needing to be disposed of or recycled.

Algramo 1.0 sells Algramo branded products (not co-branded FMCG-Algramo products) to 2,000 FONS in low-resource communities of Santiago-it reached financial sustainability in early 2018. However, this 1.0 business model is unable to provide adequate profits for the technology development that we are implementing to take Algramo’s distribution system into global supply chains.

To develop our technology into and with FMCG brands we are relying on FMCGs investing in CAPEX for our technology development so the brands cover the main technology development costs of the hardware. Algramo is actively seeking a $2 million Series A raise, being led by a circular economy focused venture capital fund so we can hire staff and develop/fund the software system that ties together and manages our distribution system.

We are structuring relationships with brand partners in a win-win manner that helps ensure a long-term financially viable and successful relationship between Algramo and brand partners. Brands are providing a margin on products sold that covers our operational costs. Furthermore, FMCGs are offering a minimum payment to Algramo for the implementation period to ensure Algramo has an operational runway while we attract a critical mass of customers to our distribution system.   

In essence, Algramo 1.0 is an established high-impact scaling social-enterprise-but with limited financial resources to scale impact. Algramo 2.0 is an early stage spinoff of Algramo 1.0, that is piloting/evolving its distribution systems with global brands-to co-develop technology and a business model that can be rapidly scaled for maximized growth and impact.

Algramo is perhaps slightly mature as an optimal stage startup for MIT Solve. However, our pivot (Algramo 2.0) is essentially an early stage start-up, at pilot stage, that is co-developing a game-changing reusable packaging distribution system with global brands. 

In May of 2019, we officially launched our electric tricycle distribution system with Unilever. We have Nestle confirmed and several other global brands in the partnership pipeline. However, a start-up working with global brands on a distribution system that has never been executed is a slow-moving process that is financially challenging to develop. Winning additional financial support would help us onboard essential human resources and make more aggressive technology investments so our impactful distribution system can more rapidly and aggressively be piloted and proven in Chile-so it's ready for global expansion.

Support at the United Nations in New York would greatly benefit the deployment of Algramo 2.0.

Even more important than financial resource are repetitional benefits and experts that the MIT Solve name could help attract to Algramo. MIT Solve would help us attract and onboard brands onto our system with greater success and speed. MIT’s endorsement would also comfort investors-helping to catalyze our Series A investment.

Other potential value adds MIT could offer are R&D for reusable plastic polymers that mix an optimal blend of safe extended reuse and recyclability.

Any organizations to help verify environmental or social impacts created from our distribution system.

On the environmental side, anything like an LCA or ideally an LCA type analysis that had a focus on quantifying the circularity of Algramo's distribution system. For example: http://circular.ul.com/circula...

Other interesting opportunities would be examining and understanding the value of Algramo's distribution system as a market-based solution to reducing ocean plastic pollution. 

Socially, we would be keen to have support from an organization like Jpal to help evaluate the social impact our distribution system creates, especially with lower-resource customers.

Brand partners keen to lower product costs and decouple the impacts of packaging from consumption-we are dedicated to co-branding and distributing Algramo-FMCG products. We are open to diverse product ranges-currently exploring refill solutions for products like pet food (Nestle), wine and coffee. We see a double-sided platform with positive network effects being critical for our growth-the wider the product offerings/brand partners, the greater our network effects will be.

Retailers who are operational in Chile, but also operational in key global markets are essential partners. To validate our distribution system in Chile so it’s ready for plugging into new markets.

We are keen to work with experts across the plastics value chain so we can produce a new type of plastic that is not light weighted and optimized for lowest cost single use packaging systems. We are keen to be a nexus that brings together players from across the plastics value chain and material science to develop a safe optimal plastic solution customized to specific product types to be sold in reusable packaging that can be refilled hundreds of times.  

Partners like: UN, World Bank, InterAmerican Development, WWF, EMF, international development experts and academics interested in promoting Algramo’s distribution system so we can save families ~40% on consumption by keeping packaging in the economy and out of the environment. MIT support and/or endorsement from researchers working in AI, ML, business model innovation, material sciences and supply chain optimization would be valuable support for Algramo to scale its impact.  

We propose funds to use AI to optimize the routes of our electric tricycle delivery system. By late 2019 we will have 30 Unilever tricycles-reaching 1 million potential customers. With several other brands committed we will have many tricycles offering many types of product refill delivery. AI would offer a powerful tool to optimize delivery, so we minimize delivery costs/emissions. As delivery-essentially real time product consumption-data grows into bigdata, AI could provide Algramo and its brand partners optimized granular understanding of product demand and customer preferences. This can be used to enable a more just in time supply chain-to reduce product costs and minimize potential wasted products-due to inaccurate or misinformed product demand projections.

Another potential use of AI, if your AI focus is broad enough to include, is using machine learning that processes images to make decisions based on images and integrating this ML technology into our vending machines so our machines scan the reusable containers to ensure the containers are safe to be refilled. Infrared scanning technology integrated with ML image processing would be especially effective in leveraging the power of technology to help promote reusable packaging systems in a safer manner. This could open up new product types to refillable packaging systems.

Our solution strongly aligns with the GM Prize for CE as we use electric tricycles to get life’s essential’s to consumers for the lowest possible prices-with maximized convenience. We are keen to maximize the amount of PV solar energy that fuels our tricycle fleet. Lowest prices and maximized convenience (cashless home-based refill) are key ingredients to motivating consumers to purchase products in sustainable packaging. We know this based on 5+ years of selling life’s essentials in a convenient, lowest cost manner-via our 2,000 family owned neighbourhood stores.

Over the past 5 years, reuse rates on our packaging have increased from less than 10%, to now over 80%. With our new distribution system and Packaging as a Wallet, we are confident we will get reuse on our containers over 95 percent. Placing value on the packaging and enabling the packaging to save the customer money is essential to keeping the packaging out of the environment-nothing valorizes packaging better than turning the packaging into a wallet. 

At the recent UN Environmental Assembly 4, the UN Science Policy and Business Forum, and Circularity 2019 there were many business leaders, academics and government officials who considered Algramo’s pivot to be an exciting world-class circular economy business model, with game-changing potential. We would be extremely grateful to have GM support Algramo’s efforts to drive forth the circular economy in a manner that enables us to save families on the cost of life’s essentials, while keeping packaging waste out of the environment. 

Our solution does not strongly align with this prize.

Our solution does not strongly align with this prize as we currently do not operate in the US.