Closing the Loop: Zack Peng Of Seel On Embracing the Circular Economy

An Interview With Russell McLeod

Abuse and fraud prevention: For example, with items like sneakers and jewelry, people will buy real items, and return fake ones. If this isn’t taken care of, businesses will imminently see its end.

In our current economic model, we see a lot of waste and inefficiency. Products are designed, used, and then discarded, often creating environmental and economic burdens. The circular economy offers a solution by designing out waste and keeping materials in use for as long as possible. This shift can lead to innovative business models, sustainability, and economic resilience. How are companies making this transition, and what can others learn from their journey? I had the pleasure of interviewing Zack Peng.

Zack Peng is the founder and CEO of Seel. As a technical founder with an engineering background, Zack identified the opportunity to create an AI-powered solution that helps retailers offer risk-free shopping experience to their customers at affordable cost. He founded Seel with $25 million in venture funding, and is now powering the risk-free shopping experience at 2,000+ brands & marketplaces.

Thank you so much for doing this with us! Our readers would love to get to know you a bit better. Can you tell us your “Origin Story”? Can you tell us the story of how you grew up?

The origins of my journey, my Seel journey, traces back to my very first job. Fresh out of undergrad, I landed a gig as an engineer at a vision company. The theorizing my Physics and Philosophy classes warranted came in handy as I translated solutions from theorems to the practical. And I loved it.

I developed an immediate penchant for the insurance underwriting asked of us, and our company was nothing short of innovative. We had alternative approaches to industry standards — taking on the challenge of natural catalysts like satellites and forecasts — and those two years there were spent building existing products to improve the needs of the insurance markets. Selling tradition was not a good business and we knew that.

The turning point for Seel came in 2022, two years after I started it. I met a CEO in the same industry who was speaking about his return program: what he used, his rules and policies to prevent abuse, provisions, and allowances for losses. I learned that it had nothing to do with selling products and everything to do with risk management for his business. As soon as this realization started settling in, the rest, as they say, is history.

Could you share with us your journey and the pivotal moments that led you to focus on the circular economy within your business?

My encounter with the wise founder in 2022 made clear the need to reframe our mission. Borne of that realization was the bolstering of our purchase program.

Inspired, I set out to revamp our system. Our initial model allowed merchants to make items returnable, but they were the ones taking the pen on policy to prevent abuse and fraud. We transformed this first model, by creating a purchase program that merchants could add to their final product as an alternative to in house return programs. This innovation made all final sale products refundable, introducing circular economy principles to final sales. Major players in the secondhand marketplace, like eBay, Poshmark, and Goodwill saw the ingenuity in this and are steadfast partners of ours. Consumers now receive enhanced benefits while merchants experience lower costs than ever before.

What experiences in your background have shaped your understanding and commitment to sustainable business practices?

My initial brushes with sustainability came heavily handed from understanding the structures that best facilitate it. My beginnings in insurance underwriting hardwired a deeper understanding of resource efficiency and operational risks, allowing for me to harness this backend knowledge to proactively facilitate sustainable business practices. It became glaringly apparent how much waste occurs across the board, and I had to do something about it.

As a consumer, I also wanted to preserve the sentiment we all hold to shopping. Undeniably, the secondhand marketplace has always been an exciting space. While the benefits are obvious, the experience itself can be a hit or miss. With Seel, we hope to build on the greenification of the sector by bridging the gap to mainstream markets. Our goal is to create value for all stakeholders: the buyer, the seller, and the experience.

Can you tell us about a significant challenge you’ve faced in your career that has influenced your approach to business and sustainability?

From the outset, it was clear the entire returns system needed overhauling. Seel came about as a solution to this, envisioning a path towards a more profitable and sustainable future for the industry. However, our first bottleneck proved to be the most pervasive: building market trust.

While merchants are aware of the glaring flaws in the system, they’re slow to adopt risk management programs, and even slower to outsource everything that comes with it. They’re reluctant to hand over the keys without an existing relationship — and that’s fair. Trust became the foundation for our collective vision.

Each customer interaction became a successful demonstration of our commitment to their consumers. Our loyalty is always to consumers, and we were able to put Seel forth elegantly, seamlessly aligned to each individual merchant’s brand. As more orders came in, eventually, the entire marketplace evolved and trust had flipped the sector.

How has your company evolved to integrate circular economy principles, and what role have you played in this transformation?

Seel integrates circular economy principles through several key innovations.

• At the broadest level, we’ve implemented a Zero-Waste pledge, ensuring that every item returned via our partner platforms finds a new home. This directly contributes to a circular retail ecosystem.
• Our AI-powered platform predicts and prevents returns, transforming potential waste into opportunity. Instead of penalizing frequent returners, we purchase potentially unwanted items at full price, keeping goods in circulation.
• We also offer On-time Delivery Guarantee, a product that includes carbon offsetting and helps address the environmental impact of e-commerce shipping. In the first six months of 2024 alone, Seel offset more than 250,000 kilograms of carbon emissions. These innovations have allowed us to reshape how e-commerce platforms approach customer satisfaction and environmental responsibility, setting a new standard for sustainable online shopping experiences.

What does ‘closing the loop’ in the circular economy mean to you, and why is it important for businesses today?

For Seel, closing the loop in the circular economy means creating a retail ecosystem where products are kept in use for as long as possible, and waste is minimized or eliminated. Our approach involves several key strategies:

1. Proactively purchasing potentially unwanted items to prevent them from becoming waste.
2. Ensuring all returned items find new homes through our Zero-Waste pledge.
3. Enabling returns in the secondhand e-commerce market, which keeps products in circulation longer.

This approach is paramount for businesses today because it addresses pressing sustainability concerns while also driving growth. The secondhand market is growing three times faster than the overall global apparel market, indicating strong consumer demand for circular solutions.

In an industry where the fashion sector’s greenhouse gas footprint ranges from 1.8% to 10% of global emissions, closing the loop is essential for combating climate change. By aligning profitability with sustainability, businesses can meet consumer expectations, reduce their environmental impact, and tap into new market opportunities.

Does designing products to be circular increase the cost of the product? What are the challenges of balancing cost with creating a circular product that has demand?”

It does — and it’s a good thing! Once customers start considering items for their resale value, they’re willing to spend however much is needed. Durability is a priceless investment. At a certain point, a 20k handbag is less expensive than a 5k handbag. The former retains its value, so the customer is happy, and that’s one less handbag in the landfills. It’s a win-win all around.

Can you identify the 2–3 critical mistakes companies often make when transitioning to a circular economy model?

For those of us embracing the circular economy, we know that the “shiny and new” is not the end all be all for consumers. Two key misconceptions that are critical in addressing to reconcile the new and old are:

• “Brands don’t want to integrate a circular economy model, as it can lead to increased sales of second-hand and counterfeit goods.”

Reality: Whether you are a part of it or not, second hand sales occur anyway. In fact, most companies recognize this opportunity as a long-term, high capitalization opportunity and have integrated branded resale into their platforms.

• “If people buy used goods, the primary market will shrink.”

Reality: Demand for new items will always exist, as will the need for guaranteed resale items. High-end products will continue to have assured resale value, maintaining a balance between new and second-hand markets.

How does your company address the entire lifecycle of a product, from design to end-of-life, to ensure circularity?

Seel plays a crucial role in extending product life cycles and ensuring circularity in the retail ecosystem:

• Return prevention: Our AI system predicts potential returns, allowing us to intervene before a product becomes waste.
• Proactive purchasing: If an item is returned, Seel then buys the item back at full price, keeping goods in circulation.
• Zero-waste pledge: At Seel, we commit to reselling all items returned through our partner platforms.
• Secondhand market acceleration: By enabling returns in the secondhand e-commerce market, we’re extending product life cycles beyond their initial use.
• Carbon offsetting: Our On-time Delivery Guarantee includes carbon emission offsets, addressing the environmental impact of product transportation.

Seel uses these strategies to ensure products remain in use for longer periods, resulting in reduced waste and the acceleration of the circular economy in retail.

What innovative strategies has your company implemented to reduce waste and promote resource efficiency?

Seel has implemented several innovative strategies to reduce waste and promote resource efficiency:

• AI-powered return prediction and prevention: Our proprietary AI system identifies potential returns before they happen. In turn, we’ve shifted the $101 billion returns abuse problem into an opportunity, creating a win-win situation for retailers and consumers while reducing waste.
• Proactive purchasing: Instead of penalizing frequent returners, we buy potentially unwanted items at full price and keep them in circulation.
• Zero-waste pledge: We ensure that every returned item finds a new home, eliminating waste in the return process.
• On-time Delivery Guarantee with Carbon Offsetting: By offsetting the carbon emissions associated with shipping, this innovation addresses both customer satisfaction and environmental concerns,
• Enabling returns in secondhand e-commerce: By making returns possible in this growing sector of retail, we help promote the reuse of products and extend their lifecycle.

These strategies not only reduce waste but also drive business growth, demonstrating that profitability and sustainability can go hand in hand.

What role do partnerships and collaborations play in your efforts to close the loop and create a more sustainable business model?

Community is fundamental to Seel’s efforts in closing the loop. It allows us to scale our impact and integrate our innovations into existing retail ecosystems. A few examples of our partnerships and collaborations include:

• DHgate partnership: We’ve partnered with DHgate, a leading global B2B cross-border e-commerce marketplace to offer our On-time Delivery Guarantee to DHgate’s 60 million registered buyers across 225 regions worldwide. Through this partnership, we’re able to continue promoting sustainable shopping practices on a global scale.
• Goodwill Finds partnership: By implementing Seel as their only exception to final sale purchases, Goodwill Finds has seen a 10% surge in net-new customers. This partnership underscores how our circular economy practices can drive business growth for our partners while promoting sustainable shopping.

Through these partnerships, we’re not just changing how individual companies operate, but transforming the entire retail landscape toward a more circular and sustainable model. Our collaborations underpin that businesses can address environmental concerns while driving growth and meeting consumer demands for more sustainable shopping options.

What are your “5 Things You Need To Create a Successful Circular Economy Based Business”?

1. Durable product.
2. Good pre-purchase marketing: the durability and resale value of what they sell.
3. Good post-purchase experience.
4. Reverse logistics.
5. Abuse and fraud prevention: For example, with items like sneakers and jewelry, people will buy real items, and return fake ones. If this isn’t taken care of, businesses will imminently see its end.

What is one actionable step companies can take today to move closer to a circular economy model?

In an age of instant gratification, reactions hold little to no value. Responses don’t hold the test of time, only movements do.

Seel tackles overconsumption head on with innovation and community at its core. We don’t just predict returns, we mobilize to prevent them. Our model reduces waste and carbon footprint from returns by aligning with consumers’ demand for sustainable shopping and by partnering with secondhand purchasing platforms. Partner with Seel and join the movement!

Could you share a story of a business or leader who has inspired you in the realm of the circular economy?

Jim Davis, Chief Marketing Officer at Goodwill, is someone I truly admire. Jim’s constantly pushing back on the narrative of what it means for commerce to be sustainable and redefining what final sale is.

How can our readers further follow your work or your company online?

You can follow Seel’s LinkedIn profile for updates and announcements.

This was great. Thanks for taking time for us to learn more about you and your business. We wish you continued success!

About the Interviewer: Russell McLeod is an experienced business leader, social entrepreneur, and mentor. A champion of profit with purpose, the circular economy and of collaboration for positive progress.

Russell is the founder of Mightyhum a Toronto-based impact enterprise dedicated to supporting growing organizations. And, while it’s not a requirement, the Mightyhum team has a passion for collaborating with purpose-driven businesses. Mightyhum specializes in providing consulting services and turning hairy audacious concepts into achievable ventures & projects. The Mightyhum team work with C-suite executives and leaders, developing new product offerings, effective go-to-market strategies, building for profitability, and streamlining operations. Before Mightyhum, Russell was involved in the world of social enterprise as the Executive Director of ME to WE, one of Canada’s best known and most awarded social enterprises. While at ME to WE, the team demonstrated that being profitable and impactful was indeed possible. During his tenure, ME to WE delivered $20M in cash and in-kind to WE Charity, helping transform the lives of over 1 million people through access to clean water; the lives of 200,000 children with access to education; and 30,000 women-led businesses launched globally.

Russell’ personal mission is to inspire others that there is ‘a better way to do business,’ ‘that through business we can solve some of the world’s problems at the same time.’ You can follow Russell’s work at https://www.linkedin.com/in/russell-mcleod1/ or www.mightyhum.com.

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Closing the Loop: Zack Peng Of Seel On Embracing the Circular Economy was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.