Ecommerce has exploded over the last decade, and with it, growing concerns about its environmental impact.
These concerns make sense. Ecommerce uses a lot of packaging, which produces a lot of waste. Ecommerce uses a lot of transportation, which produces a lot of carbon emissions – usually just to deliver one or two items to an individual address.
Ecommerce – at least on its surface – looks bad from a sustainability standpoint compared to traditional brick-and-mortar retail.
In ecommerce, the role of sustainability can range from creating new business models, to the country registration of container ships, to packaging decisions for individual orders. It’s complex. It’s sometimes counterintuitive. But it’s a critical concern for our brands, for our stakeholders and for our planet.
Many of the concerns regarding ecommerce sustainability center around the fulfillment process. Let’s take a closer look at the facts around the sustainability impact of ecommerce fulfillment.
The facts about the impact of ecommerce fulfillment
Walmart, a giant in both traditional retail and ecommerce, studied the emissions generated by its brick-and-mortar retail stores vs its ecommerce business. In general, they found that ecommerce transactions had a greater impact on the environment than in-store shopping for three reasons:
Packaging: Ecommerce usually requires additional packaging to protect products during shipping. And sometimes that means special, extensive packaging for fragile items or refrigerated goods.
Shopping Cart Size: Consumers tend to purchase fewer items per ecommerce transaction than they would in a store visit. That means multiple carrier shipping trips and last mile trips to deliver the same basket of goods, creating excess greenhouse emissions.
Excessive Returns: Global ecommerce returns represent 20% of all purchases—a figure much higher than with traditional in-person shopping. These returns create a significant carbon footprint due to transportation back to the warehouse. Returns also generate a lot of waste. Aside from disposing of the packaging needed to ship a return back to the warehouse, studies show that more than 10,000 tons of returned goods go to landfills each year.
But sustainability is complicated. Other studies have taken a deeper look, including factors such the distance and mode of transportation to the retail location, the physical size of the products purchased, and the likelihood products in a given category would be returned.
These studies indicate that – in many cases – ecommerce may have a lower carbon effect than in-store shopping due to more efficient fulfillment logistics. Factors such as how customers travel to store – public or private transportation – the distance to the store, the carbon impact of the physical retail location itself, the type of products purchased and the likelihood of returns all matter. In fact, some studies show that the end-to-end environmental impact of ecommerce is about 15% lower for online vs in-store shopping.
Of course, a lot of these distinctions are academic. People are going to visit retail stores. They are also going to shop online. As brand marketers and operations professionals we have the responsibility to make these transactions as sustainable and environmentally friendly – or at least as environmentally neutral – as possible. No matter how people choose to shop.
Creating a Strategy for Sustainability
Three tactics to improve fulfillment sustainability
As we saw in the Walmart study, much of the underlying environmental impact of ecommerce fulfillment comes down to packaging and transportation.
Our marketing colleagues can implement tactics to encourage larger shopping cart sizes and reduce returns – the other factors cited in the study. But almost all ecommerce orders and any resulting returns eventually will need to be packaged and shipped. The trick, from a sustainability standpoint, is to do that in the most environmentally friendly way possible.
There is another reason to focus on sharpening the sustainability of our fulfillment strategies. While your customers say that they want to support sustainability, studies show only 34% of consumers are willing to pay more for sustainable product and services; 66% are not.
Ecommerce fulfillment offers a unique opportunity to improve your sustainability track record while also funding it through lower fulfillment costs.
So how can you enhance environmental sustainability while still sustaining acceptable margins?
Fulfillment sustainability often comes down to three factors:
1. Shipping Carton Selection
Minimizing shipping carton size and weight while using environmentally friendly materials and still protecting the package contents is an important first step in reaching your sustainability goals. That’s because carton design and packing workflows are directly under your control. Plus, reducing carton size usually results in lower packaging and shipping costs – which can help offset the potential for increased costs for more environmentally friendly packaging materials. Smaller carton sizes also allow your carriers to fit more packages on a truck, reducing their overall environmental impact.
2. Delivery Distance
The next step is to minimize shipping distance while still meeting customer and marketplace delivery expectations. That’s a bit more complicated than just addressing packaging issues because it involves putting inventory closer to customers – often through the use of 3PLs or other fulfillment partners. But even given the costs of shipping and storing product at multiple fulfillment locations, the math is clear: Less miles traveled for the final customer delivery usually results in lower shipping cost and less environmental impact. And that helps offset the expense of distributed inventory management and its positive impact on sustainability.
Last mile deliveries have a huge environmental impact. But research shows putting the right inventory in the right place – closer to potential customers – can cut emissions and be much more cost efficient for sellers.
Distributed order management (DOM) automates routing an order to the best fulfillment option while still meeting the customer’s delivery requirements. Order optimization platforms like Etail are designed to manage orders and inventory across complex networks of multiple fulfillment locations and fulfillment options like 3PL partners. Together they help brands manage the complexity of distributed inventory management and lessen the environmental impact of ecommerce fulfillment.
Implementing sustainable fulfillment practices is complex; often involving a combination of shipping templates, business rules and carrier requirements. Using automation helps to make sure that the best choice is made for every shipment. As we’ve seen, there are a lot of factors involved in improving the sustainability of any given order. It’s beyond the capabilities of the folks packing and shipping products on the frontlines to execute the right strategy on each individual order. Automating the process through cartonization helps ensure that the best decision is made every time so even small gains on a per package basis can accumulate to significant gains in meeting your sustainability targets.
Automating cartonization lets technology make the right packaging decision for every order every time.
Smart choices that improve the sustainability of your ecommerce fulfillment strategy can also result in lower costs while still meeting customer delivery expectations. That frees up cash to invest in supporting these corporate sustainability commitments. So your brand can do well while also doing good.
Download our complete guide to ecommerce sustainability
Our latest white paper “Sustainable Ecommerce: The Complete Guide to Sustainable Ecommerce Fulfillment” looks at the research and facts behind ecommerce sustainability, solid strategies you can adopt today to improve ecommerce fulfillment sustainability, and how sustainable fulfillment can be self-funding – doing good for the planet while also doing well for your margins. Click here for more information or to download.
For more information and a complete list of sources used for this post, see our white paper “Sustainable Ecommerce: The Complete Guide to Sustainable Ecommerce Fulfillment”.