It’s no surprise that e-commerce has practically taken over the global economy. Annual online sales worldwide are expected to climb to a staggering $6.5 trillion by 2023. But alongside that dizzying sales growth, we’ve also witnessed a growing consciousness about how damaging all of those online sales are to the environment, and throughout the product life cycle, from manufacturing to delivery to eventual disposal.
Consumers have started taking sustainability into account when deciding what to buy and where to buy it. Over the past seven years, there has been a 71% increase in online searches for sustainable goods. This is especially true for younger consumers: some 75% of millennials say they consider sustainability when making a purchase.
On the one hand, when it comes to environmental impact, there are many advantages to online sales. According to a study by the Öko-Institut in Berlin, e-commerce overall results in significantly lower carbon emissions than brick-and-mortar retail sales, mostly thanks to savings in heating and electricity.
But online purchases still have a significant environmental cost, even if it is lower than that of physical retail stores. Much of this impact comes from shipping and warehousing, as well as from operating all those computer servers to facilitate all of those sales. If e-commerce is here to stay, it’s incumbent upon e-tailers to find greener ways to sell.
Product returns in particular represent a huge portion of the negative impact that e-commerce has on the environment. When a consumer returns an item, that’s two legs of shipping—and the concomitant environmental impact—that essentially occured for naught. Fortunately, research shows that 73% of returns can be remedied by retailers themselves.
To minimize returns, retailers can ensure that product descriptions, sizes, photos, and other accompanying information are as accurate as possible and that the quality of the items are a match for consumer expectations. The more information the consumer has before the purchase, the less chance there is of items being returned. Clothing e-tailers can utilize virtual fitting technologies to help customers make more accurate choices when they shop.
When returns do occur, far too often these items simply end up in landfills. Often, it’s cheaper for companies to simply throw the items away than try to resell them. This is particularly true for clothes. To prevent this waste, online retailers can build resale, or “recommerce,” marketplaces to enable consumers to purchase worn or returned products. Retailers can also sell returned and unsold items to liquidation marketplaces like Bstock instead of throwing these goods away.
In addition, there’s the environmental impact of all the packaging required for those returns. About 40% of customers use new packaging when mailing back items. Today, there are a number of ecommerce returns companies focused on offsetting the harmful environmental impacts of repackaging and relabelling for returns.
Companies like Happy Returns are centralizing the return process, giving customers the option to drop off returns through physical stores, without the need for repackaging. The returns are loaded onto trucks in reusable totes. These platforms reduce the need for cardboard and also reduce greenhouse emissions by 0.12 pounds per item.
Technology and sustainability
One major factor that has expanded the carbon footprint of e-commerce sales is the growing pressure to deliver products as quickly as possible. Amazon and Walmart have set the delivery standard, promising delivery within two days, and the race to get things to consumers faster has had a tremendous negative impact on the environment.
When companies ship items as quickly as possible, they aren’t optimizing delivery routes or filling trucks to capacity, which means more trucks on the road and more flights in the air to get consumers their items a few days earlier. The race to expedite the so-called last leg of delivery unfortunately comes at the expense of sustainability.
Fortunately, there are technologies on the immediate horizon that can temper much of that environmental impact, including electric trucks and airplanes. However, large fleets of chargeable vehicles are typically the province of large companies. Smaller e-commerce platforms hosting B2B or C2C vendors need ways to improve their logistical approach as well.
One approach for smaller e-tailers lies in investing in demand planning tools to better understand customer needs and reduce waste. These tools use AI to predict consumer needs and can help sellers minimize overstocking. Dedicated software using machine learning can also factor in supply chain management, marketing, and other relevant business operations to provide better insights about what products are needed where and when.
One such demand-planning tool is Greenchain, a B2B platform for food wholesalers. Using this digital application, sellers can find buyers for their products quicker than ever before. For companies dealing in perishable items, Greechain reduces the amount of food waste going into landfills, and mitigates the negative impact of the extra production needed to replace those foods.
Smaller sellers can also seek out companies that create networks of smaller e-tailers to help them manage sustainability practices. Companies like Bringg aggregate online sellers together to help them consolidate in that oh-so-important last leg delivery. These networking platforms often use electric vehicles, and offer route-optimization AI and carbon-footprint analytics. These services provide the advantages of giant retail supply chains to smaller e-retailers everywhere.
There is still much work to be done, especially concerning the energy consumption of data centers. However, there’s a growing consciousness among both consumers and sellers about finding ways to reduce the environmental impact of e-commerce. Successful e-tailers would be wise to lead the way.