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For more than two decades into the e-commerce era, the ordering and delivery of products bought online largely remained the same. Whether its a running shoe or a printer, a favourite piece of jewellery or perfume, a coffee maker or diapers, the products ordered from a brand's e-commerce store or a marketplace today arrive by much the same method as it did in 2011 or 2001: wrapped in plastic bags or bubble wrap, packed inside a cardboard box and shipped on delivery trucks to customers’ doorsteps. What has changed, however is the e-commerce share of market, and global volume of parcels shipped and their environmental impact.
As global parcel volume likely to more than double by 2026, so will the e-commerce industry's environmental impact.
Pitney Bowes Parcel Shipping Index Reports that small-package volumes in the world’s 13 major markets during 2020 ranged between 115 billion and 132 billion in 2020 after cracking the 100 billion barrier for the first time in 2019. On average, 3,248 parcels were shipped each second, an amount equal to 27 parcels shipped per person.
Source : Screenshot of Pitney Bowes Parcel Shipping Index
E-commerce Negative Environment Impact : Fast Deliveries, Plastic Packaging and Product Returns
As global parcel volume likely to more than double by 2026, so will the e-commerce industry's environmental impact. Ecommerce contributes hugely to global waste and negatively impacts environment in multiple ways. The shift to e-commerce is leading to more single-use plastic waste due to packaging. Retailers often offer the convenience of same-day or next-day delivery – and may package items individually rather than together. On top of all plastic or non-recyclable packaging, the sheer amount of deliveries made has a negative impact on the environment due to increased carbon emissions.
Ecommerce contributes hugely to global waste and negatively impacts environment in multiple ways.
A study published by the World Economic Forum (WEF) found that the growth in last-mile deliveries over the next decade will lead to slower transits and higher emissions in major cities across the world. The report forecasts a 36% rise in the number of delivery vehicles in the world’s top 100 cities by 2030, leading to an emissions increase of over 30% driven by the same-day and instant delivery as fastest-growing segments of the last-mile delivery environment, increasing at rates of 36% and 17% a year.
Source : World Economic Forum :The Future of the Last-Mile Ecosystem
World Economic Forum Study forecasts a 36% rise in the number of delivery vehicles in the world’s top 100 cities by 2030, leading to an emissions increase of over 30%
Given the high return rates for items bought online, which average around 30% (compared to 9% in physical retail), the negative effect on the environment is augmented through additional carbon emissions for e-commerce reverse logistics, while much of the return goods ends up in landfills. Analysis by Environmental Capital Group and Optoro on the impact of total U.S. retail returns done in the pandemic year of 2020 estimates that 428 billion worth of goods was returned, creating over 16 million metric tons of CO2 emissions annually, while 2,6 billion kilograms of returned goods ended up in landfills.
As packages flood into homes, so does the packaging that keeps their contents intact. Technavio, a market research firm, estimates that demand for filled-air products is poised to swell by $1.16 billion between 2020 and 2024 because of the spike in online sales.
Paper packaging isn’t entirely benign either — some 3 billion trees are pulped every year to produce 241 million tons of shipping cartons, cardboard mailers, void-fill wrappers, and other paper-based packaging, according to forest conservation group Canopy — single-use plastics present the bigger concern for environmentalists because they can persist in the environment, sometimes for hundreds of years. And their recyclability is often oversold. Currently, less than 14 percent , of the nearly 86 million tons of plastic packaging produced globally each year is recycled. The vast majority is landfilled, incinerated, or left to pollute waterways and poison wildlife.
Currently, less than 14 percent, of the nearly 86 million tons of plastic packaging produced globally each year is recycled.
AE Business School has published a report entitled Sustainability and Covid-19, prepared by the lecturers May López and Elena Búlmer, which reveals that household packaging waste has increased in 2020 by 15% due to the rise in e-commerce and the over-protection of food products because of Covid-19.
eCommerce Sustainability Push : Sustainable Assortments, Carbon Offsets, CO2 Neutral Last Mile Deliveries and Recycling / Circular Models
Taking note on the changing consumer sentiment, which not only showed increasing interest into sustainability practices, but also pointed to potential rewards in terms of higher demand for products because of more responsible corporate behaviour in its sourcing, production and distribution, companies around the world engaged in efforts to rethink their operations and supply chains. With fashion and consumer packaged goods industries leading the way, companies made large scale sustainability pledges to reduce their environmental impact, while some smaller, pilot level, efforts have already seen light of day. Setting self imposed future targets for environmental footprint reduction, which span years and decades, rather than months, reflects both the operational reality of complex global value chains adjustments and the consumer education need about alternative offerings. Key pillar of environmentally friendly business models is their economic viability. One of main goals of smaller scale pilots is to create demand through communications and consumer trials - educating consumers about sustainable practices and offering given that, at least until they scale across all markets, they will most likely require their willingness to pay more for them.
Luckily all consumer surveys and pilots have promising feedback and show growing demand for sustainable products. Leading global brands and organisations are racing to capitalise on their first mover positions and include the sustainability into the brand positioning and consumer value proposition through corporate communications and branding efforts. A wise strategy, given that sooner or later, the sustainable practices will be mandated by law, so not a matter of corporate choice (commanding market differentiation & branding opportunities) but legal requirement and compliance.
With such complex ecosystem of brands, retailers, markets and initiatives it is hard to get an understanding of a complete picture of sustainability practices.
Back in 2019, Etsy, the online marketplace known for its handmade goods, became a first major online shopping destination to offset 100% of carbon emissions generated by shipping. Etsy included automatic purchases so-called carbon offsets to manage the environmental impact of shipping products sold on its site. Following up on their climate pledge, the e-commerce giant Amazon, often credited with biggest e-commerce environmental impact due to its market grip, announced in 2019 the purchase of 100.000 custom made electric vehicles, committing to put 10.000 of them on the road by 2022. Zalando, leading online fashion retailer in Europe, has been spearheading sustainability practices for past couple of years. Zalando, aside of 100% cardboard recyclable packaging and 64% recyclable polgybags, climate neutral deliveries, also committed to generate 20% of its GMV (Gross Merchandise Volume) with more sustainable products by 2023, triggering a range of network effects towards brands that work with it. Some of the brand partners are already available under the separate filter selection "Sustainable" such as Tommy Hilfiger, Ralph Lauren, adidas, Nike, Timberland etc.
Zalando.de category overview print screen
Sustainability obviously can mean different things for different brands, and they have a varying degree of items with label of sustainability but its a definitely a move in the right direction. Moreover, Zalando provides an explanation of its sustainability labelling on site.
H&M has introduced in early 20201 low carbon, customisable parcel delivery service in the Netherlands, which would be scaled to 30 cities by end of the year.
Similar initiative which will most probably have a same trickle down effect is noticeable across the luxury industry as well or luxury fashion at least. Recently, Farfetch has begun to consider the lasting impact that fashion has on the environment and recognised that fashion comes with a carbon cost. Since April 2020, Farfetch has balanced the carbon footprint of every delivery and return through investments into independently certified and verified environmental projects. Assortment on their site now includes sustainable assortment "Conscious" while their POSITIVELY FARFETCH initiative also provide access to pre-owned sales program, repair and second-life initiative as well as donation to sustainable causes.
Sustainability practices are becoming a growing part of business across luxury and watch industry as well. Even though sustainability and socially responsible practices have been part of a industry topic for luxury jewellery, especially for matters of responsible sourcing of materials, the inclusion of sustainability practices towards consumer communication and awareness raising is of a more recent date.
Sustainability practices are becoming a growing part of business across luxury and watch industry as well.
The Moser Nature Watch by H. Moser & Cie. (Photography: Courtesy of H. Moser & Cie.)
In early 2019 H. Moser & Cie. a luxury watch brand, unveiled a truly spectacular one-of-a-kind timepiece, named The Moser Nature Watch. Unfortunately this mechanical piece isn’t available for purchase. It was, instead, created to remind collectors of the brand’s commitment to eco-friendly and sustainable watchmaking developments. Packaging, especially for luxury products, is traditionally very elaborate, so Richemont took an important step in the right direction by declaring its commitment to “reduce, reuse and recycle.” IWC has set up a sustainable-packaging committee, which is working on specific measures to achieve a 30-percent reduction in the weight and volume of IWC’s packaging materials by 2020. Many other brands such as Chopard, Breguet, Panerai, Swatch Group have taken activities either by issuing more sustainable products or making partnerships with sustainable causes.
However, in eCommerce, sustainability doesn't end with deliveries or packaging, and many brands have engaged re-selling used goods or repurposing / recycling items received back from consumers. Brands are moving towards a circular economy by encouraging consumers to recycle, offering free shipping, free weekly pickups from home, drop off points across cities, discount coupons and reward points.
Quantifying and comparing efforts between brands and retailers and would help identify e-commerce sustainability leaders and laggards across industries
Even though its seems to be leading the efforts, the Fashion industry is not the only one. In fact, in the consumer goods industry, rivals are becoming partners to set up a great example for others. Brands such as Nespresso, Nescafé Dolce Gusto and Tassimo have launched a new recycling initiative that aims to get the coffee sector collaborating on a simplistic way to enable consumers to recycle coffee pods in the UK. The aim of Podback is to provide a number of methods for consumers to easily recycle used coffee pods. Podback is scheduled for launch in early 2021 and will act as a not-for-profit organisation. It has been set up Nestlé and Jacobs Douwe Egberts UK (JDE UK).
Market Level Cross-Industry Competitive Benchmarking on Sustainability Practices in eCommerce : The Single Source of Truth and Inspiration
While sustainability practices are definitely gaining more ground across leading brands and across different industries, with such complex ecosystem of brands, retailers, markets and initiatives it is hard to get an understanding of a complete picture of sustainability practices. Moreover, as sustainability effort are an evolutionary and ongoing efforts, it is also hard to understand where is the market right now or which brand and retailers and in which way are employing sustainability practices right now and how it may differ across markets.
Quantifying and comparing efforts between brands and retailers and discerning between future pledges and actual practices will add a level of much need clarity and help both brands and retailers
Quantifying and comparing efforts between brands and retailers and would help identify e-commerce sustainability leaders and laggards across industries while enabling measurable differentiation between future pledges and actual practices. This would add a level of much need clarity and help both brands, retailers and consumers to have a complete current picture and help navigate future choices and activities. That is why a market level cross-industry competitive benchmarking on sustainability practices in eCommerce industry across countries will be the single source of truth and inspiration for sustainability stakeholders.
Building upon our existing platform solution & service for e-commerce post-purchase benchmarking which we've been doing across Europe since 2015 for brands like Nike EMEA and Jacobs Douwe Egberts, SO DIGITAL will be benchmarking sustainability practices across segments of : ONSITE EXPERIENCE, TRACKING, DELIVERY, PACKAGING and RETURNS across key markets in Europe and North America. Leveraging existing network of trained researches in countries like UK, Netherlands, Belgium, France, Spain, Italy, Denmark, Sweden, Germany, Poland, Russia, Turkey, France we perform actual ordering of products from leading cross-industry e-commerce sample of retailers and brands while recording and documenting. Researchers answer scale based scorecard with more than 250 questions supporting their experience with PHOTOS and VIDEOS where available.
We're looking at sustainability communication, policies visibilities and communicated commitments available to consumers while browsing and shopping for products. We'll look at breadth and depth of sustainable products / merchandise / assortment available on site and discern between brands in a quantifiable way. We aim to highlight the differences in sustainability products / assortment available per category, brand's contribution to sustainability offering and individual categories, as well as check for any consumer actions like automatic carbon offset purchases and/or availabilities within normal shopping flows. We'll highlight "Sustainability" categories / Search / Filters as well identify categories available etc.
After completing purchase we'll be looking at communication to consumers in terms of sustainability practices of brands /retailers and logistics partners and/or usage of green fleet / deliveries. We'll be looking to identify logistics partners / methods of deliveries available to consumers and call-out any positive / negative practices.
We analyse delivery options available to consumers during the purchase and/ or sustainability alternatives offered / communicated and/or incentivised through different forms or programs. During actual purchases alternative models of delivery will be preferred / used and compared in terms of (in)convenience for consumers to traditional forms of delivery (eg.home). Pick up at store, lockers availability and green type of deliveries will be particularly noted. We will also take note on different speed of deliveries as express / same day deliveries create more carbon footprint. We'll look at offered carbon offsets for deliveries etc.
Screenshot : Benchmarking platform 2020 France eCommerce Reporting
We look at both the outside and inside packaging, recyclability of materials, as well as communication of sustainability initiatives and branding. We look at the (over)size of the packaging compared to the goods actually used and delivered as well as the filling materials. We take note of the materials used and their classification in terms of sustainability and will take note of any over-packaging. We'll look for special initiatives like FFP - frustration free packaging spearheaded by Amazon in United States.
Screenshot : Benchmarking platform 2020 France eCommerce Reporting
RETURNS & REPURPOSING / RECYCLING & UPCYCLING
We look at methods and incentives for consumers to return / recycle or repurpose or re-sell used products. We look at the the actual process offered to the consumer and its viability, convenience and feasibility. If there are special consumer-oriented ways company arranges pick-ups such as pick up at home or drop off at store we'll take a note on those.
First countries and industries that we'll benchmark in 2021 are : France, Germany, United Kingdom, The Netherlands and United States. First industries we'll pay special attention to are : Fashion, Beauty & Cosmetics, Luxury, Consumer Electronics and Consumer Packaged Goods (CPG)/ Grocery.
To have a chat with us on auditing your practices in relation to the market and/or getting a copy of the country / industry reports have a chat with us.