05/25/2022 | News release | Distributed by Public on 05/25/2022 08:17
In the previous article in our Climate Conscious Commerce blog series, we looked at Green UX practices that can be used on e-commerce sites to inform and support customers to make more sustainable purchases. In this article we will look at the infrastructure around e-commerce, focusing on delivery, packaging, and data. E-commerce relies on many services and products to be able to package and deliver their goods to their customers. As e-commerce has grown, so have these services. There is a huge potential here to reduce the environmental impact of e-commerce and make customers more aware of the environmental implications of their purchases from cradle-to-door. We spoke to logistics expert Martin Jungerts to help us gain a deeper insight into the current challenges and opportunities. Today, Martin works as a logistics consultant, and he has previously held positions at Swedish food retailer Coop and Swedish fashion retail group RNB Retail and Brands.
A recent report from Accenture stated "The last-mile supply chain made possible by local fulfilment centres could lower last-mile emissions between 17-26% by 2025." Martin Jungerts thought this was a great development and had some thoughts about some additional environmental benefits. "When the pandemic struck, many multi-channel retailers were forced to deliver from their local inventories, because they had to close their stores due to restrictions. They suddenly had a lot of local inventory hubs (stores) that they just had to find a way to sell and deliver from. Green and fast last-mile deliveries from local stores was a positive sustainable side effect."
"However, the climate impact of making your local inventory available online doesn't stop there. For a traditional retailer with a network of local stores in combination with e-commerce, an even higher climate effect can come from reducing over-production and unnecessary consumption. For example, a retailer of sneakers with 100 local stores and a central DC (distribution centre) for e-commerce has historically only been able to sell local store inventory on each store's local market. Since all stores need to carry a wide assortment of styles and sizes, and since it is impossible to predict sales down to each unique article on a local level, the inevitable result is that each local store and the e-commerce DC at the end of each season will end up with excess inventory of some articles and run out of stock on others. Historically, the cure has been to over-produce to local safety stocks (the stores), and to dump the prices of local excess inventory in aggressive end of season sales. This drives both over-production and over-consumption, which is a bad combination for the environment - in the end, the best way to reduce emissions is to produce fewer articles."
"By enabling ship-from-store or ship-from-local-DCs that sneaker retailer could in one stroke suddenly make their whole total inventory available for the total market. Sure - they should ship locally, when possible, to reduce last-mile emissions, but by being able to also ship that last pair of that odd sneaker in that odd size from a local store across the country to an e-commerce customer in another city they will also match supply and demand much better, thus reducing the need for both local and central safety stocks across the full assortment. The combined environmental and business effects could be huge: 1) lowered last-mile emissions by prioritising local deliveries, when possible, but also 2) significantly reduced over-production, over-consumption, and waste, 3) happy customers that find what they need, and 4) a reduced need for aggressive end of season sales leading to reduced profitability for the seller. I think this is a great example of how smart logistics could be used to make companies more sustainable and profitable."
Consolidation of deliveries is key and to really make this happen Martin believes that companies need to share infrastructure. "New last-mile delivery companies pop up like
mushrooms. However, to increase fill rates and reduce emissions, I believe that we need to see a lot more "shared infrastructure" or "co-opetition" initiatives - from a sustainability perspective, it is a total waste to have three different companies producing and putting up separate parcel lockers next to each other, or that three different delivery companies are delivering parcels to your door the same evening. This has started to happen, and I think we'll see an accelerated trend. For example, In Sweden, both iBox and E-Drop are now being tested and rolled out, both independent parcel locker solutions that all delivery companies can deliver to. And within "co-opetition," Early Bird and BRING recently announced that they will start to collaborate - combining mailbox deliveries and pick-up points, by sharing their infrastructure both products become better with very limited investments and offer many sustainability benefits by utilising existing delivery infrastructure and reducing unnecessary returns of packages that could not be delivered."
To ensure that your e-commerce order is delivered in one piece, the packages must be packed, usually in corrugated cardboard boxes with bubble wrap or plastic bags. If packaging was more efficient, there would be huge environmental benefits, Martin says. "If you just reduce unnecessary packaging, you could reduce the number of trucks, long-haul and last-mile deliveries significantly, since fewer trucks could transport the same amount of goods. The fill-rate of a distribution truck is often measured as the amount of air in the truck when loaded - however, the real fill-rate should also include the air in every package, and then the fill-rate of e-com distribution compared to classic B2B distribution becomes really frightening. Inefficient packaging also impacts on two levels: firstly, it drives unnecessary emissions from transportation, and secondly, it drives unnecessary waste of packaging material. Too many e-coms still offer fixed packaging sizes - a small, medium, and large box, branded with their logo and often filled with more padding than actual products. Wrapping machines for "soft" packages are already quite efficient and I don't understand why not more e-coms use them. However, I would like to see much more development towards efficient "wrapping"/"cutting" machines of boxes that could be put at the packing station of the warehouse."
E-commerce should not only try to reduce the amount of packaging, but also reuse the delivery packaging when possible. There are a few companies now offering reusable packaging solutions like RePack and LimeLoop. The customer selects the reusable packaging option in the checkout for a small fee. After the customer receives their order, they can return the packaging easily, fold it flat and add the return label. The package is then ready to be posted back to the retailer to be reused. Of course, the pack can also be used to return the goods. The packaging is made from a durable recycled polypropylene material which gives it a long lifespan. On average, RePack bags usually handle 20-40 cycles. After 20 cycles a medium RePack bag causes 80% less CO2 emissions from manufacturing and waste treatment than a cardboard box. Companies like Gina Tricot, GANNI and Mads Nørgaard are already using this packaging solution enabling them to live up to their environmental commitments.
It is only possible for consumers to shop sustainably if they are informed about the environmental and social impacts their purchases make. It was not always mandatory for food products to have ingredients or nutritional information listed, because of consumer demand in 1966 the USDA (United States Department of Agriculture) mandated that a list of ingredients must be placed on all food products and in 1990 a standardised nutritional facts panel was obligatory. Consumers wanted to make a better choice for their health, now consumers want to make a better choice for the planet's health. There are several services that e-commerce businesses can access that gives customers clear sustainability information about the products, harnessing the power of big data for social good.
Consupedia is the world's largest sustainability database for food, leveraging data from leading sources such as WHO, Gapminder, RISE, FAO Stat, EFSA. Retailers can connect their database to Consupedia's API, which enables them to display the sustainability impact of their food products for consumers, this can be for any type of food - from micronutrients to meals. The data gives a broad sustainability assessment, attributes include origin, carbon and water footprint, use of antibiotics, risk of child labour, health impact and much more.
Doconomy's service The 2030 Calculator makes it possible for brands to calculate their product's carbon footprint. The calculation is cradle-to-gate, which means the result is based on emissions created from manufacturing and transport up to the point of sale. The service covers a broad range of product categories such as apparel, sports, outdoor equipment, furniture, household goods, books, toys, baby products, small household appliances and much more. This transparency means that customers can make a more informed choice and see that a brand is living up to their sustainability commitment. It also means that companies can see where they can make improvements in their manufacturing and distribution processes to reduce their environmental impact. Watch brand Triwa, has a strong sustainability profile, they manufacture watches made from recycled ocean plastic and solar powered watches. They show the carbon footprint of their watches from The 2030 Calculator as part of the product information on the product details page. They want to challenge the industry, the C02 declaration is a clear statement of intent.
There are six actions that I feel summarises the ideas, initiatives, and services that we have looked at, that can be used as guiding principles for sustainable business practice:
● Consolidate
● Collaborate
● Reduce
● Reuse
● Incentivise
● Inform
Consolidating as many shipments as possible in one delivery or one truck will inevitably create less CO2 emissions per package. Companies can reduce their sustainability impact, by finding smart ways to share infrastructure with competitors and within their own business departments and leverage stock data to optimise their total inventory, reducing over-production and unnecessary consumption. Reducing packaging will lower emissions but reusing packaging could have an even greater impact because it also reduces emissions created by manufacturing and waste treatment. Consumers increasingly want to shop sustainably, but if the benefits of their green choices are not clear enough, they will easily choose the fast and free options that are perceived to be the most beneficial. Transparency means that consumers can buy the more sustainable option when they want to or can. If their choices are based on factual data, it is a clear indication to the market what consumers really want to buy.
Please get in touch if you would like to know more or have a specific case. Sustainability is a complex issue; we must discuss and develop our approach together with multiple perspectives. Watch out for the next post in this series where we will be looking at digital energy efficiency, how you can reduce a website or apps power consumption.