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10 April 2019

Sustainability sells, but how environmentally friendly is our e-commerce?

“The ocean is rising, but so are we”, “What happens in the Arctic doesn’t stay in the Arctic”, “I’ve seen better cabinets at IKEA”. The sight of young and old raising their voices and signs during climate protests has become a familiar one over the past months. And then there’s the latest #TrashTag challenge that has taken social media by storm. Initially targeted at bored teens, the action encourages people to share pictures of littered areas before and after clean-up.

As society recognizes the environmental challenges we face, consumers are becoming more mindful of their buying behavior.

The #TrashTag challenge that's gone viral on social media.
The #TrashTag challenge.

The sustainable mindset

According to Nielsen research, consumers across nations, gender and generations (especially millennials) demand sustainability: 81% indicate that companies should contribute to improving the environment. They also hold themselves accountable: 73% would change their consumer behavior to reduce their environmental impact. Between 30% and 50% are willing to pay a premium price for products providing benefits like high-quality or safety standards (organic, hormone-free), all-natural ingredients, sustainable materials or social responsibility claims.

Putting theory into practice, a recent Nielsen study confirms sustainability does make a difference. Researchers selected chocolate, coffee and bath products, common fast-moving consumer goods purchases, and compared sales of products with sustainability claims to the overall markets. Package claims included environmental claims (for example, recyclable packaging), absence of artificial ingredients or fair trade. Overall, the sales of the products with sustainability attributes grew twice as fast as the weighted average growth of all categories together (+5% vs. +2%).

Sustainability sells

As consumers increasingly pay attention to sustainable product claims and are willing to spend more on those items, brands are leveraging the sensibility towards sustainability to grow their sales. They’re including environmental references in their product offering and/or communication to encourage conversion. For example, Innocent smoothies communicate clearly that they’ve been front and center of the recycling movement, as their packaging is 100% recyclable. With a witty message on their bottles, they encourage consumers to contribute as well.

Innocent encourages consumers to behave environmentally friendly by recycling their bottles.
Message on a bottle: Innocent's encouraging message to consumers.

But while many businesses surf on the sustainability wave, they heavily rely on our traditional e-commerce ecosystem. One that could hardly be dubbed sustainable, mainly due to the last mile transport. Covering the different ways in which a product reaches the end-consumer, the current last mile has a negative impact on the environment.

Hello contradiction

A while ago, I was looking to buy wooden sunglasses as a birthday gift. I bumped into a brand that for each sale of their handmade products donates to an organization investing in our planet’s future by planting trees. A sustainable brand, you’d say. But then I found their products on Bol.com, where I could order before 11:59 pm to have them delivered at my doorstep within 24 hours. Like me, most consumers prefer home delivery when they shop online. The result? Extra drop-offs if we’re unable to open the door the first time around.

Or take Adidas’ UltraBoost, a shoe they made out of ocean plastic. I could have a pair delivered at home and return at no cost via Zalando. Those free returns have given way to orders and returns in bulk: who hasn’t selected multiple sizes knowing they’ll only keep one?

Packaging isn’t always sustainable either. For example, I recently ordered vegan-friendly mascara. I received it in reused packaging, but the cardboard box was six times the size of the item itself. Add to this the increasingly limited time spans, as consumers expect delivery the next day or within a few hours, et voilà: thousands of delivery vehicles are sent out onto the Flemish roads, leading to road congestions and air pollution.

Because of fragmented processes, online shopping remains an environmentally unfriendly activity. It turns out the increased anxiety about the environment hasn’t led to a behavioral change when ordering over the internet. Research shows more than half of online European shoppers are concerned about the environmental impact, but only a third consider it when buying online.

7 ways to build eco-friendly e-commerce

Recent Belgian research confirms consumers indeed prefer free, next-day delivery to a location of their choice, within regular office hours during the week. They are, however, willing to make trade-offs once the conditions of free delivery and return are met. In that case, they’re inclined to collect their parcels themselves or wait longer to have them delivered.

Those results are in line with a European study showing 75% of consumers wouldn’t mind receiving their orders later if they knew selecting a shorter delivery period led to more air pollution and congestion. Another 60% are prepared to pay extra for sustainable delivery methods. The problem, however, lies in the lack of knowledge: 58% aren’t aware express delivery has a more negative environmental impact than the standard option. Those findings demonstrate businesses’ responsibility to generate more awareness of the impact of delivery decisions amongst online consumers, for example during check-out.

Not only should organizations encourage consumers to become more conscious of their online shopping behavior, they should innovate and improve their delivery options, consider the use of green delivery vehicles and offer sustainable packaging. Here are examples:

  • Use environmentally friendly packaging. Launching this spring in the US and France, the start-up Loop delivers branded products from, for example Unilever in durable, reusable packaging. These packages will be collected from consumers’ houses and automatically refilled - the modern version of a milkman.
  • Choose packages that match the size of your product. Since standard boxes are cheaper, 40% of packages consist of air. Slimbox, a Belgian business, developed a packaging machine that’s controlled by an app and cuts out customized boxes.
  • Offer slower delivery methods, for instance at a lower price than the faster options. This facilitates better loading of vehicles and more efficient routing of delivery rounds.
  • Provide alternatives such as collecting parcels at pick-up locations or lockers, instead of only proposing home delivery.
  • Offer alternative moments of delivery, in addition to the standard ‘next-day’. Ocado, an online supermarket in the UK, displays more eco-friendly ‘green van’ slots. These are moments during which a delivery vehicle is scheduled to be in the consumer’s own area.
  • Bundle items that are ordered simultaneously and deliver them together.
  • Shift to environmentally friendlier means of transportation. Bpost currently drives around using the Colibus, a 100% electric van designed for inner-city last mile delivery. By 2030, they are intending that half of their fleet should be electric. Cargo Velo, in turn, picks up orders from a warehouse on the outskirts of Antwerp and Ghent and delivers them by bike in the city centers. They count Proximus and Lidl among their customer base.

Final note

The current consumer mindset values sustainability, which has encouraged brands to include environmental references in their communication. The increased anxiety amongst consumers, however, hasn’t led to a behavioral change when ordering online. The current reality challenges businesses to take action, by generating awareness amongst online consumers to choose consciously and by providing innovative and more sustainable delivery options.

Since there are two sides to every story, it’s important to nuance the environmental impact of online purchases. If an online purchase replaces an offline one, it is a more environmentally friendly activity. For instance, ordering groceries online that are delivered by an efficient logistical partner replaces individual consumers’ dedicated car visits. Shopping online, however, doesn’t always equal substitution. For items with a longer consideration phase, like electronics, consumers prefer to visit a physical store for information or product testing before ordering online. Those pre-purchase visits are complementary to the actual parcel delivery, leading to two or more movements instead of one. Whether online shopping has a negative environmental impact depends on the context of the order: is it a substitute or a complement to a dedicated physical visit?

Is green e-commerce the future? If you want help to overcome your e-commerce challenges, don’t hesitate to reach out – we will happily support you in innovating your approach. In the meantime, find out how other e-commerce players are performing: in the newly launched E-commerce Barometer 2018, we collected key facts and figures concerning Belgian online merchants.

DISCOVER THE E-COMMERCE BAROMETER
References:

    • Green generation: Millennials say sustainability is a shopping priority (Nielsen, 2015)
    • Green & Social Delivery Report: The Future of Ecommerce lies in its Sustainability and Sociality (B2C Europe, 2018)
    • Sustainable shoppers buy the change they wish to see in the world (Nielsen, 2018)
    • The Future of Ecommerce lies in its Sustainability and Sociality (Vlaams Instituut voor de Logistiek, 2019)
    • The “next day, free delivery” myth unravelled: Possibilities for sustainable last mile transport in an omnichannel environment (Buldeo Rai, H., Verlinde, S., & Macharis, C., 2018)
    • What's sustainability got to do with it? (Nielsen, 2018)
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