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The Green Last Mile

The increasing importance of sustainable delivery options for retailers and shippers.

Shoppers are increasingly concerned about the environmental impact of online shopping. In this QAD Precision Report we look at green logistics for retailers.

In recent days, the following three events occurred:

  1. Teenage climate activist Greta Thunberg accused world leaders of failure to properly address environmental issues at the United Nations Climate Action Summit;

  2. Amazon placed an order for 100,000 electric delivery vans from start up Rivian Automotive;

  3. The first Green Postal Day took place on 20 September 2019.

Taken together, these three events point to a potential sea change in the way we think about the environmental ramifications of e-commerce. 

Consumers have long been aware that online shopping has environmental and social impacts. Our purchases are often packed in single use plastics, and excess packaging is common. Delivery vans are common sights on our city streets, and combustion engines spew fumes and noise. 

Despite this, the popularity of online shopping is unlikely to slow down. However, survey after survey has found that consumers are increasingly want retailers to address environmental concerns. Half of online shoppers in the US and UK say environmental concerns impact their shopping decisions, and 50 percent of British shoppers claim they will only support retailers with a wide range of sustainable delivery options in future. 

It is a truism to state that online shoppers want their deliveries as quickly and as cheaply as possible. Whether or not consumers are willing to pay extra for environmentally friendly delivery is another matter. Nevertheless, when an e-commerce behemoth such as Amazon invests in electric vehicles, retailers ought to take note — where Amazon goes, others are sure to follow.

Smartphones and Demographic Shifts

A 2018 study from DHL found that online retail sales increased from $290.4 billion to $1.6 trillion between 2008 and 2018 — a fivefold surge. This explosive growth in online shopping has taken place alongside other important social, political and technological trends, including the invention of the smartphone and demographic shifts to metropolitan areas.

The widespread adoption of smartphones means we can shop anywhere, any time. Smartphones outsold mobile feature phones for the first time in 2013. In that year, mobile e-commerce accounted for just under $42 billion in retail purchases in the US. By 2021, smartphone retail sales are projected to reach over $345 billion. 

Significantly, the rise of e-commerce has happened concurrently with the large scale migration of people from rural to metro areas. Globally, in 2018 55 percent of the world’s population lived in towns or cities. This figure jumps to 74 percent in Europe; 81 percent in Latin America and the Caribbean; and 82 percent in North America. The United Nation expects this trend to continue and forecasts that by 2050, 68 percent of the world’s population will be metro dwellers. 

E-commerce delivery in high-density areas presents logistical and environmental challenges, including air and noise pollution as well as traffic congestion. Retailers, and their delivery partners, need to balance customer expectations around speed and convenience with the environmental impact of their operations.

Speed vs Sustainability

Postal operators and parcel carriers have been investing in sustainable practices and technologies to reduce their carbon footprint. This September’s Green Post Day highlighted how collective action can achieve significant results. Working together, 19 global postal operators reduced their collective C02 emissions by almost 30 percent and electricity consumption by almost a quarter. The postal operators taking part include bpost (Belgium), Correos (Spain), Deutsche Post DHL Group (Germany), Royal Mail Group Plc (United Kingdom) and the United States Postal Service (United States).

In addition, parcel carriers have been growing their carbon neutral fleets, with zero emissions vans and cargo e-bikes. Recent examples include, DPD’s four-wheel e-cargo bike; DHL’s StreetScooter vehicles; the recent FedEx Express acquisition of 1,000 EVs; and UPS’s electric delivery vans and long range hybrid trucks. Carriers have also trialled drone and delivery bots, but these have obvious limitations in terms of capacity and range.

The investment in zero-emissions vehicles helps carriers reduce their own carbon footprints. This, of course, is good for the environment. But these efforts are increasingly important to their customers and their customers’ customers too. Green delivery options — especially if they do not negatively impact delivery windows — are likely to become a key differentiator.

Green(er) Online Shopping

There are a number of business practices that help address the environmental impact of online shopping. First and foremost, cutting down on excess packaging is a must. In the US alone, the cardboard packaging needed to ship a year’s worth of online shopping products amounts to over 1 billion trees.

Depending on what they sell, and who they sell to, retailers and manufacturers could consider reusing packaging; refillable packaging; recycled materials; or biodegradable bubble wrap, air cushions and so forth. 

There are practical and economic considerations here. For one thing, many metro areas do not yet have the infrastructure in place to compost biodegradable packaging. As a result, it may end up in landfills. Eco friendly packaging options can cost more, squeezing margins if customers are unwilling to pay a premium for these.

Clothing retailers can be at the mercy of serial returners. However, it is also fair to say that certain practices contribute to high levels of clothing returns, such as photography that is aspirational instead of genuinely reflecting the cut and quality of the clothing and inaccurate size guides. 

Retailers and other shippers should leverage the investments carriers have made in carbon neutral fleets, particularly in high density urban areas, with a multi carrier shipping solution. Furthermore, retailers could certainly do more to educate consumers about the environmental impact of online shopping and returns. This could include information about the carbon emissions associated with different delivery and returns choices and incentivizing shoppers to choose greener options. 

About QAD Precision – Trusted Global Trade and Transportation Execution

QAD Precision (Precision Software), a division of QAD Inc., provides industry-leading global trade management, transportation execution and multi carrier shipping software solutions from a single, integrated platform. Preeminent industry leaders in every region of the world rely on QAD Precision’s global support centers to leverage thousands of carriers and manage millions of shipping transactions every day. Our open architecture easily integrates with Enterprise Resource Planning, Warehouse Management Systems and legacy solutions. An ISO-certified company, QAD Precision assists companies to minimize shipping costs, optimize first mile and last mile deliveries, automate free trade agreement compliance, avoid customs delays and mitigate the risks associated with dynamic trading environments to maximize their competitive advantage. QAD Precision’s customers span multiple industries including banking and finance, life sciences, high technology, retail, industrial, automotive, higher education and public sector as well as logistics providers. For more information about QAD Precision, visit www.qadprecision.com.

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