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:
Teenage climate activist Greta Thunberg accused world leaders of
failure to properly address environmental issues at the United
Nations Climate Action Summit;
Amazon placed an order for 100,000
electric delivery vans from start up Rivian Automotive;
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
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
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
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
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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