Here Vaggelis Giannikas explains how our online shopping habits could harm the environment and the economy, and what customers and retailers can do about it.
Since the pandemic began, e-commerce (perhaps the most popular example of the digital economy) has gone from just being an alternative way of shopping to a key way for people to gain access to essential goods and services. At a time when most industries were suffering significant losses, as shops and restaurants were forced to close, the companies who quickly adapted to the new, online reality managed to find ways to serve their customers despite lockdowns and social distancing restrictions. This caused a sharp increase in customer demand for online shopping services that lasted for longer than anyone expected. As a result, many companies struggled (and continue to struggle), to create the necessary capacity for logistical services –both warehousing and last-mile ones– that would allow them to get their products to their customers.
A side-effect of this increase in demand was the realisation that online shopping –unless done right– can be costly both in monetary terms but also from a sustainability point of view. For years many companies have reported no profits from e-commerce due to the logistics costs associated with it. In the past, an online presence was often seen as a necessity for many retailers, as companies believed that not being online could affect their sales in more traditional channels. A website raised visibility and could affect brand image, and could help bring them to your store. Today, however - as we continue to navigate the pandemic - selling online has become the only way to create new revenue and business for many. However, this is not without its challenges - selling online requires different order fulfilment and distribution services to those used for offline channels, and all of this becomes even harder to manage in situations of very high demand.
A costly habit
From a customer’s perspective the convenience and low cost of online shopping make it a highly appealing option, meaning that more and more consumers are choosing to buy their items online. However, these same factors often lead to consumer behaviours that can be costly not only for the economy (that is the retailers and logistics providers who lose money due to these practices) but also for the environment. Examples of this – which I’m sure many of us would recognise – include:
- Ordering multiple items with the intention of returning several of them, for example buying different sizes of the same clothing item to see which one fits. The outcome of this is the need for additional warehousing transportation capacity (and double the vehicular emissions) as items are delivered but also returned to the retailer.
- Placing small (e.g. single item) orders on fast delivery. Often this is done when customers don’t need the items urgently, but purely because they are taking advantage of a pre-paid subscription for next-day, cheap deliveries. Similarly, customers placing multiple orders per week, e.g., grocery ones, instead of consolidating orders into one shop.
- Building on the above, packaging inefficiencies mean that items are often being packed in overly large boxes, which creates empty spaces that needs to be filled with paper, plastic air bags etc to stop the item from being damaged. This results in vehicles transporting goods are full of half empty boxes (meaning that more the necessary emissions are being produced) as well as the waste created by all the additional wrapping/filling material.
- Customers missing deliveries. With online shopping now so commonplace, and products being delivered many times a week, there are frequently occasions when the recipient is not at home. This leads to a need for extra resources to re-attempt the delivery, especially in cases of food items that cannot be delivered to safe locations, lockers etc.
How can we make online shopping more economically and environmentally sustainable?
Whatever the future might be covid-wise, an increased demand for online shopping will likely remain, as customers have now experienced the convenience of conducting their shopping online. So, the question that naturally follows is what can different stakeholders do about it to ensure a sustainable future for a useful way of shopping?
- Retailers and logistics providers should explore technologies that allow for “greener logistics” while at the same time developing mechanisms to motivate sustainable consumer behaviours. Companies have already found ways to do that with some innovative examples including
- incentives to consolidate orders to a smaller number of deliveries and to avoid unnecessary use of fast and ultra-fast delivery options
- using packaging that better fits the product and reduces the likelihood of empty space
- reducing the likelihood of returns, even by considering offering an item to a customer for free
- communicating directly with customers, for example sending text messages to arrange and confirm an attended delivery.
- Customers need to become aware of the impact of their actions not only in terms of the goods they consume (an area that has received a lot of attention over the past few years) but also the way they purchase and return them, as well as what they do with their packaging, boxes etc. The rate of adoption of more sustainable logistics options over cheaper/more convenient ones also needs to increase considerably – for example, choosing a bike delivery over a van one (accepting that the former option might take longer) or choosing to click and collect rather than opting for home delivery.
- From a policy perspective, it is important to understand how different options for online shopping compare and relate to offline ones in terms of their impact to the economy and the environment. Both channels will continue to co-exist to satisfy consumer demand so a holistic view is necessary to find ways from improvement. This demands for a careful assessment that takes into account the whole distribution networks and infrastructure required for traditional versus online shopping. This information can then be used to raise awareness but also drive more sustainable behaviour from practitioners and consumers alike.