Can E-Commerce and Sustainability Co-Exist?
Technology is transforming the retail landscape as we know it. The Census Bureau estimates that U.S. online retail sales were $97.3 million in second quarter 2016, a 15.8% increase from the previous year. According to Forrester, that growth is expected to continue with U.S. online retail sales anticipated to exceed $520 billion by 2020. Globally, online sales are growing three-times faster than GDP.
Increasingly, online shopping is being combined with traditional shopping trips to brick-and-mortar stores. According to the 2016 UPS Pulse of the Online Shopper study, 38% of purchases combine store visits with online research or purchase, and half of the surveyed respondents ship purchases to brick-and-mortar stores for pickup. Adding to this mix is a trend toward recurring deliveries. For items that are more predictable, consumers are increasingly willing to trust automatic refills, where one request results in ongoing fulfillment.
Navigating New E-Commerce Challenges
As more shoppers click to buy, the demand for a seamless shopping experience lands on retailers, and oftentimes the effort to provide this comes at an increased cost to the environment. Merchants now face the challenge of offering faster and easier shipping and return options, as well as the growing expectation that returning an item should be as simple and convenient as receiving it. If the returns process isn’t smooth, the customer experience level drops and what started out to be a satisfied consumer soon becomes a frustrated one.
As retailers deal with an ever-increasing number of packages that must be delivered in record time, their struggle rests in how to remain profitable while also reaching customers across channels in the most effective, efficient and sustainable manner possible. With goods flowing in multiple directions among manufacturing facilities, warehouses, stores and consumers, traditional supply chain models are insufficient. Now is the opportune moment to bring in new practices that are efficient, cost effective and environmentally conscious.
Collaborating to Drive Sustainable Solutions
E-commerce brings with it new considerations on everything from packaging and fulfillment to returns, as well as new possibilities to create and implement innovative and sustainable solutions. Businesses are partnering with forward-thinking logistics providers to reduce impact and improve operating efficiencies.
For instance, there are consumer-friendly services available, like UPS My Choice and UPS Access Point, which allow residential customers to modify their delivery times and locations, as well as provide access to an extensive network that supplies customers with new ways to receive deliveries at an alternative location – especially important for deliveries to apartments or other urban environments. These services help online shoppers avoid missed deliveries and eliminate the environmental impact associated with wasted trips caused by multiple delivery attempts.
Another area worth taking a closer look at is packaging. Properly packaged goods have a better chance of arriving intact, reducing the number of returns and the overall environmental footprint. When a shipment is packed correctly and arrives undamaged, no replacement goods need to be picked, no additional transport is required to replace the item, and no broken items have to be managed, recycled or sent to a landfill. Packaging made from sustainable materials also helps to further reduce the environmental impact and reduce waste, while demonstrating to customers that the company is using ethical and thoughtful practices.
And it’s not just large companies that are committed to navigating e-commerce sustainably. Small businesses are also using smart partnerships to enhance sustainable business practices. Take for example travel bag designer TOM BIHN. The company now uses shipping boxes made of recycled cardboard that are right-sized to prevent the use of excess materials, and crush tested to prevent product damage, as well as to reduce the rate of return shipments. Additionally, TOM BIHN ships every order via UPS carabon neutral, where carbon offsets are purchased to balance out the emissions produced by the transportation of shipments.
Moving Toward More Sustainable E-Commerce
Here are a few ways retailers can navigate the changes taking place to drive measurable results:
1. Optimize supply chains. Businesses evolving to meet the demand for e-commerce must re-evaluate current supply chains that were created to support in-store deliveries. E-commerce brings with it new challenges that include an increase in residential deliveries and complexities associated with product returns.
By identifying areas where service needs and environmental challenges converge, and exploring new ways to drive efficiencies and reduce impact, companies can create viable solutions that address both business and environmental goals.
2. Tap the power of data. The flow of goods throughout supply chains generates a tremendous amount of data. By partnering with a logistics provider that can tap into the power of this data, retailers can gain insight into customer preferences and trends, learn about hidden issues (e.g., ineffective processes or packaging), and fine tune supply chain movement so that valuable assets such as re-sellable returns don’t get lost or overlooked.
3. Fuel collaboration. Technology has made collaboration and innovation even more powerful. While collaboration between retailers and service providers can be highly effective, providing e-commerce customers with better choices and allowing them to actively participate in delivery decisions can help to build trust and preference.
Simple steps, such as providing customers with a way to shift their delivery to a time and location that meets their needs, reduces the environmental impact and results in a better experience for everyone.
4. Measure, manage, mitigate and market. Companies that are willing to understand the extent of their carbon footprint (including Scope 3 emissions) are then able to take the necessary steps to manage and reduce what they can and mitigate the remaining emissions. This, in turn, demonstrates company concern that goes beyond capturing immediate revenues. This type of positioning can help support the company’s reputation and offer a competitive advantage when driving consumer preference.
The cultural shift to e-commerce has brought about new expectations for immediate gratification from consumers, and with that, increased environmental impacts as retailers attempt to meet those demands. However, when companies are willing to invest in creating sustainable solutions to navigate the evolving demands of today’s shopper, they will see a return on their investment beyond operational efficiencies.
Greg Brown is the retail sector president of UPS.
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