EnvironmentSustainability

How to Tackle the Environmental Cost of Ecommerce

By October 8, 2020No Comments

You are an eco-conscious consumer. Maybe you turn off and unplug your lights, or you try to reduce water consumption. You may buy second-hand products, or perhaps you are well-studied on the long, long list of rules for recycling.

Maybe you carpool or ride a bike, or you have a garden and shop for organic produce. You do all the eco-friendly things that would make Al Gore blush; but now consider this inconvenient truth: each and every time a package arrives on your doorstep within 48 hours of ordering, also known as same-day delivery or two-day delivery, the environmental costs of such an expedient service are wasting all of your carbon-diminishing habits.

“The time in transit has a direct relationship to the environmental impact. I don’t think the average consumer understands the environmental impact of having something tomorrow vs. two days from now. The more time you give me, the more efficient I can be.” That is a quote from Patrick Browne, director of global sustainability at UPS.

The advent and booming popularity of same-day and two-day delivery have forced delivery and fulfillment companies to take more inefficient and carbon-intensive routes, passing both the financial and environmental costs on to the consumers. Yes, the shipping may appear to be ‘free’, but that is because notable e-commerce giants are fronting the logistics costs for competitive reasons while doing all they can to disguise the true costs, the harm to our environment. Cue Captain Planet.

Let’s delve into the environmental impacts of the services provided by these e-commerce giants, and then examine carbon-friendly solutions with promises of the exact same delivery times.

The Cost of Consumer Expectations
You wake up in a cold sweat. It is your dear mother’s birthday tomorrow, and you have nothing, nada, zip, zilch, diddly-squat… just like last year. You’re out of excuses, and more importantly, out of time. What is a desperate son or daughter to do? Well have no fear; up in the sky, look! It’s a bird, it’s a plane, no! It’s a delivery drone coming to your rescue. Ah, the future.

The trend of faster delivery times, from click to door, has always been a point of competition amongst e-commerce companies, with a 2019 study conducted by Rakuten Intelligence showing that delivery times have been steadily decreasing the previous two years from 5.2 days to 4.3 days. And today, over 50% of shoppers between 18-35 years old have reported that they expect same-day shipping and will opt for speed of delivery; however, 90% of consumers reported that they would opt for free delivery over speedy delivery.

So, are you willing to trade speed for the eco-friendly, green alternative? If so, you are in the vast minority. A study by Forbes in 2019 showed that 95.6% of consumers were not willing to make the trade-off of speed for package consolidation, and 54% of consumers mention ‘speed of delivery’ as their top delivery consideration when shopping.

Our expectations as consumers are trending towards not only the same day but within 1-3 hours for some products. The promise of e-commerce was economies of scale, allowing companies to synergistically ship orders to your door in a more environmentally-friendly way when compared to each consumer driving to the store in their own cars. These initial environmental benefits are now at risk as shipping gets artificially pushed to be faster and faster.

Environmental Costs of Shipping
You may be thinking, how bad is bad? Well, in the worst-case scenario, a package delivered the same-day could result in carbon emissions up to 35 times more than if the delivery had been done efficiently. These abhorrent emission numbers can stem from carriers relying heavily on air freight, which values speed, instead of the lower carbon option of ground freight.

Transporting 2 tons of freight over 500 miles with a truck creates just 12% of the carbon emissions used to do the same with a plane. That’s right, give a trucker a hug. The air freight option is much more expensive and carbon-intensive than ground freight and is used solely in the case where goods need to be shipped long distances, quickly. This, of course, requires a lot of energy and fossil fuel.

Not only does air freight emit over 8 times the carbon, but the effects of these emissions are also 2 to 3 times more harmful compared to carbon emissions from ground transportation because airplanes release the carbon at high altitudes into the atmosphere, where they contribute much more to the greenhouse effect.

While larger delivery companies are able to combat a portion of these added carbon emissions by purchasing more carbon-neutral vehicles or packaging, the large majority of companies that are struggling to compete, such as meal kit delivery or razor subscription box companies, just cannot afford to be environmentally-friendly, and unfortunately, it will be all of us that will pay the price.

Solutions for Low Carbon Delivery
“But it’s my mom’s birthday tomorrow and I need to get something, like, today!”, you may be saying to yourself. Or, “Shouldn’t that be the company’s job to be environmentally friendly?” Well, absolutely. Here are some ways that companies are meeting consumer expectations for quick service, all while reducing the added carbon footprint.

Implementing Machine Learning
One of the major trends in 2020 for delivery and fulfillment will certainly be the injection of Artificial Intelligence (AI) and Machine Learning into the supply chain. According to McKinsey & Company, businesses can expect to gain between $1.3 trillion to $2 trillion a year in economic value by using AI in their supply chains.

These computing solutions have limitless potential to transform the supply chain and logistics network. The main impact of these solutions can be found in the following areas:

  • Predictive demand: tuning Machine Learning models to predict and forecast demand, using order metrics, product data, and real-time KPIs, will allow companies to shorten shipping distances, lower delivery time, and eliminate the need for carbon-intensive air freight in some circumstances.
  • Smart Warehouses: Smart warehouses are able to simplify and automate the tedious tasks of picking, packing, and shipping, thereby creating a greener and more cost-efficient system.
  • Route Optimization: Route planning using real-time location data allows companies to optimize ground routes with various stops, allowing them to fill ground vehicles more efficiently and aim to reduce fuel consumption.

Delivery and smart fulfillment companies like ShipHero are realizing the potential of Artificial Intelligence and Machine Learning to solve the complex problems presented by logistics and supply chain operations; and when configured correctly, Machine Learning has the ability to help key business leaders get the real-time information they need to make smart decisions.

Considering the present-day state of shipping and delivery during the COVID -19 pandemic, with shipping carriers at capacity and consumer demands at all times high, companies must rise to meet this watershed moment where e-commerce has seen 5 years of growth… in just four months. So being able to combine these new technologies, a wide fulfillment network, and transportation optimization will present a radical new shift for e-commerce logistics.

Reducing Waste
Single-use and disposable materials are terrible for our environment, filling up landfills, waterways, and the bellies of poor turtles. Fulfillment companies like ShipHero are switching to recyclable packaging, thereby eliminating single-use materials, and using sustainably sourced paper and recyclable packaging.

Waste can also be created by overproduction, unnecessary inventory, and unnecessary transportation, all of which can be addressed and reduced through a smart fulfillment platform set with a goal to lower and optimize carbon emissions. So how can companies measure their carbon emissions?

Transparent Reporting and KPIs: A Competitive Advantage
Almost half (46%) of surveyed global consumers said they would be willing to forgo a brand name in order to buy environmentally friendly products. In this information era ripe with cancel culture, brands should be sure to show-not-tell their customers how they are being eco-conscious, lest join the expanding list of canceled brands.

Over 73% of global consumers say they would definitely change habits to reduce environmental impact and over half of shoppers choose brands based on sustainability; so, brands that are notably eco-friendly like Lush Cosmetics, Patagonia, and TOMS make sure to advertise just how eco-friendly they are. In order to meet the expectations for this majority of consumers, companies must be able to demonstrate this competitive advantage through transparent reporting and Key Performance Indicators (KPIs).

When warehousing, distribution, and fulfillment activities are all performed by a singular entity, carbon emissions and footprint are much easier to monitor, optimize, and report. These are brand new reporting capabilities that could not have been made under standard fulfillment methodologies, and now these capabilities can be developed even further. Taking the approach to continually build out more eco-friendly reporting services at a steady pace, ShipHero can make a difference now, all while continuing to evolve them over time; and they even envision a future service where carbon savings are published and available for every shipment with a simple scan of a QR code included on the shipping label. What’s important to note is that ShipHero does all of this while maintaining the exact same delivery times (between 3-5 days) that you and your consumers have come to expect.

Then, these carbon emission optimization metrics are passed onto you, so that you can communicate them to your loyal, eco-aware customer base.