Is online retail going green?



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Sustainability Is online retail going green?

Published on 24.03.2020 by Susanne Lüdi, Digital Product Manager, Post CH Ltd

There is a flip side to the boom in online retail, namely packaging waste, inefficient deliveries and returns on a massive scale. These drawbacks are known to everyone involved. Sustainable concepts are now required.

How “green” is online retail? We have investigated which trends and topics underpin the issue of sustainability in online retail:

Avoiding returns and the destruction of goods

According to the e-commerce trend indicator 2019, more than 70 percent of all Swiss residents shop online at least once a month. However, one in six parcels is returned by the customer – at the expense of not only the online retailer, but also the environment (Süddeutsche Zeitung, May 2019). For Swiss customers, a free returns policy is even a decisive factor in the choice of online shop (e-commerce trend indicator 2019). To curb this development, a statutory return shipment fee is currently under discussion (ARD-aktuell, December 2019).

As Bamberg University discovered, approximately 4 percent of returned items are thrown away. This figure does not, however, include the destruction of unsold goods (Süddeutsche Zeitung, June 2019). In Germany, a controversial new returns law is designed to reduce the number of return shipments that are destroyed (t3n, February 2020).

Packaging offers considerable potential for sustainability

Almost half of the people surveyed pay attention to whether online retailers use sustainable packaging. The most important issue for consumers is size-optimized packaging, closely followed by the return of the same packaging and environmentally-friendly packaging and padding (Magento study, 2019). Three quarters of consumers would welcome the introduction of a reusable system for return shipment packaging (PwC, 2018). The Swiss Post Dispobox, for example, is already used for food deliveries.

According to the logistics study (2019) conducted by the retailers’ association, more retailers opted for environmentally-friendly packaging in comparison to the previous year. However, costs are still decisive in the choice of packaging.

The CEP study (2019) shows that sustainable packaging solutions are relevant to online retail in many respects. It’s all a matter of making the most efficient use of materials. This lowers the cost for senders, while reducing waste and resource consumption. The size of packaging also has a direct impact on delivery vehicle loading, as smaller parcels promote innovative delivery concepts such as microdepots, whereby deliveries in city centers are made using cargo bikes. Finally, the safety of packaging is also significant: the right packaging ensures that goods are delivered to recipients undamaged, thereby avoiding unnecessary returns.

Keeping first-time delivery rates for parcel consignments as high as possible

In its 2017 study, the University of St. Gallen (HSG) put forward an interesting thesis that online retail is more environmentally friendly than bricks-and-mortar retail: in urban areas, lower average CO₂ emissions are generated per parcel thanks to efficient bundled deliveries in the online retail sector. A specific example of this is that Swiss Post records a high success rate of about 90 percent when it comes to first-time delivery of parcels. The shorter the distances covered, the better the climate footprint. An increasing number of consumers are opting for delivery solutions such as parcels being deposited in a safe location and collecting online purchases from branches or from a collection point (MetaPac, 2018). In rural areas, CO₂ emissions are higher for purchases from bricks-and-mortar retailers due to consumers making longer journeys in their own vehicles and the need for shop maintenance. Nevertheless, no general statements can be deduced from the study, as numerous other factors must be taken into consideration (HSG, 2017).

Will grouped deliveries save the world?

Swiss customers would like to receive their different orders in a single, or so-called grouped, delivery. The global consumer survey conducted by MetaPack (2018) states that grouped deliveries are also attractive for online buyers in the German market. Some 61 percent would opt for a grouped delivery immediately. A single delivery window is easier to plan for and better for the environment. ExLibris, for example, offers customers the choice of partial deliveries or environmentally-friendly grouped deliveries which, under certain circumstances, may take 1–2 days longer (ExLibris, 2019).

Slow logistics – the new megatrend in sustainable delivery?

According to an article by Axios (June, 2019), delivery efficiency is decisive for every retailer. This also places enormous pressure on distribution companies. With the acceleration of Prime shipments from two days to one day, Amazon has created a new normality – at the expense of the environment. Yet Amazon is often one step ahead and has already begun thinking in the opposite direction. Why go quickly when slow is also a possibility? In the UK, the American group attracts customers with discounts if they opt for “no-rush shipping” (Amazon, 2020). The service appears to meet customer requirements. The e-commerce trend indicator (2019) shows that demand for same-day delivery tends to be low. This is also confirmed by a study conducted by PwC: some 70 percent of young academics surveyed claim that they accept a slower delivery option if it is demonstrably more ecological, less expensive or genuinely punctual (Süddeutsche Zeitung, September 2019).

We are all in the same boat

We are undergoing a change in thinking. There are some measures that have already been implemented and others that can be introduced relatively quickly. One precondition is a series of changes in consumer attitude and behaviour. Manufacturers, retailers and logistics companies should ensure that sustainability is pursued not as an individual process, but as a strategic approach that forms part of an overall concept.

The current situation offers an ideal opportunity to take consumers by the hand, offer them guidance and support them with regard to sustainability, thereby creating loyalty. Whether this evolution towards sustainability in online retail will occur organically or through policy intervention remains to be seen. Ultimately, we must be aware that we are all responsible for our actions and our environment and that simply passing the buck is not a solution. Because when all’s said and done, there is no Planet B.

Interesting

Swiss online retailer survey 2020

We’re calling on you, online shoppers! Help us gain some insight into the sustainability of Swiss online retail. We will present the results in autumn for the first time at Connecta. You too can benefit from the findings. By participating in the survey you can request a summary of the results from the study. It’s well worth taking part!

Go to the survey

Susanne Lüdi, Digital Product Manager, Post CH Ltd

She is a digital product manager in the Digital Commerce Competence Center at PostLogistics and assists customers in managing their online consignments. The customer is always the central focus so new services can emerge at the forefront of the market. As an active online shopper, she tries out and compares each of the services.

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