Dec 10, 2019 8:30:00 AM
Senior Consultant, Design
Adopting sustainable business behaviour is not just an act of corporate social responsibility – it’s fundamental to a company’s brand and bottom line. Sustainability is also driving innovation in ecommerce services and business models.
The expectations and values of consumers have changed in recent years, and they are now more aware than ever of the sustainability credentials of products. As the threat of global warming has become a reality, we regularly see people marching for the climate. These same people make choices on whether they want to buy from a certain brand or not.
Consumers are becoming increasingly aware of the impact that digital sales has on the global climate. The complete product chain – from production to at-home delivery – is adding to worldwide pollution levels, and the future of digital sales needs to exceed the ever-increasing expectations of customers and everyone else associated with a brand.
Sustainability is currently a powerful branding and marketing message, and will be even more so in the future as consumers sway towards sustainable service providers. As such, it’s in every company’s best interest to strengthen their brand’s association with sustainability.
Building a sustainable digital sales strategy has the potential to improve business results. This is not only because a sustainable ecommerce brand appeals to conscious consumers, but also because the whole digital sales process is more effective when fewer resources are wasted.
It is essential that every company and individual take action to lower their carbon footprint. It is highly likely that the product chain will be regulated by more laws in the near future as the environmental crisis calls for new action. For instance, as part of its circular economy law, France has passed new legislation that bans producers and retailers from destroying unsold food and non-food items.
Sustainability is no longer an issue solely involving product manufacturing, marketing, or delivery. Now it's about the company's process as a whole, including scrutiny of its mindset and values. Businesses are waking up to this and new roles in sustainability are being created for employees. Having a dedicated professional looking into the sustainability of an entire process – all departments, new legislation, and communication around sustainability (both internal and external) – is advised for businesses involved in digital sales.
“The true test of a responsible company is when all functions and departments are capable of minimising their own negative impacts and are thinking about making a positive impact on their community.” - Alberto Andreu Pinillos
The change towards sustainable business practises can be driven from the company’s digital sales process operating models. A great example of this is the “preorder” model, where goods are only manufactured once an order has been placed. This reduces the waste of overproduction, which is a huge problem globally.
Another strategy that some companies are using is the “drop” model, where only high quality garments are sold, and in limited quantity. The point is to sell out all stock. Brands like Supreme and Sézane have been quite successful with this model. For consumers, the experience can be quite frustrating, as the best garments sell out in a few seconds. But from a sustainability perspective, the advantage of using such a model is that there is usually no waste.
The “upcycling” model – a way of processing an item to make it better than the original – and the “recycling” model – converting waste into reusable materials – are also gaining popularity. For example, the company Lovia makes leather bags out of excess high-quality materials from leather couches. Rothy’s makes washable, woven flats out of recycled plastic. Precious Plastic Bazaar is a platform to buy and sell items made of plastic. And Tilli is a French startup that connects seamstresses with consumers to breathe a second-life into unused or old garments.
These actions include, for example: going paperless where possible, reusing packaging material, using thinner packaging tape, optimising packaging, and recycling more.
Some companies have been very innovative in tackling these issues. For example, RePack is a reusable packaging service where delivery packages can be returned and reused. Recently, Zalando has launched a pilot test to use RePack’s shipping bags.
According to a research conducted by B2C Europe in the UK, Netherlands and France, 75% of customers would be willing to wait longer for their parcels if they knew that opting for a shorter delivery period resulted in more air pollution and congestion. This is something that should be highlighted more in the purchase funnel when the customer is looking at the delivery options.
End users like to have choices for delivery options, and studies have found that customers are more loyal to brands that offer a premium delivery and return experience.
The three main elements to take into consideration within digital sales are: price, speed of delivery, and place of delivery. To improve sustainability, we need to look at the whole product chain – from production to delivery. Research has found that of the overall journey of a package, the last mile is the most problematic. The last mile of a package has been researched extensively because it is both the most expensive and the least ecological. It represents 20% of the final cost of transport.
Home deliveries are subject to problems such as the customer not being at home when the delivery arrives, which adds to the unsustainability of such deliveries. The simple solution is to improve communication with the customer in the sales process; to clearly inform them about the price and time of delivery.
There are also several alternative delivery methods currently making their way into ecommerce and already being tested, developed and used:
All delivered packages are grouped in a single central location. From the retail perspective, lockers offer a solution that saves time (and therefore resources) for the delivering company, and yet is still secure. End users also benefit as they can decide the time of the pick up, and use the same locker if returns are required.
Door-to-door deliveries can be improved simply by making them appointment only. To lessen the environmental impact of the delivery, alternative delivery methods include options such as bike, drone, walking, public transport, and autonomous car.
In 2013, Amazon announced they wanted to use drones to deliver globally. Since then, DHL, UPS, Google, La Poste, JD, and Starship Technologies have been developing their drone systems, and this idea is still being thoroughly investigated.
But there are many issues with drone deliveries, including the fact that they are forbidden in some areas. Also, the ethical aspect of using them in residential neighbourhoods needs to be discussed.
Autonomous vehicles are one of the examples of how AI can reshape the ecommerce transportation industry, and the testing of autonomous delivery trucks is already happening by DPDHL.
Pizza chains have already recognized the potential of this technological development. In the US, Ford and Dominos have teamed up and plan to have a fleet of autonomous vehicles delivering goods on US roads by 2021. Toyota and Pizza Hut have similar plans and testing is due to begin in 2020.
Renault’s innovation of an autonomous delivery concept featuring shared customizable robo-pods is creating interest in the delivery industry. End-customers choose where, when and how to receive their deliveries.
New courier operating models are already being tested and developed. For example, the Stuart operates with the aim of reducing the ecological impact of transport, using an algorithm that offers low-price transport and optimises deliveries in on-demand areas.
As the use of data and AI develops, customers will have access to more tools that help them choose the most sustainable options. In webstores, for example, we will be able to set preferences on things like delivery speed, environmental impact, and how we engage with the value chain.
New technologies in automation and process optimisation are also becoming available. Data analysis can be used to anticipate the demand of goods in a particular geographic area, for example, and to prepare packages beforehand. Analysis and optimisation can also focus solely on improving the last mile, while simultaneously improving the traceability and security of deliveries.
Improving sustainability in digital sales is not just a branding exercise. It benefits a company's bottom line too, as fewer resources and goods are wasted, and processes are optimised. In short, it can have a direct positive impact on the business. By using operating models like pre-ordering or optimised deliveries, sales risks can also be lowered.
There is a constant stream of new players entering this field, so more and more options are available all the time for making your ecommerce business more sustainable.
Want to get more inspiration? See how MyHelsinkis Think Sustainably service make it easy for its users to find sustainable options for living in and enjoying Helsinki. The Think Sustainably service is a stellar example of how technology and growth can be used for the common good.
Mar 16, 2020
Senior Consultant, Strategy
Mar 9, 2020
General Manager, Sweden
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