The Impact of Sustainability on eCommerce Fulfillment Operations
By Laura Ritchey, COO, Radial
Retail and eCommerce have long had a major environmental impact caused by product manufacturing, the supply chain’s extensive carbon footprint, the extensive use of packaging, and other factors. Retailers are aware of the need to shift to more environmentally friendly business practices, and given their massive footprint, know they can make a real and measurable global difference. As more and more consumers become focused on sustainability, brands understand that they need to take a proactive approach to gain and retain customer loyalty and sales.
Retailers like Amazon and Walmart are leading among large retailers who have made climate pledges and are taking action to reach net zero carbon footprints. While eCommerce fulfillment is one of the largest areas that generates waste and carbon emissions, it is also an area where retailers have the most control. With a sharp rise in online shopping since the pandemic, retailers are doubling down on their sustainability initiatives.
Do Consumers Really Care?
Yes, they do. A recent study found that 60% of global consumers rank sustainability as an important purchase criterion, and 70% of US consumers say they will change brands if they discover the brand is not operating in a sustainable way. The word “sustainability” means different things to different people, but generally includes reducing waste, recycling, using eco-friendly materials, cutting greenhouse gas emissions, and using ethical labor practices.
Further, a 2021 IBM study found that 51% of consumers say they care more about sustainability than they did in the prior 12 months and nearly half are willing to pay 59% more for eco-friendly products. This consumer sentiment makes it clear that sustainability isn’t only good for the environment; it’s also good for business.
What’s Important to Consumers
Consumers care about retailers’ overall sustainability practices, but it’s the ones that directly impact shoppers that carry the most weight. Typically, this involves sustainable and recyclable packaging. In the US, cardboard boxes used for shipping packages account for one billion trees annually, demonstrating how just this one aspect alone affects the environment in a profound way.
And it’s not just cardboard. According to Statista, in 2019, the Chinese eCommerce industry produced about 488 million pounds of plastic packaging waste, while the US was responsible for about 469 million pounds. That same year, the estimated worldwide amount of plastic packaging waste produced by eCommerce fulfillment activities surpassed two billion pounds. Statista predicts this amount will double by 2025.
This chart shows how consumers ranked attributes that are “extremely important” to them when selecting a retailer. Clearly, activities related to environmental impact, sustainable packaging, and recycling are at or near the top of consumers’ list of priorities, so retailers would do well to act on the factors that matter most to them.
Where Can Retailers Drive Change?
- Packaging. Nearly every consumer has had the experience of receiving a large box with a small product in it, along with excessive packaging materials. Packaging matters to consumers because it becomes their responsibility to dispose of it afterwards. Having to contend with single-use boxes, plastic filler, bubble wrap, and oversized boxes make customers want retailers to ship packages in a smarter and more sustainable way. Eco-friendly packaging, right-sized boxes or mailers, and shipping materials made from renewable materials that are compostable matter to the unboxing experience.
Of course, customers also expect eCommerce orders to arrive undamaged. This can be a catch-22 for brands, as they need to balance protecting products during last mile delivery with reducing packaging waste. Using reusable packaging and working with manufacturers devoted to eco-friendly packaging and sustainable eCommerce fulfillment can help address these challenges.
In addition to changing packaging, retailers need to educate customers on what they are doing and why it matters. Amazon’s bags, for example, clearly explain that they are lighter than their smallest boxes and direct customers to learn why this matters via a QR code and website. To make a real difference, customers need to know how the brand is improving sustainability—and what they can do to help. If packaging can be recycled, brands can clearly ask customers to please do so.
- Transportation. Logistics accounts for a massive carbon footprint among retailers. While the supply chain works to reduce emissions, retailers can work with their order fulfillment process to consolidate shipments and locate eCommerce fulfillment centers closer to customers for delivery. Implementing store fulfillment can achieve this, as well as having shippers combine inventory delivery and reverse logistics pickups on the same trucks. Radial’s parent company, bpost, is switching to oversized freight haulers to carry 60% more packages on every route, reducing emissions and increasing delivery times and efficiency.
- Fulfillment centers. Sustainable fulfillment involves warehousing, eCommerce fulfillment services, order processing, shipments, and reverse logistics. Fulfillment centers can reduce waste and move to more sustainable operations by driving efficiency via automation and robotics. Selecting the right-sized packaging, kitting, and giving customers the option to group multiple orders in shipments all help reduce waste. Retailers that want to improve their sustainability practices need cloud-based order management systems that streamline operations, provide real-time inventory visibility across the supply chain, and help synchronize order fulfillment and routing for efficiency and waste reduction.
- Supply chain alignment. Sustainable eCommerce fulfillment takes everyone working together with a common commitment to eco-friendly practices and reducing environmental impact. Retailers can exercise their responsibility by choosing suppliers, manufacturers, fulfillment partners, and shippers that align with their common values on environmental issues and agree on their power to make an impact.
Ensuring eCommerce Fulfillment Providers Align with Sustainability Principles
Ecommerce retailers that operate their own fulfillment centers have direct control over their eco-impact. However, for those that partner with third-party logistics providers, ensuring that these partners support and complement their sustainability practices is critical.
Fulfillment partners should demonstrate their own commitment to reducing environmental impact and work with retailers to align on initiatives (e.g., leveraging robotics and making sustainable packaging choices). Kitting and aggregating orders to reduce waste is also important. Fulfillment partners should also support retailers’ efforts to market their initiatives with information on packaging.
When choosing a fulfillment partner, retailers need to clearly outline their sustainability commitments and requirements, and make sure both companies are working in sync toward common goals. Together, they can reduce waste, decrease environmental harm, and meet customers’ expectations for more sustainable business practices.
Learn how Radial supports sustainability and delivers world-class eCommerce fulfillment.
