During the pandemic, online sales grew dramatically. In 2021, retail ecommerce sales reached 4.9 trillion US dollars globally. By 2025, this number is projected to grow by 50 percent, expanding to 7.4 trillion US dollars.
At the same time, consumer concerns around sustainability are burgeoning. Between 2017 and 2021, the segment of Americans with the highest level of concern about climate change grew from 18 percent of the total adult population to 33 percent in the US alone. Those who are concerned about the impact humans are having on the planet are translating this into how they shop. According to a Nielsen survey, 73 percent of consumers state that they would change their consumption choices and habits in order to reduce their environmental impact.
Much of this shift in focus is being led by younger generations, particularly millennials and Gen Zers, who are quickly becoming the largest consumer segment. Of those ages 21 to 34, 90 percent say that they are willing to spend more money on a product that contains environmentally friendly or sustainable ingredients. Additionally, 80 percent of millennials said that they would be willing to spend more on products with social responsibility claims.
Not only is there a growing increase in the amount consumers are willing to spend for sustainability, but the flip side is that 53 percent of millennials are willing to forego a brand in order to switch to a more environmentally friendly brand.
For ecommerce businesses, the future is bright. The opportunity for increasing sales is continuing to reach new heights. However, the future will also demand a renewed focus on sustainable business practices with increasing pressure from consumers to see a viable demonstration of a brand’s value of sustainability.
How Ecommerce Impacts Our Environment
Currently, ecommerce is largely impacting our environment in a negative way. To begin with, ecommerce packaging is responsible for contributing to CO2 emissions through the production of plastics, as well as adding an immense amount of waste to our landfills. And it’s not just plastics at fault. According to Canopy, a forest conservation group, 3 billion trees are pulled each year to produce 241 million tons of shipping cartons.
Shipping emissions are another area where ecommerce has a serious environmental impact. The shipping and return of products are responsible for a large amount of GHG emissions. Returns alone account for about 15 million metric tons of carbon dioxide emissions annually in the U.S.
As the demand for online shopping continues, brands need to look for ways to reduce their carbon footprint and offset CO2 emissions. This is where a sustainable ecommerce business model comes into play.
What is Sustainability in Ecommerce?
Understanding the negative impact of ecommerce on the environment is one side of the coin. On the other is understanding what sustainability in ecommerce looks like.
Sustainable ecommerce includes a blend of sustainable practices and sustainable products.
Traditionally, sustainability is broken down into three key pillars:
- Economic viability
- Environmental protection
- Social equity
For ecommerce brands, this means that everything from the sourcing of materials to the shipping of products needs to consider these three critical areas, creating a business model that contributes to a sustainable future.
How to Transition Your Ecommerce Business to a Sustainable Model
Transitioning your ecommerce business to a sustainable model not only has the potential to increase long-term growth, but it is the right thing to do for our planet and our people. But sustainability doesn’t happen overnight. It is about more than simply creating a vision statement or calling your brand green. It is about taking a strategic approach to transitioning layers of your business to a sustainable model.
Analyze Your Supply Chain
Across your supply chain are countless opportunities to reduce your carbon footprint and lower your pollutants production. From the manufacturing of your products to your shipping fulfillment strategy, look for areas where you can improve your practices with sustainable alternatives.
For example, look for sustainable sourcing for materials for your products. Build relationships with suppliers that treat the planet well and offer social equity to their workers.
Switch to Sustainable Packaging
With the high amount of impact, custom packaging has on the climate, switching to sustainable packaging is an effective way to increase your business’ positive reach.
When choosing a partner, focus on sustainable packaging that meets the following criteria:
Uses renewable energy in the process of sourcing and manufacturing the packaging
Uses materials that are safe and healthy for individuals and the environment
Implements a design that will optimize material usage
For example, Arka provides customizable sustainable packaging, working with ecommerce brands to reduce the amount of packaging used by focusing on “Ships In its Own Container” (SIOC) solutions. This SIOC packaging allows brands to dramatically reduce the amount of packaging used in product fulfillment while also focusing on sustainable materials. You can check custom folding cartons, shipping boxes and mailer boxes that Arka offers, which ensure an unforgettable unboxing experience for customers!
Offer Delayed & Bundled Shipping Options
Part of the draw of online shopping is convenience, and much of that convenience has been translated into the speed of delivery. As consumers have become increasingly reliant on fast delivery times, the impact on the environment has been great. Trucks are deployed half full in order to meet delivery deadlines, wasting a massive amount of fuel and creating unnecessary waste.
As you transition to a more sustainable business model, offer your customers delayed or bundled shipping options. According to recent data, customers who are willing to wait up to five days for home delivery can actually help cut carbon dioxide emissions by 30 percent.
Make sure that when you offer delayed shipping, you highlight the positive impact this will have on the planet.
Consider Carbon Offsets
Implement sustainability into your ecommerce business model almost immediately by investing in carbon offsets. These programs allow you to offset emissions from areas of your supply chain where it is not currently viable for you to cut down on emissions.
Make sure to look for offset companies that have been certified by auditors, such as Green-e® certified renewable energy and carbon offset programs.
Look for Ways to Reduce Returns
Another effective method for becoming more sustainable as a business is to reduce your return rates. When you ship a product to a customer, and they turn around and ship it back, you have doubled your shipping impact.
One of the best methods for reducing returns can be accomplished by improving product information. Managing your product data across platforms is critical to lowering return rates. Product descriptions, images, and options should be kept up to date and reflect current inventory. This helps cut down on returns that are due to inaccurate product information.
Implement Demand Forecasting
Often, a large amount of waste occurs in relation to inventory planning. This can contribute a significant amount to your ongoing carbon footprint when inventory is overstocked. In order to more accurately define future inventory needs, implement the use of demand forecasting.
Through the use of historical sales data, this predictive analytics tool is able to forecast the future demand for a product. From here, you can make data-driven decisions to improve inventory planning. The result is that you can reorder stock in a more effective and sustainable manner, reducing waste.
Integrate Omnichannel Fulfillment Strategies
The more efficient you can become in your fulfillment strategy, the lower your carbon footprint. This is where omnichannel fulfillment strategies can play a critical role in reducing waste.
Omnichannel fulfillment allows you to allocate products from different stores to fulfill any given order. From picking to packing to shipping, this strategy moves away from a single selling channel and instead focuses on synchronizing data across warehouses. This allows you to have ultimate visibility into your inventory and allows you to fulfill shipments based on the most sustainable choices.
Create Content Showcasing Your Commitment
Finally, once you have transitioned to sustainable business practices, be sure to share your hard work with your customer base. From including information about your sustainable practices with products to promoting your values through social media, ensure that your brand messaging focuses on sustainable business practices.
For many consumers, seeing how you contribute to a more sustainable future will be a critical component in their purchase decision-making process and long-term brand loyalty.
A More Sustainable Tomorrow Starts Today
There is no doubt that consumer demand for sustainability from ecommerce brands will only increase as the concerns for our planet take center stage. Not only does it make good business sense to invest in a sustainable business model now, but it is critical for the future of our planet. If you are interested in learning more about how you can partner with Arka and Skubana to create a sustainable business model that leads to long-term growth, we invite you to reach out for a demo. We’ll be happy to assist you in transitioning to a sustainable future.
Author
Matthew Rickerby is the Director of Marketing at Skubana, the leading solution for multichannel, multi-warehouse D2C brands. For the past ten years, he’s covered e-commerce topics ranging from SEO to supply chain management.
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