Is e-commerce sustainable compared to traditional retail?
It is no secret that over the past few years, it has become more fashionable than ever to shop online. Moreover, according to most market predictions, online sales are expected to exceed the unattainable $2 trillion mark soon. The COVID-19 pandemic has had the biggest influence when it comes to these figures, as it has provoked even more people to buy online.
With all this expansion, two important questions must be asked: Are ecommerce businesses and online shopping truly more eco-friendly than conventional brick-and-mortar stores? Are there overlooked consequences for the environment that we are ignoring, especially regarding sustainable practices in retail?
Without a doubt, online shopping has revolutionised the way we shop by making it easier than ever to locate what we need with the click of a mouse. Unfortunately, such convenience usually has a very high cost for the environment.
However, since people worldwide are gradually beginning to understand that their environmental footprint is great, it may be worth thinking about the sustainability of online shopping and fostering environmental consciousness. A new study analysing the sustainability of the UK retail industry, through a survey of British Retail Consortium (BRC) members, has highlighted a number of key opportunities for UK retail to become a more sustainable industry. For more insights on wider sustainability developments, discover the latest sustainability trends in retail.
Countless online marketplaces can do their part to protect the planet by adopting sustainable business practices. A handful of sustainable online retailers are making significant steps towards sustainability, and we’ll be sure to mention them as well as explore what constitutes sustainable e-commerce business and the various strategies online retailers can implement to reduce their environmental footprint
What is sustainability in e-commerce?
In e-commerce today, businesses relate sustainability to reducing their impacts on nature without causing harm. One option is a combination of solutions, from localising transportation to managing how we produce and dispose of packaging, as well as knowing where renewable energy will work.
Here are some specific strategies to improve online shopping sustainability:
- Reducing transportation footprint
- Sustainable Packaging
- Energy-efficient operations
- Circular economy initiative
Reducing transportation footprint
The transportation footprint can be reduced through the use of EVs or hybrids or by using smart delivery routes. Both of these options can significantly reduce the emission rate. In practice, this means calculating an innovative way to use less technology that leaves a significant carbon footprint, as well as rerouting to reach the final point faster. In general, the best way to go is with advanced logistics software. This allows companies to reduce miles on the road, which means less fumes and minimises carbon
Sustainable packaging
The use of recyclable, biodegradable, or less packaging materials can keep waste lower and make packaging more eco friendly, which is crucial for sustainability in food retail. Most e-commerce companies are looking into using innovative packaging solutions to minimise their carbon footprint. This means using compostable mailers and packaging created from recycled materials. These keep the environmental impact lower.
Energy-efficient operations
A handful of retailers have started using wind turbines and solar panels for everything from warehouses to data centres, which cut back on greenhouse gas emissions. Others are presenting power-efficient lights and heating methods, often sharing their progress on social media to inspire other businesses to adopt sustainable practices in retail.
Circular economy initiative
Another key practice is recycling products (if possible) or simply refurbishing and reselling them, which extends the life cycle of a product and promotes sustainable shopping habits among consumers. Initiatives such as take-back programmes and repair services not only reduce waste but also promote a culture of sustainability among consumers through sustainable practices.
E-commerce and sustainability: Assessing the environmental impact
The rapid expansion of e-commerce has led to increased carbon emissions throughout the supply chain. For instance, e-commerce logistics are projected to generate around 25 million CO2 metric tons by 2030. This impact is primarily due to several factors:
- Carbon emissions from shipping and deliveries
- Packaging and waste
- Data centres and energy consumption
Carbon emissions from shipping and deliveries
One of the dark sides of shopping online is related to the growing emissions associated with deliveries. With the increase in online shopping, more and more retailers are forced to dispatch more delivery company vehicles, resulting in greater carbon emissions.
No doubt traditional retail involves transportation too, but in many instances, several orders are dispatched through one delivery trip. However, through e-commerce, more often than not, single orders are sent at a time, thus multiplying the carbon emissions. In addition to that, the rapidly growing popularity of same-day and next-day delivery services further enhances the situation as it increases the frequency of dispatched vehicles while at the same time lowering the number of delivered orders per vehicle, thus wasting fuel.
Packaging and waste
E-commerce generates substantial packaging waste. Each single order is placed in a plastic or other non-recyclable package, for instance, and the return policies allow for as many returns as needed, thus wasting packaging and increasing emissions for processing it.
Some innovative companies are looking for ways to minimise the need for packaging, by offering products that do not require lots of packaging, or using materials that are easily recyclable or compostable. Also, some retailers are offering returnable packaging solutions that are sent back to the company and used again.
Data centres and energy consumption
Online stores require huge amounts of energy, and this energy is generated by power plants that rely heavily on non-renewable sources. As a result, they account for a significant portion of the carbon emissions associated with e-commerce. Energy conservation technologies and renewable energy must be implemented.
Data centres are core to online business operations as they ensure the uninterrupted running of websites. Companies need to consider how power-hungry these technologies are and their long-term operational costs, including running servers and cooling them. This is where renewable sources and energy-efficient technology come into play.
E-Retailers vs. Brick-and-mortar stores: Which is more sustainable?
When comparing the sustainability of e-commerce and traditional retail, retailers need to take several factors into consideration:
- Buildings and energy use
- Transportation and consumer behaviour
- Packaging and waste management
Buildings and energy use
Traditional retail requires brick-and-mortar stores that use energy for light, heat, or air conditioning. By comparison, e-commerce depends on large air-conditioned warehouses and giant energy-sucking data centres.
The environmental consequences are huge, even if internet retailers do a good job on energy efficiency operations. Offline stores are usually large energy-spending facilities created nearby due to the specifics of their operation and shopping requirements. E-commerce warehouses, while potentially more efficient in energy consumption on-site than city centres, are frequently placed further from central areas, posing long transportation routes to cities.
Transportation and consumer behaviour
Shopping at a physical store involves a trip. In this case, the energy intensity depends on how far customers travel and the mode of transport. On the other hand, e-commerce involves delivery logistics. Online shopping means fewer individual trips, but it also leads to a higher number of vehicles operated by delivery companies.
Another element is consumer behaviour. Online shopping makes shopping easier than ever but unfortunately encourages over-shopping and could bring an increased return rate. This can end up having a worse environmental effect.
Consumers who are aware of the environment can lessen the impact of their shopping habits. Knowing how their actions affect the environment is important. By understanding this, consumers can make more sustainable choices. This can ultimately reduce the negative impact on the environment.
Packaging and waste management
E-commerce generates more waste as each item is typically packaged individually before shipping. Additionally, online retailers contribute to packaging waste through their practices of stockpiling products, often irrespective of consumer demand. This is driven by policies imposing minimum order quantities and high shipping fees.
In either case, practices of waste management are an absolute must for sustainable ecosystems. Both online shopping and physical stores must prioritise sustainability. This can involve using eco-friendly packaging and implementing better waste management practices. Companies may also partner with retailers to create new products that use less packaging or are more easily recycled.
The best sustainable online retailers
Numerous companies are taking big steps towards embracing sustainability. Here are some examples of sustainable online retailers excelling in sustainability:
Søstrene Grene:
Søstrene Grene advances sustainability in a very positive way. The SBTi, a globally recognised climate standard, has validated the goals set by the Danish homeware retailer to reduce relative emissions in Scope 3 by 58.1% by 2030 and absolute emissions in Scope 1 and 2 by 50.4%.
Patagonia is widely known to be environmentally active and sustainable. They incorporate recycled materials into the products they make, including but not limited to recycled polyester and reclaimed cotton, which helps lessen demand for virgin resources.
They support several environmental groups in the fields of climate change, land preservation, conservation of water resources, and biodiversity with grants and donations. They also have their Worn Wear recycling programme to encourage customers to repair, reuse, and recycle gear as part of closing-the-loop economies.
In every aspect of Patagonia, sustainability is handled with care; this includes the transparency of their supply chain, which ensures ethical labour practices. More than 65% of Patagonia’s electricity usage comes from renewable sources and carbon offset projects.
Etsy:
Mirroring that commitment to sustainability, the vintage and handmade goods marketplace Etsy reached some important milestones. The platform invests in carbon reduction projects, so all shipping is fully offset and therefore kind to the planet. Etsy additionally urges its seller community to employ sustainable packaging materials, limiting plastic use and advancing the presence of recyclable as well as biodegradable alternatives.
Etsy enables a viable alternative consumption business model by encouraging the community of artisans and reducing the burden on landfills. Aside from this model limiting mass production and the environmentally damaging practices that it entails, it also means that work is created using materials sourced locally, allowing for traditional craftsmanship.
Allbirds is on a mission to be the most eco-friendly retailer around, doing their best for sustainability using materials like merino wool, eucalyptus tree fibre, and sugarcane. For shoelaces, they recycle used plastic bottles, and for insoles, use an oil extracted from castor beans!
Allbirds is already carbon neutral; it compensates for its emissions by purchasing carbon offsets, making Allbirds a leader in sustainability within their market. They even provide the carbon emissions of each product, allowing for transparency and enabling consumers to make more informed choices. As a company, you can learn lessons from the brand zeitgeist of Allbirds and its commitment to sustainable materials that reduce environmental harm.
IKEA:
IKEA has set a goal to use only recycled and renewable materials by 2030. They promote sustainable living with the help of Solhetta LED bulbs, Abacken water nozzles, and others. They reduced their carbon footprint by 12% in 2022 and recycled 15% of their wood, demonstrating their dedication to sustainable practices.
Final thoughts
While e-commerce poses challenges to sustainability, it can also provide ways of mitigating the environmental impacts. E-commerce and traditional retail both have some ways to go before reaching true sustainability. If their operations as a whole ventured into more sustainable methods through both transport and packaging, e-commerce could be one of the best to lead by example on how we should tackle our future.
Sustainability is an ongoing process that retailers, consumers, and politicians need to work together on. As technology and social media continue to advance and consumers become more aware of the choices they make, we can expect an increasing number of new sustainable ideas that safe-keep both online and conventional retailing.
If you want to discover more about the latest trends in the retail industry and create effective retail and e-commerce strategies, don’t miss out on the next retail event, The Retail Conference. Secure your spot now to gain the competitive edge your business needs.
