Sustainability in e-commerce: 5 aspects that retailers should keep in mind
Since Fridays for Future, it has become clear: Sustainability is no longer an empty buzzword that lacks action. Not only the young, digitally savvy segment of the online retail target audience increasingly recognizes how urgently societal changes are needed to leave a livable world for future generations. Although, or precisely because sustainability in e-commerce is (still) not a major topic, environmentally conscious retailers in this segment have the opportunity to establish sustainability as their unique selling point – while also saving money.
Because the size of the market alone has potential: With an expected revenue of over 65 billion euros in 2019, online retail in Germany is growing by nearly eleven percent compared to the previous year. There is no end in sight in the coming years either. By 2023, it is expected that about 20 percent of retail sales will be made online. Particularly noteworthy: As a study by Facit Research 2017 found, for about two-thirds of respondents, how sustainable the product or retailer appears plays a significant role in their purchasing decision before they click the “Order” button. Since environmental and climate protection have entered the general societal debate, the proportion of those who can do little with sustainability in e-commerce is likely to have decreased significantly.
Still in its infancy: Sustainability in online retail
For online retail, this presents a significant challenge – and equally great potential. Only about one third of online retailers have addressed the sustainability of their business practices. Very few implement comprehensive and consistent measures. Those who seriously engage with the topic now can not only save a lot of money – for example, on packaging waste or return rates – but also take a pioneering role in the industry and effectively market their efforts in customer communication.
But where and how to start? Especially smaller online retailers who sell through marketplaces like that of the shipping giant Amazon often cannot afford professional consulting or even a dedicated employee for sustainability in e-commerce. However, even without large resources, retailers can gradually approach their goal with the following five aspects.
Approaches to increasing sustainability in e-commerce
#1: The assortment: Products, manufacturing, and purchasing incentives
The royal discipline right from the start: Those who want to switch their entire product range have a lot to do, but they will certainly achieve the greatest impact. Here, manufacturing processes play a role as well as the resources used, the raw materials, or their extraction. Certification is often complicated, but the commitment is reflected in the product price later on.
Not every online retailer is up to this mammoth task. Fortunately, even less extensive measures can be effective: For example, a note about the environmental impact of multiple orders of the same item can deter customers from ordering the product in different variations or sizes. A precise description and professional photos often provide equally good service. In the case of clothing, it is advisable to provide an accurate size chart that allows buyers to determine their clothing size themselves. This way, unnecessary returns can be prevented and sustainability in e-commerce can be increased.
#2: Shipping: Packaging, delivery, and returns
In 2017, Amazon customers ordered an average of about 41 times a year from the shipping giant. In their shopping carts, there were about 1.3 products. This is fewer than a few years ago when customers ordered nearly two products per order. Smaller shopping cart, more orders – for retailers, this means higher consumption of packaging materials and shipping boxes, as well as rising costs.
More important than recyclable, sustainable packaging in online retail, however, are delivery and returns. Major shipping companies like DHL, Hermes, or DPD have been offering climate-neutral shipping for some time now, where the resulting greenhouse gas emissions are offset, for example, by investing in climate protection projects. Amazon sellers who use this service can also specifically promote it to their customers.
Whether customers return their order also depends on the shipping options. Those who handle their fulfillment themselves should still pay attention to fast shipping, as the smoother the customer receives their order, the lower the likelihood that they will return the shipment.
It goes without saying that the destruction of returned goods is the worst possible option in terms of sustainability in e-commerce – rather, it is advisable to check these products for damages and reintegrate them into the assortment or donate them to a charitable cause.
#3: The company: Employees and business operations
If sustainability in e-commerce starts with the product range, it should not end at the company headquarters. Larger companies often underestimate the amount of CO2 they could save through appropriate measures in their premises. What energy mix is being used, for example? If it is coal power, a switch to a provider of energy from sustainable sources should be considered, such as Naturstrom or Greenpeace Energy. And where does the free fruit come from – overseas or from the region, and is it even available seasonally? Additionally, many companies provide their employees with free beverages. Those who want to emphasize sustainability in e-commerce should pay attention to reusable bottles or even install a water dispenser.
In addition, employees should be encouraged to reflect on their daily decisions. Does it have to be a domestic flight, or is a train ride to the business appointment perhaps even more relaxing? Can a job ticket help increase the use of public transport compared to cars? Does everyone throw their waste in any bin, or is waste separation observed?
#4: Marketing: Image, customer communication, and transparency
Those who operate sustainably can actively use this to their advantage in marketing. This enhances the image, especially among the many young customers on Amazon. The topic is still relatively underrepresented in the industry – those who position themselves well now can generate a unique selling point for themselves. But beware: Greenwashing harms one’s own brand more than it helps! All measures communicated to the customer must be adhered to at all times and must also be traceable. According to a study by ECC Köln, honesty is one of the top criteria for over 90 percent of consumers when forming opinions about an online shop. This also applies to sustainability in the e-commerce sector.
Greenwashing …
… is the attempt by companies to create a green image through marketing and PR campaigns without actually implementing corresponding measures. A prominent example is the green giant RWE, which diligently placed wind turbines in the landscape while the share of renewable energies in the group was below three percent. Even in 2018, only a meager 5.6 percent of green electricity was generated, and the company ranks among the top 15 largest CO2 emitters in Europe.
A good way to transparently communicate one’s efforts for more sustainability in e-commerce is through certifications. For example, many retailers and manufacturers in the outdoor industry have joined the Global Traceable Down Standard or the Responsible Down Standard. Both labels certify down products regarding animal husbandry, feeding, and more. Live plucking or force-feeding are thus excluded – the promises are verified by independent organizations that conduct regular unannounced inspections. On the other hand, self-invented certificates without any substance that deceive customers are an absolute no-go. Empty or misleading advertising promises can also tarnish an entire brand’s reputation.
#5: The review: Market analysis and success monitoring
Sustainability is becoming increasingly important in e-commerce as well. However, it is not an end in itself. Only those who can fundamentally assert themselves in the market will achieve long-term success with their environmentally friendly strategy and potentially displace other, less sustainable providers. Therefore, online retailers should use appropriate tools for market observation – because in the fast-paced and vast online world, non-automated analysis is simply no longer feasible.
At the same time, the successes of the new sustainability initiative should also be monitored. How much more are customers paying for environmentally friendly products, how many emissions have been saved since the energy mix was changed, and how many employees are already using public transport? Because this not only provides retailers with more information about their customers, but it also motivates employees to all pull in the same direction.
Conclusion: It doesn’t always have to be a big leap!
More and more consumers are actively paying attention to their ecological footprint and the environment, for example by preferring recycled materials and returning less. However, not every Amazon seller or online shop operator can completely overhaul their product range. Those who sell electronic products often have little influence on the global structures of raw material extraction for batteries. In particular, small online retailers may encounter limitations when it comes to sustainability in e-commerce.
Nevertheless, environmentally conscious online retailers can achieve a lot with small measures: whether it’s switching to green electricity, using eco-friendly shipping boxes, or certifying product components – even small actions can make a significant impact. This not only protects the environment but also benefits the retailer through cost savings and improved image. Because a smaller ecological footprint, sustainability, and e-commerce do not have to be mutually exclusive.
