Sustainability in E-Commerce: 5 Aspects That Sellers Should Keep in Mind
Since Fridays for Future, it has become clear: sustainability is no longer an empty buzzword without 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 sustainability is (still) not a major topic in e-commerce, environmentally conscious sellers in this segment have the opportunity to establish sustainability as their unique selling point – while also saving money.
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: According to a study by Facit Research in 2017, the sustainability of the product or seller plays a significant role in the purchasing decision for about two-thirds of respondents before they click the “Order” button. Since environmental and climate protection have entered the general societal debate, the proportion of those who can make little sense of sustainability in e-commerce is likely to have significantly decreased.
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 selling 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, sellers can gradually approach their goal with the following five aspects.
Approaches to Increasing Sustainability in E-Commerce
#1: The Assortment: Products, Manufacturing, and Purchase Incentives
The royal discipline right from the start: Those who want to transform their entire product range have a lot to accomplish, but they will certainly achieve the greatest impact. Here, manufacturing processes play a role, as do the resources used, the raw materials, or their sourcing. Certification is often complicated, but the commitment ultimately reflects in the product price.
Not every online retailer is equipped to handle this mammoth task. Fortunately, even less extensive measures can be effective: for example, a note about the environmental impact of ordering multiple variations or sizes of the same item can discourage customers from making such purchases. A precise description and professional photos often serve just as well. In the case of clothing, providing an accurate size chart 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. Each shopping cart contained approximately 1.3 products. This is fewer than in previous years when customers ordered nearly two products per order. Smaller shopping carts and more orders mean higher consumption of packaging materials and shipping boxes for sellers, 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, where the greenhouse gas emissions generated are offset by investing in climate protection projects. Amazon sellers who use this service can also specifically promote it to their customers.
Whether customers return their orders 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 – instead, it is advisable to check these products for damages and reintegrate them into the inventory or donate them to a charitable cause.
#3: The Company: Employees and Daily Operations
When sustainability in e-commerce starts with the product range, it should not end with the company headquarters. Larger companies often underestimate the amount of CO2 they could save through appropriate measures within their premises. What energy mix is being sourced, for example? If it is coal-based electricity, a switch to a provider of energy from sustainable sources, such as Naturstrom or Greenpeace Energy, could be considered. 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.
Additionally, employees should be encouraged to reflect on their daily decisions. Does it have to be a domestic flight, or might a train ride to the business meeting be even more relaxing? Can a job ticket help increase the use of public transport over cars? Does everyone throw their waste in any bin, or is waste separation taken into account?
#4: Marketing: Image, Customer Communication, and Transparency
Those who operate sustainably can actively leverage this in their marketing. This enhances their 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 create a unique selling point for themselves. However, caution: greenwashing harms your 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 Cologne, 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 installed wind turbines in the landscape while the share of renewable energies in the company 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 your efforts for greater 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. However, it is not an end in itself. Only those who can establish 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? This way, sellers not only learn more about their customers but also motivate employees to work together towards the same goals.
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 fewer items. However, not every Amazon seller or online shop operator can completely overhaul their product range. Those selling electronic products often have little influence over the global structures of raw material extraction for batteries. In particular, small online retailers may face 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 helps protect the environment but also benefits the seller through cost savings and improved image. After all, a smaller ecological footprint, sustainability, and e-commerce do not have to be mutually exclusive.
