Green e-commerce: how to make online retail more sustainable?
Sustainable online trading – is that even possible? Destruction of goods, high CO2 emissions from transport and a lot of packaging waste are just a few factors that have a heavy impact on the ecological balance of e-commerce. Some retailers and manufacturers have already developed an awareness of this and are adapting their products and processes to become more sustainable. On the one hand, this is good for the environment, on the other hand, such companies open up new customer groups and score points over the competition.
But the road to sustainable e-commerce is long. There is an enormous need for optimization, especially in the areas of packaging, shipping and returns.
Avoidance of unnecessary returns
Especially in the fashion sector, customers tend to order products in multiple versions in order to find the right size or to take a closer look at colors and cuts. According to a study by the University of Bamberg, 50% of the items of clothing ordered are returned, and 16% across all product groups. In Germany, the approximately 800,000 returns per day emit around 400 tons of CO2 and a lot of packaging waste. Returns are therefore one of the biggest problems in e-commerce.
The return of goods is often based on discrepancies between the product photo and description and the delivered item. Comprehensive product information and images in the online shop are a first but crucial step in avoiding returns. For the fashion industry, precise dimensions and a suitable description of the color and material are crucial. A uniform regulation regarding sizes across all manufacturers would also simplify orders, because a size M, for example, is not the same for every supplier. A 360-degree view of the garment on models or virtual changing rooms also improve the selection and purchase process. Products can also be presented well via videos. This applies to fashion as well as to technical products that require explanation.
In addition, AI-based applications can optimize returns management by analyzing customer behavior and making data-driven product suggestions — from product categories to the right size and color in fashion. In this way, consumers know before they receive the goods whether a piece of clothing fits and whether they like it.
In the run-up to the order, there are a number of things that can be done to minimize the number of returns.
The second chance for returns
Goods that are nevertheless returned can certainly be put back on sale and do not have to be destroyed. Clothing can be cleaned, repaired and repackaged and resold as A-goods. According to a study by the EHI Retail Institute, in 2018 more than half of the retailers surveyed were already selling 80 to 90% of the returned goods as A-goods. Saving resources, sustainability and also the positive image enhancement should be incentive enough to take this path.
There are now many suppliers who process returned goods. These service providers are often committed to sustainability, rely on sustainable packaging and sometimes also generate their electricity from solar and photovoltaic systems. Depending on customer requirements, they also take over the logistics in retail or shipping to the end customer, which in turn saves on unnecessary transport routes.
If returns do not find their way back to retailers as A-goods, there is still the option of classifying them as B-goods at a discount or selling them to leftover buyers.
Eco-friendly packaging solutions
The requirements for shipping packaging are high: they should not only protect the product, but also convince with a design that matches the brand and also be sustainable.
However, very few packaging is environmentally friendly: Many retailers use standard sizes and pad the boxes with filling material when sending smaller products. In addition to a lot of rubbish, this also results in increased CO2 pollution, since the delivery vehicles are not optimally utilized. For a more sustainable online trade, optimized packaging sizes adapted to the respective product are needed.
Products that require special protection during shipping, such as fragile goods, can be padded with renewable raw materials. Vegetable starch or PLA, a biodegradable plastic, are ideal here. To insulate products, such as food, retailers can use straw instead of polystyrene.
Anyone who wants to operate more sustainable e-commerce in the long term relies on holistic packaging solutions that are material-optimized, recyclable and reusable - for example for returns or subsequent product shipments.
Environmentally friendly shipping options
The trend towards individual express deliveries at desired times through "premium" services means that transport vehicles are often not optimally utilized. In addition, around a quarter of deliveries fail on the first attempt because the customer is not at home, so the package is automatically transported back to the retailer.
When it comes to shipping goods, there is room for improvement and thus potential for becoming more sustainable in the future. Electric vehicles, for example, improve the climate balance during transport, while packing stations avoid unnecessary journeys and unsuccessful deliveries. Digitization is also making the shipping of goods more climate-friendly: AI and self-learning algorithms for route and package optimization reduce the distance traveled and guarantee optimal utilization of the transport vehicles. In the cities there are also providers who deliver by bicycle.
Third-party providers are responsible for transport on the last mile. Choosing the right shipping partner is therefore crucial for the retailer. Climate protection programs such as GoGreen from DHL or ThinkGreen from GLS rely on a mixture of CO²-reducing and CO²-compensating measures. Emissions generated during transport are precisely calculated and offset by climate protection projects. In addition, individual shipping service providers are already increasingly using eVans or eBikes and micro-depots close to the city for deliveries. DHL also relies on Packstations at convenient locations, which are increasingly supplied with electricity via solar panels. In addition, the parcel service provider offers comprehensive options for making reception greener and avoiding unsuccessful delivery attempts.
Short transport routes thanks to georouting
Articles ordered online are often located in different warehouses or branches of a retailer or at different retailers who are networked with each other through network structures. That doesn't have to be a disadvantage; on the contrary, such structures enable orders to be sent over short distances and save resources at the same time.
This requires a backend system that serves as a control center, processes online orders automatically and uses an algorithm to determine which dealer or branch receives the shipping order for the order received or for part of it. For this purpose, previously defined criteria are checked: In addition to the availability of the goods, the system can also use geo-routing to check which branch or warehouse is closest to the recipient. This saves shipping costs and shortens transport routes for delivery services.
Much need for action, much potential
Transport, packaging, returns: there are various areas where retailers can start to make their business more sustainable. This often requires significant investments in the short and medium term, for example in materials, technologies or personnel. In the longer term, however, there are also savings, a better image and thus new customers.
Be patient: The business does not go "green" overnight, rather you should develop a sustainable strategy and tackle tasks one at a time. In any case, be honest and authentic, because greenwashing can significantly damage your company.