Global e-commerce is booming, but are consumers happy with the environmental cost?

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As part of The Drum’s Globalization Deep Dive, we’re looking at the environmental impact of the global e-commerce boom and what brands are doing about it.

The pandemic has accelerated the adoption of e-commerce around the world as people go online amid lockdown restrictions. According to Forrester, there has been a 25.7% increase in 2020 to make e-commerce worth $ 4.2 billion and he expects global retail sales to grow another 16. 8% in 2021.

It also means that more customers than everyone else are buying from retailers beyond their borders. Zion Market Research has found that global cross-border e-commerce generated revenues of $ 562.1 billion in 2018. By 2027, that figure is expected to reach nearly $ 5 billion.

This is happening in the face of massive changes in consumer expectations for product availability and delivery.

“The baseline level of buyer expectations has changed. When Amazon launched Prime, cutting standard delivery times from weeks to days, it was a game-changer. However, it only took a few years for anything more than a few days to be completely unacceptable, ”says Rob Sellers, Retail Manager at VCCP.

“Wherever products are made or however complex the supply chain is to get them to our homes, we expect almost immediate fulfillment. “

KPMG’s 2020 UK Retail Report found that 43% of consumers are now choosing next day delivery, a 4% increase from last year, while a whopping 73% say that ‘they would have been dissuaded from buying if there had been a delivery charge associated with it. , compared to 57% a year earlier.

The time consumers wait for free delivery is also decreasing, from an average of 5.5 days in 2012 to 4.5 a year ago.

“But the average buyer has absolutely no appreciation for the intricacies of the global supply chain,” Sellers continues. “They trust the big retail platforms and brands, like Amazon, Nike and John Lewis, to handle this for them. What interests them is getting the product they want, when they want it and at the price they want.

And at the moment, that comes at a huge environmental cost. According to the Boston Consulting Group, transportation activities account for 17% of global greenhouse gas (GHG) emissions.

More than 90% of world trade is carried out by sea, with maritime transport accounting for 3% of all global emissions – a figure that could reach 10% by 2050 according to experts.

Meanwhile, on land, the World Economic Forum estimates a 36% increase in the number of delivery vehicles on our roads over the next decade.

But KPMG has found that consumers also expect brands to be more sustainable in their supply chain. More than a third (37%) of shoppers now base their purchasing decisions on ethical and sustainable retailers’ policies, while 67% of consumers say they care more about the environmental impact of the products they buy today. hui than five years ago.

Almost half (43%) of buyers were frustrated or dissuaded from the buying process because of the packaging used, and with an increasing expectation of low-emission delivery procedures and logistics, KPMG insists that ‘this is an area in which retailers have no choice but to evolve with the times.

Still, the trade-off for speed is that orders can’t be consolidated, which means more packaging waste. There are also fewer packages deposited per kilometer, and therefore more delivery vehicles on the roads.

In order to maintain its delivery goals, Amazon has built its own airline fleet to compete with UPS and FedEx.

“Most people say they’re willing to pay more for sustainable brands, but many also wonder why they should,” says Michelle Whelan, CEO of VMLY & R Commerce.

“The bottom line is that consumers are torn in three ways. They want it cheap, they want it now, and they want it guilt-free too. They care, but they won’t necessarily do anything about it. So it’s up to brands to remove the friction of guilt in a way that makes life convenient and affordable for customers, or to make it a truly meaningful part of the experience.

In response to the spotlight on the damaging impact of maritime freight transport, last week many brands, including Ikea, Patagonia and Unilever, signed a pledge to use only zero-carbon ships by 2040.

There are other brands that are trying to do e-commerce differently around the world. The luxury market Farfetch, for example, has built sustainability into its business plan, creating several features, including carbon neutral shipping and return, with the brand taking responsibility for offsetting emissions. It also has circularity built in, selling second-hand as well as seasonal items and allowing easy donations to charities. It has set up a Positively Conscious initiative, which allows buyers to buy brands according to ethical and environmental criteria. Sales through this site are growing faster than the overall Farfetch market.

“It is difficult for the consumer to really understand the supply chain because there is not enough transparency on the part of brands and retailers. We are even finding that within companies there is not a holistic understanding of sustainability along the supply chain, ”says Neda Eneva, Global Marketing Director at Arch & Hook.

Arch & Hook is an Amsterdam-based startup that works with retailers to provide sustainable alternatives on things like hangers, furniture and accessories, and transportation.

Eneva continues, “There is a gap between consumer awareness of the environmental impact of the brand they are buying and their sourcing and supply chain journey. There is also usually a price gap between locally designed / sourced products and products imported from Asia, for example. “

Brands like Everlane, Arket and Reformation owned by H&M approach this through the prism of “radical transparency”. When you shop on their sites, you will receive a breakdown of each part of the supply chain and how that fact counts into the final cost of the product.

Reformation has developed a methodology called “RefScale”, which measures and shares the environmental impact of each garment it sells, such as the volume of carbon dioxide and the amount of water used in production.

“Other brands, including Allbirds and Veja, have found cultural accolades and justified higher prices because of ethical behavior, not in spite of it,” Sellers continues.

“Projecting personal value through the brands we choose to wear has always been a fashion truth, but now those values ​​are as likely to be of great benefit to the planet or society as they could be to. other social positions.

“So the hope is that the remarkable behavior of some flagship brands and some general improvements of some of the bigger players will result in a total reduction in the negative impact – societal or environmental – of the entire category. “

To learn more about how technology and trends are bringing the world together, check out The Drum’s Globalization Deep Dive.


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