Eco-sustainability, the necessary imperative for the supply and demand chain

e-sostenibilità
Michele Caprini
28 Aug 2020

With the term e-Sustainability we can summarize what has been well known to the most attentive industry observers for some time, and which, following the sudden developments in e-commerce in the time of the lockdown, is now gaining general attention.

We talk about a double emergency driven by e-commerce. Environmental, on the one hand, due to the enormous quantities of waste produced and the impact on air pollution, and social, on the other, in terms of quantity and quality of the work required to support current volumes and future growth.

At the origin of e-Sustainability

At the base of it all, the delivery service, which is the subject of a real war between retailers. To explain it in its essential features, an advertising slogan and a few words said in an interview will suffice.

The slogan exemplifies Amazon’s new advertising campaign (‘low prices when and where you want it’), linked to an image of a parcel in front of a house door.

A few weeks ago, however, Forbes quoted the words of Iain Gold, one of the directors of International Brotherhood of Teamsters, a historic trade union that represents truck drivers in the United States and Canada and which includes thousands of UPS and DHL delivery workers.

What you don’t see, what isn’t transparent, is what it takes to get that product and satisfy your convenience. If you knew the story behind the supply chain and the people who fulfil your order, you might think differently about your need to have it delivered in 48 hours or less.”

The unsustainability of supply and demand

Online shoppers are not keen to pay shipping charges, whose costs are the main reason for abandoning the cart. The demand for advanced delivery and collection services tailored according to the type of goods and place of residence – even before the 24-hour deadline –is the inevitable prelude to tough competition. This is where the need for e-Sustainability emerges.

For retailers, the problem is in managing a huge number of shipments in increasingly shorter times while maintaining a high level of customer satisfaction and safeguarding profitability, eroded, moreover, by a very costly business model. The ongoing battle for deliveries revolves around logistics, fuelling a rush of acquisitions of companies in the sector by retailers.

Environment

In the United States, 165 billion packages are shipped each year; a quantity of cardboard equivalent to more than a billion trees. According to The Guardian’s estimates, packaging for home-delivered products now accounts for 30% of the annual solid waste generated in the U.S.

Without a decisive action, the proportional increase in boxes and delivery trucks will weigh heavily on the environmental impact. Under the pressure of new consumer awareness and virtuous consumption habits, online retailers will have to undertake process reviews in order to reduce packaging and group the orders into batches. On the agenda, above all, is the cutting back of overboxing, which involves huge quantities of packaging materials.

Although the expected benefits of drones and street robots are not yet clear, for a large number of start-ups, eco-sustainability passes through innovative packaging solutions, as, for instance, fully recyclable boxes and packing tape, or durable shipping bags that can be reused multiple times.

Another reason for promoting e-Sustainability is the return of goods.

Operators must meet the expectation that returning goods should be as simple and effortless as their receipt. If the return process is not straightforward and represents a point of friction, the shopping experience deteriorates significantly and the chances of losing the customer increase. Merchandise returns are a huge part of e-commerce, to the point of extending the fourth quarter’s operations to February of the following year. In the clothing industry, they can reach 50% of the orders, with a corresponding doubling of CO2 in the atmosphere.

Work

The operational management of e-commerce involves workers in multiple structures, along a defined and strict timeline affecting environmental, legal and safety factors.

In addition to salaries and work conditions, at the basis of the unceasing controversy over Amazon’s practices and recently re-launched by the case of Sweden, also relevant are the side-effects on employment of the entire sector, due to the drastic lowering of the acceptance level, typical of the delivery war. According to The Economist, the very presence of Amazon warehouses in a given area may drive down wages in local warehouses by 16 to 30%.

These include couriers and workers involved in the delivery of food products and those working in the factory or warehouse which are constantly under pressure. In the United States, the pilots of companies affiliated with Amazon Air reported the obligation to travel under challenging and difficult weather conditions in order to meet the delivery times contracted with the customer. Returning to Iain Gold: “Drivers under pressure face tough working conditions, high speeds, bald tires on their vehicles; we see this in regional operators that are comparatively weak links in the chain, because they are dealing with Amazon or Walmart”.

The trend that is emerging is the same as that adopted in other industrial sectors. The race to the bottom to minimize labour costs, aims to misclassify workers as independent contractors, which, by being directly responsible for expenses such as fuel, mileage and wear and tear of vehicles, effectively see their wages reduced to minimum levels.

The advantage of e-sustainability

The retailer who aims at e-sustainability not only pleases consumers and stakeholders, but also gains credibility in the financial environment. And this has its own relevance. The investment, however, must be backed up by the virtuous contribution of all those involved in distribution processes. I am talking about the supply chain and logistics, and the involvement of company staff and the customer. It needs to be clear, even to those who buy, that it is not possible to expect e-sustainability without sharing its cost.” (Retex - Sustaining sustainability)

In e-commerce, as in any other business, eco-sustainability applied at all levels is synonymous with double winner. The virtuous economic and operational models not only reduce the environmental impact, but also make e-commerce more valuable for buyers, to the advantage and benefit of the territory, the communities, the customers and the suppliers.