Conducting a business without exhausting the natural resources is the need of the hour. A sustainable business will have a positive impact on the environment, community and society. Whether it is manufacturing, retail, fashion, jewelry, or farming, a growing number of businesses are implementing different strategies to control their carbon footprint and keep it under the minimum accepted levels by integrating sustainability. Even customers desire sustainable practices from their brands, and make greener choices. Just as each business improves over time, e-commerce brands must also continuously evolve and embrace top sustainability practices to stay ahead of the competition in the market. Sustainability drives business growth. Investing in the right technologies like the best ecommerce software can help online businesses to progress towards this mission.
“The sustainability revolution will, hopefully, be the third major social and economic turning point in human history, following the Neolithic Revolution – moving from hunter-gathering to farming – and the Industrial Revolution.” - Prince Charles, England
What is Sustainable E-commerce?
Sustainable e-commerce, as the name suggests, is a process in which e-commerce brands neutralize their carbon footprint by utilizing natural resources in an optimum manner. The term has repetitively been used by businesses to ensure we meet the demand of the current generation without compromising on future generations. Sustainable ecommerce is not just a term, rather it is the efforts of an online business to reduce the environmental impact of the business while also assisting the development of local communities. Online shopping order has surpassed millions in number, due to which sustainability is not a choice instead, it has become a necessity for the e-commerce industry.
In the last few decades, around 50.6% biodiversity has been lost to rampant human and business activities globally. As a result, governments worldwide are now forcing businesses to slowly transition towards a circular economy. With the proliferation of smartphones, improved network capabilities, and digitization, many retailers are going online with the best ecommerce platforms. In serving such a huge number, it is the necessity of the time to redesign business processes and strategies in such a way which can fulfill the population demand while preserving the planet. All these factors are the driving force behind the huge popularity of sustainable ecommerce.
Why do you need sustainability in business?
“Sustainable development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” - Gro Harlem Brundtland, former PM, Norway
In the present times, businesses are serving a huge number of consumers at regional, national, and international levels. In this process, they produce a huge amount of pollution, wastage, and carbon emissions, and brands have no choice but to take a holistic approach towards achieving sustainability in the business. Achieving sustainability not only helps in protecting the environment and natural resources for future generations but also helps in business growth. The economic, environmental, and social sustainability are as follows:
From paper, textiles, and furniture to non-metallic, computer, and electronic products, the materials and production costs are consistently rising in the US. This poses a direct need for e-commerce brands to achieve economic sustainability in manufacturing. In addition, through sustainable operations, businesses can lower their operating costs from packaging, shipping, labeling, etc. This cost can be utilized elsewhere to strengthen the company’s market position and brand image among customers.
Whether you are alarmed, concerned, cautious or doubtful, it is evident that environmental sustainability is growing as a huge concern today. Implementation of climate policies and new technologies in e-commerce operations is a prominent way to combat growing global temperature and warming. E-commerce brands have to redesign their entire processes to limit the carbon emission and waste generated from sourcing, packaging, and dispatching.
Sustainability does not only benefit a firm environmentally and economically but also socially. Every business has several responsibilities towards the local communities and employees in terms of quality of life, equality, and diversity, which can be carried out effectively through eco-friendly practices. In addition, sustainability helps reduce natural resource utilization so that future generations do not need to compromise in satisfying their needs. Ecommerce firms are fostering inclusive urban development, reducing pollution, protecting natural resources, and creating sustainable communities so as to achieve complete social sustainability.
Benefits of Sustainable E-commerce
Sustainable ecommerce offers various benefits to businesses in terms of environmental, economic, social, and operational. Some of these are as follows:
Reduce Overall Costs
As business costs are rapidly rising, sustainable e-commerce is useful for companies in reducing overall operational costs. Leading e-commerce firms like Amazon, Flipkart, Etsy, Alibaba, etc. are using renewable energy to power infrastructure, recyclable raw materials for manufacturing, electric vehicles for delivery, waste management, smaller packaging, etc. resulting in a huge amount of cost savings. Many governments from all over the world are giving so many incentives to e-commerce giants for slowly transitioning toward shared circular economy goals.
Better Efficiency and Productivity
E-commerce companies, big or small need improved efficiency and productivity to sustain ahead of their competitors. For this, e-commerce firms should adopt sustainability practices like automating the critical processes, real-time monitoring, optimizing supply chain, route optimization, etc. These practices can reduce multiple problems associated with order delivery, manufacturing, processing, etc., allowing them to perform better with improved efficiency and productivity.
Enhance Customer Satisfaction and Loyalty
One of the main reasons e-commerce and sustainability should go hand in hand is that people prefer to shop from sustainable e-commerce brands. Brands can enhance their customer satisfaction and loyalty by providing eco-friendly products with a low carbon footprint. Many brands also offer eco-friendly ecommerce sites to enhance user loyalty and satisfaction levels.
Explore new Opportunities
With clear and concise eco-friendly policies, businesses can explore new opportunities in new markets while expanding in the existing ones. The need to create innovative and sustainable products and the government are driving e-commerce firms to upgrade their traditional processes to sustainable ones. For example, China’s initiatives to combat air pollution could generate upto $3 trillion in investment opportunities by 2030, creating a new market and business ecosystem.
Support Government’s Incentives for Sustainability
With the growth in online orders and e-commerce businesses, sooner or later, the government could force e-commerce firms to embrace sustainability. Businesses already having sustainable practices in place can achieve a higher competitive edge in the market in such contexts. These include clean vehicle tax credit for purchasing electric vehicles for businesses, Green Jobs Initiative, etc. Agencies like Environmental Protection Agencies (EPA), National Science Foundation, National Oceanic and Atmospheric Administration (NOAA), etc., have several other rewards to support sustainability, and e-commerce businesses can avail these benefits by practicing sustainable operations.
According to a report from McKinsey, products with sustainability received an average of 28% cumulative growth over the last five years. One of the main reasons behind this cumulative growth is that customers are demanding green e-commerce products. When they are provided with their preferred products, they are likely to buy and recommend the brand to others. This is beneficial in improving the brand image which ends up contributing to more sales and long term sustainability.
Reduce Biodiversity Loss
E-commerce businesses should contribute their part by employing eco-friendly corporate social responsibility strategies, e-commerce software and sustainable e-commerce practices in the overall order-to-delivery process. Through this, firms can optimize their route, reduce their wastage, streamline their operations, etc., which reduces the negative impact on the environment, thereby reducing the biodiversity loss.
How can an ecommerce business be sustainable?
Businesses are using a wide range of sustainability practices to achieve their predetermined environment protection goals. They are making numerous changes in their policies, processes and infrastructure to accomplish sustainable operations. Some of the most popular e-commerce sustainability practices which are becoming widely popular among online sellers and consumers are as follows:
Plastic packaging is a major environmental polluter affecting the quality of soil in the present era. 1 million waste releases around 2705.937 kg CO2e. By 2025, e-commerce plastic waste is estimated to reach 4.5 billion pounds, forcing brands to either optimize their product packaging or adopt eco-friendly packaging. Given below are some sustainable packaging practices for eco-friendly ecommerce.
Biodegradable packaging is rapidly gaining popularity among e-commerce businesses. After disposal, the plastic packaging degrades within a year, resulting in less pollution, while plastic waste takes decades in the degradation process. Some biodegradable materials for packaging include mushroom-based mycelium, corn starch, bamboo, organic fabric, paper, etc.
Compostable materials are the ones that decompose easily, leaving compost behind. It replicates the good qualities of plastic but with a lower impact on biodiversity. Widely used materials for compostable packaging are cardboard boxes, paper bubble wrap, gardening twine, clay desiccants, etc.
Minimizing the packaging materials
Generally, ecommerce brands use a lot of packaging material including plastic, cardboard, paper cuttings, foam, etc. in packaging just to ensure that the product inside reaches the customers in the right shape and size without any damage. But, sometimes, without any proper planning smaller boxes are packed in bigger boxes. Such un-planned packages contribute to e-commerce waste due to which businesses should efficiently plan and use the required amount of packaging materials.
While labeling doesn’t majorly contribute to the increasing waste problem, it should still be prioritized for attaining the brand image of completely eco-friendly ecommerce. Some common practices of sustainable labeling are as follows:
Low paper consumption
Paper is one of the most commonly used materials, but with a high carbon footprint. First, it is extracted from trees and then needs a huge amount of water and energy for transforming the wood to paper. One of the best ways to ensure that the ecommerce business does not add much to the global paper wastage is using less paper while printing and labeling. This is achieved by printing only essential information on the label, allowing you to save some money while preserving nature.
Every e-commerce business needs to source recyclable materials from reputable suppliers for labeling purposes. This ensures that the labels will not pollute the environment; instead, they will be either decomposed, recycled, or reused for other purposes. Recycled paper is one of the leading eco-friendly materials for labeling.
QR code integration
QR code integration in labeling allows users to directly scan the product for any information. Apart from the code, there is no need to print any other information which helps save time and money. In addition, QR code also helps distinguish brands from competitors, generating more trust and engagement.
Thermal printers utilization
Thermal printers are considered more eco-friendly and sustainable as compared to laser and inkjet printers. Thermal printing is among the fastest and easiest printing techniques, leading to less frustration, money, and time consumption. Some thermal printer brands also offer label cartridges developed through compostable potato starch and are plantable in home gardens.
E-commerce organizations source a large number of raw materials for manufacturing, packaging, shipping, etc. While sourcing these raw materials, they need to consider several factors in order to minimize the negative impacts of business on the ecosystem. Sustainable sourcing deals with the ethical practices, ecological footprint, and long-term viability of the raw materials. Some of the sustainable sourcing methods that are trending nowadays are as follows:
Sourcing recyclable raw materials
The global waste recycling market is anticipated to grow at a rapid pace in the near future after reaching $61.76 Billion in 2022. Most of the products that are recycled in this market are paper, glass, plastic, food, etc. After recycling, the recycled products are again used for different purposes. The final products developed through recycled raw materials come with a lower carbon footprint, allowing businesses to take a step ahead toward the circular economy.
Sourcing from nearest wholesalers
E-commerce businesses can also use this sourcing practice to further reduce their carbon footprint upto some extent. When businesses hire nearby wholesalers, they can ensure quick transportation of materials with low fuel consumption. Due to this, the extra costs and energy that get wasted due to delays in raw materials shipment can be saved. This helps increase the speed of the overall process while keeping the carbon emissions in check.
Ethical sourcing is one of the good old ways of sustainable sourcing. It means that the company is sourcing the products or raw materials in compliance with the ethical principles. These principles include fair labor practices, supply chain transparency, eco-friendly materials, certifications, safe working conditions, etc. While it may not hugely contribute to carbon emission, it still plays a major role in the mindset of consumers, owing to which brands are highly focused on ethical sourcing.
Viability of Raw Materials
It is one of the best ways for sustainable sourcing, which helps ensure the sourcing of only the best quality products. In this, businesses check the viability of the different raw materials that will be procured for the business operations. If it fails the viability tests, then a replacement is chosen based on other viability tests. Through this, e-commerce firms are reducing the wastage from their manufacturing process while ensuring its continuous functioning.
Dispatching and Shipping
Dispatching and shipping processes should be optimized to achieve sustainability in e-commerce. According to a research report, 52% online shoppers choose a brand with a low delivery impact on the environment. Brands can use the following strategies to achieve low carbon emissions during product dispatching and shipping.
Reusable shipping containers
Earlier, traditional materials like cardboard and polythene wraps were used for shipping the products. Not only are they less environmentally friendly, but also take more space during shipping. Reusable shipping containers made of metals, fibers, and plastic can be used to address such challenges during shipping. In addition, they can be used multiple times before discarding, which contributes to less waste.
Shipping in smaller packages
Many brands used to pack and ship smaller objects in bigger boxes for safety purposes. But it contributed to the increasing waste. However, this is changing, and companies are shipping the products in smaller packages to bring sustainability and cost-effectiveness. Brands mainly used air pillows made from recycled content for small packages while preventing product damage.
Nowadays, customers prefer delivery at doorsteps, and even they regularly order something to satisfy their needs. As per the statistics of 2022, on an average, an e-commerce user purchases at least three products per order. As a result, delivery boys need to make extra efforts if delivered separately, which can be reduced to a huge extent through bulk deliveries. Bulk deliveries reduce transportation costs as firms can deliver multiple orders at the same address simultaneously, resulting in low fuel consumption. This is beneficial in lowering the fulfillment costs of the products, thus increasing sales.
Offering eco-friendly shipping
Brands mainly offer eco-friendly shipping through recycled packaging, using more sustainable shipping materials, avoiding single-use plastics, etc. Partnering with a carbon offset program helps save the equal amount of carbon generated from the shipping process. Offset carbon partners either plant new trees or conserve a particular amount of natural resources to neutralize carbon emissions.
This sustainable practice is rapidly picking pace in the e-commerce industry. Many brands offer recycled packaging to pack their products. This reduces the quantity of packaging waste. Alternatively newer forms of packaging materials are used such as compostable and biodegradable. Not only this, they also offer other incentives to consumers in return for recycling the packaging leftover as suggested.
Route optimization is a significant environment friendly practice to achieve sustainability in dispatching and shipping processes. For this, the majority of the brands use e-commerce software which helps identify the efficient and shortest routes for delivering their orders. An advanced e-commerce software can even show and consider the real time traffic congestions, road constructions, etc. in identifying the most efficient routes. This saves time and fuel which helps businesses build a positive sustainable approach.
Reduce reverse logistics
In the US only, around 16.5% of total online orders ended up as return, this number may look small but it accounted for a staggering 212.9 billion US dollars, besides damage to the environment. E-commerce brands are becoming conscious of this growing threat and are placing proper strategies in place to ensure reduced efforts and costs in reverse logistics. Some of the ways for this are as follows:
- Limiting the number of products eligible for returns
- Using automation to ensure error free processing of information
- Implementation of proper quality checks to ensure placement of proper product
- Only selling best quality based products
- Recycling the returned products
- Only approving the returns in case of issues with size, damaged products, misplaced orders, etc.
Carbon Footprint Reduction
Besides packaging, sourcing, shipping, and dispatching, companies invest in various other methods to lower their carbon footprint. Some of these are as follows:
Reusable Shopping & Shipping Bags
Reusable bags are rapidly gaining awareness among e-commerce businesses and consumers, owing to which the global reusable shopping bags market is anticipated to grow at a CAGR of 2.8% in the upcoming years. Plant fiber, paper, plastic, and hemp-based bags are the most commonly used for shopping purposes.
Have an Energy-efficient infrastructure
Energy efficient infrastructure is another great step to prevent excessive carbon emissions from electrical devices when not used. Sensor-based installation of low energy consumption bulbs, lights, fans, air vents, ACs, etc. could help lower the energy utilization in offices and product warehouses. In addition, using the cloud instead of traditional on-premise can also help improve energy efficiency. Businesses can also invest in building maintenance software to lower energy waste and consumption across the infrastructure.
Introduce a Recycling policy
It is one of the main methods for significantly reducing the carbon footprint of e-commerce businesses. Not only creation but they should be enforced and clearly understandable by the employees as well as consumers. Giving incentives and attractive offers to prevent unnecessary waste, reusing, and repurposing the products is a great move to ensure policies are followed properly.
Adopt Sustainable manufacturing
Sustainable manufacturing has recently gained popularity owing to the amount of waste a facility generates from raw materials to finished products. Sustainable manufacturing can play a key role in minimizing the environmental impact of e-commerce businesses while ensuring the conservation of natural resources. Not only does it reduce the environmental impact, but it also helps in saving the manufacturing cost of products besides employee, product, and community safety. A robust AI-based manufacturing software can be of great importance in achieving sustainable manufacturing operations, as it allows businesses to use data analytics, be predictive, and stop over-producing.
Practice Supply chain optimization
Supply chain optimization is very crucial for achieving completely sustainable business operations. Initial supply chain management systems did not have adequate reporting capabilities, making the optimization a complex task. However, work became easy owing to technological developments and enhanced functionalities. One such example is AI-based supply chain management software which leverages advanced data-driven insights to generate reports for setting environmental policies, reducing greenhouse gas emissions, rerouting supply lines, demand forecasting, production tracking, waste management, etc.
Use renewable energy sources
Using renewable energy in the business infrastructure is an effective method to prevent excessive carbon emissions across all processes. Solar energy, geothermal energy, biomass, green energy, etc. are the commonly used renewable energy types. Many e-commerce brands, like Walmart, eBay, Etsy, etc., are focused on completely switching to renewable sources in the upcoming years.
Top Brands That Practice Sustainable Ecommerce
“We have big ambitions for 2030. We are committed to doing our part to tackle climate change, unsustainable consumption, and inequality. Our three major focus areas are Healthy & sustainable living, Circular & climate positive and Fair & equal.”
IKEA, a leading furniture retail company, is highly committed to achieving sustainable business operations. Although the company is new in the market, its sustainable and healthy living policies could significantly influence its growth. IKEA kept on introducing new products to save natural resources, such as Solhetta LED bulbs to save electricity, Abacken water nozzles to save water, etc. By 2030, IKEA aims to source and use only recycled and renewable materials for its products. In addition, it seeks to serve 50% plant-based foods by 2025. In 2022, the climate footprint of the company reduced by 12%, besides recycling of 15% of the total wood used in operations.
Amazon is a prominent online retail giant with a clear aim to achieve its net-zero carbon targets by 2040. The company is heavily investing in new technologies, streamlining ordering to the delivery process, procuring renewable energy for infrastructure, using energy efficient devices in warehouses, etc. To ensure sustainable e-commerce operations, Amazon is sourcing recyclable raw materials, using fewer packaging materials, EV deployment in transportation, renewable energy, etc. Repaired, refurbished, and recycled products are also sold by Amazon as a strategic step towards the circular economy.
Here is the Amazon’s approach for Net-zero carbon emission.
Flipkart, an Indian e-commerce giant also has a huge focus on sustainable shopping and carbon-neutral ecommerce.
It has implemented a huge number of eco-friendly practices in its entire process from placing an order to its delivery. For this, Flipkart has a highly efficient website to place orders. It is working with various not-for-profit and private organizations to source sustainable packaging and other raw materials. For transportation, Flipkart is committed to employ 100% electric vehicles in its logistics fleet by 2030. Moreover, the company aims to achieve its net zero targets by 2040 completely. Flipkart also offers an eco-friendly e-commerce store specifically for consumers having sustainable lifestyles. It showcases more than 30,000 sustainable and daily-use products with a very minimal carbon footprint.
Alibaba is a Chinese retail giant on its path to achieve carbon neutrality. The overall progress of the company in terms of sustainability is as follows:
By 2030, Alibaba aims to achieve complete carbon neutrality and upto 50% reduction in value chain emissions intensity. The company is investing in sustainable office spaces, green retail stores, low-carbon and circular cloud, smart and green logistics, environment friendly suppliers, etc., to ensure low carbon-based infrastructure, high water, resource, and waste management for the conservation of the environment.
Walmart, a leading e-commerce and retail company, is improving its sustainability index score mainly through sustainable packaging, carbon footprint reduction, waste management, and utilizing energy-efficient solutions.
The company mainly seeks to source only renewable and recyclable materials for the packaging process as it generates a huge amount of waste. In addition, it also optimizes the products frequently to make changes in design and recycling properties according to current situations. For example, Walmart replaced the traditional egg containers with reusable plastic containers, helping them save 37 million eggs from being thrown out, which means reduced damage rates.
eBay is a one of the widely used e-commerce platforms with a tag as eco-friendly brand. Its sustainable e-commerce goals are as listed in the below image.
It has avoided over 1.6 metric tons of carbon emissions in 2022 and aims to increase it in 2023 and beyond for sustainable e-commerce operations. eBay achieved this humongous milestone owing to the following sustainability strategies:
- eBay Refurbished program
- Frequent biodiversity risk assessment
- Water consumption and waste diversion optimization
- Renewable energy sourcing for offices
- Eco-friendly transportation through electric vehicles
- Reducing greenhouse gas emissions using automation
Etsy is highly committed to its net zero emission goals and has planned strategies in place to achieve a 51% reduction in scope 1, 2, and 3 greenhouse gases emissions. Apart from this commitment, the company has other strategies and goals to source energy from renewable sources, run zero waste operations, reduce energy consumption at offices/warehouses, etc. At present, Etsy is testing new sustainability listing attributes for allowing sellers to convey the sustainable benefits of their products to consumers.
Have a look at the following image which indicates the goals of Inditex Clothing Company, a distribution group of Zara, the largest fashion company.
As the above image indicates, achieving zero net emissions, reducing carbon footprint are definitely the goals of bigger brands, and the smaller brands should be able to follow them.
Top Best Sustainable Ecommerce Tools
Shopify, BigCommerce, WooCommerce, Magento are a few top sustainable ecommerce tools that help online retailers practice sustainability and reduce environmental impact by offering eco-friendly themes, sustainable design, optimized supply chain, green product management, plugins focused on sustainability, and eco-friendly shipping options.
This could be the best way to convert your online ecommerce business to a sustainable e-commerce business. Consumers, especially the new generation buyers are willing to buy sustainable products. It is time for all ecommerce businesses to transform.
The global sustainable e-commerce market is anticipated to reach $40.75 billion by 2030 with a CAGR of 15.38%, meaning a bright future ahead. Brands with sustainable e-commerce practices will likely to drive higher customer satisfaction, trust, and loyalty, which will also improve revenue. This is because consumers are demanding sustainable products, and they can easily bond with brands sharing their values. Online selling platforms should implement sustainable practices and incentive programs besides strict laws and regulations.
To support this, new technologies are having supporting features, and will further allow e-commerce firms to implement more enhanced systems to prevent wastage and carbon emissions. Advanced technologies, like AI, the Internet of Things, Machine learning, etc., will also help identify and eliminate the potential challenges associated with cost, complexity, lack of awareness, consumer demand, changing consumer behavior, etc. E-commerce businesses and their customers can both support each other in achieving business and lifestyle sustainability. If you are running a business, and are yet to make it sustainable, it is time to define your sustainability objectives. Analyze what sustainability means to your business, and establish your mission. Use the tips given in this blog to make a wise sustainable decision. Your objectives will in no time transform as a purpose.