Building sustainable ecommerce supply chains

How to build a sustainable supply chain

Introduction

With delegates gathering in Egypt for COP27 and the IPCC issuing dire reports on the current ecological situation, we all know how pressing the need to act on the environment is. But one of the biggest questions when it comes to sustainability is how to reconcile the needs of businesses with the needs of the planet. For many ecommerce enterprises, this is especially true, as sustainability often means additional overheads and premium prices.

But consumer priorities are changing. 90% of 18 to 24-year-olds now say that all companies should make a positive social contribution and help to protect the environment. The same age bracket is considerably more likely to buy online than any other. As consumers increasingly seek to be more responsible with their purchases, a commitment to sustainability can offer a competitive advantage and future-proof your business for a rapidly adapting world. There may even be penalties for companies that fail to consider their impact.

More than half of consumers are now prepared to give up some convenience—for example, by using products for longer or flying less—in the interest of sustainable consumption. Like consumers, businesses are also increasingly opting to partner only with others whose values match theirs.

When it comes to ecommerce companies adopting more responsible practices for supply chain sustainability, the question is how to make your business more sustainable in a way that works long-term.

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How to start sustainable supply chain management

From both an environmental and an economic perspective, there’s never been a better time to adopt more sustainable approaches to doing business. Here are ideas for how ecommerce companies can do that at each stage of the supply chain.

Production

Problem

Depending on the item, production alone can account for between 30% and over 90% of carbon emissions caused by a product's creation, distribution, and use. Plastic waste generated through ecommerce trade is projected to reach over 2000 million tons by 2025. That being the case, the best place to start being sustainable is at the beginning of your supply chain.

Solutions

Consider the materials that make up your products. Where a component is made with non-recyclable plastic, can it be substituted with a more sustainable alternative? In addition to more easily reused plastics, we’re now seeing a new generation of eco-friendly, biodegradable plastic alternatives like Sulapac enter the market.

Energy is another consideration. Everything from manufacturing to heating workspaces requires electricity, and with the current fuel crisis, there’s no better time to reconsider where you’re getting it. Solar panel installation, air source heat pumps, and switching suppliers can help lessen your business’s carbon footprint and bills.

Diversifying your suppliers can have a significant impact on the sustainability of your business. In 2021, McKinsey reported that two-thirds of organisational ESG commitments come through its suppliers. By forming partnerships with other sustainability-minded companies, you’re reducing your footprint and supporting an entire ecosystem of businesses trying to do the right thing. As the impact of climate change bites, diversity has the added benefit of protecting your business against supply chain instability.

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Shipping

Problem

Transporting materials and producing long distances is predicted to have generated 25 million tons of CO2 by the end of the decade. And while air freight accounts for just 2.5% of total carbon emissions, commercial aviation is responsible for 3.5% of warming effects. That makes distribution and shipping a great area for businesses to improve their sustainability.

Solutions

Shipping by sea is still widely used. Given that buying air-shipped products from Asia produces 25 times more CO2 than buying in bulk and shipping by sea, it’s well worth exploring. Thousands of freight ships are operating every month, reaching all corners of the globe. What you lose in convenience with slower deliveries, you’ll gain in credit with your sustainability-minded customers. When shipping by air is inevitable, effectively managing your inventory by streamlining orders into the fewest possible shipments can help reduce the emissions per unit you produce.

Offsetting is also an option for businesses with customers seeking carbon neutrality from their deliveries. Companies such as Seven Senders—Europe’s leading delivery platform—now provide services that allow ecommerce businesses to offset the footprint of their shipments for just three cents per send.

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Storage

Problem

Storing inventory and materials while not using them is essential, but half-filled warehouses are costly in terms of working capital and sustainability. If the warehouses you’re using are far away, that means more shipping, higher prices, and more emissions.

Solutions

Shared warehouses are an excellent solution for all kinds of businesses—they’re more energy efficient, reduce the amount of overall storage space required, and are considerably more cost-effective for companies with varying storage needs.

On-demand warehousing is a broader infrastructural storage solution. Over 93.2% of the UK’s warehousing space was occupied in the second quarter of 2019-20, as reported by Savilles. While that seems high, it leaves over 3 million square feet of unused space. With more flexible logistics, businesses can use that space, saving the need for building new warehouses and protecting the environment.

Choosing the right third-party logistics provider can help businesses towards sustainability in their storage. Firms with a distributed warehouse network will be able to strategically distribute inventory to locations where demand is highest, saving on transport and carbon emissions later on.

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Packaging

Problem

Packaging is often the first thing people think of when it comes to unsustainable consumption, and with good reason. 3 billion trees are pulped every year to produce 241 million tons of shipping cartons. 86 million tons of plastic packaging are produced each year globally—most of it is impossible to recycle. And it isn’t just about materials. The production of packaging also has a significant impact, with experts estimating that a widespread switch to reusable packaging could reduce total emissions between 22% and 45%.

Solutions

Recyclable packaging has been on the agenda for some time already, but it needs to be genuinely recyclable and sustainably sourced to have a real impact. When designing your packaging, keep this checklist in mind:

• Can the materials be mass-produced without depleting non-renewable resources?
• Does the prime matter come from sustainable environments such as forests under the FSC® certification?
• Do all materials used in the manufacture of the packaging tick the 3R criteria (reduce-reuse-recycle)?

One-parcel shipping is a simple and effective way to reduce the impact of packaging, and there are inspiring precedents to follow. For example, Zalando’s ‘one-parcel policy’ streamlines multi-brand orders into a single delivery, saving on packaging and transportation.

Reusable packaging is another simple but effective solution to the packaging problem. By teaming up with a company like RePack, you can make shipments using reusable, recycled plastic delivery bags that customers can fold up and return free of charge. Each bag can be used up to twenty more times, saving thousands of single-use alternatives.

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Delivery

Problem

Navigating towns and cities is much less efficient than using highways. The last mile of a delivery—from depot to door—can produce roughly double the emissions of shipping packaging and the first delivery stage—more than 65% of the whole retail process.

Solutions

E-couriers provide companies with improved transparency on the logistics process, especially the last mile, giving them more control to make sustainable choices. For choices in the UK and Europe, try Ecourier or Seko Logistics.

Out-of-home delivery can save 300 grams of CO2 per package compared to delivering to customers’ doors. Though it’s slightly less convenient, many consumers are willing to take a small hit to reduce their carbon footprint.

Information is a powerful thing. Since consumers want to make better choices, letting them know how is a great way to act more sustainably. With tools like Holland’s Bewust Bezorgd, businesses can give their customers access to information on the carbon impact of various shipping options. They have found that quite twice as many will choose out-of-home delivery voluntarily once they’ve got all the facts.

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Returns

Problem

With current consumer protection laws in the UK and Europe, customers can return purchases for relatively minor reasons. Since a quarter of emissions from the transport of goods relate to returns, that’s a serious issue. While returns are inevitable to some degree, there are things ecommerce businesses can do to reduce their likelihood.

Solutions

Accurate descriptions and sizing on your website can help prevent returns and improve customer experience. A 2019 report found that 58% of returns were down to incorrect sizing, so the more information customers have at the point of sale, the better.

Correct packaging can save on the 30% of returns made due to products being damaged or broken on delivery. When packaging a shipment, check the following:

• Is the packaging the appropriate size?
• Are shock absorbers or desiccants required?
• Are you using a trusted courier?

Free returns aren’t considered as much of a problem as they once were and can be attractive to customers. Still, it’s difficult to justify them when they might incentivise unsustainable consumption. Consider ditching free returns and making it clear to customers why you’re doing it.

For the first time in history, solar power now produces cheaper energy than fossil fuels, and that’s just one area where committing to sustainability also makes good business sense. With the points above, you can transform your supply chain from start to finish, attracting new customers from the ever-growing eco-conscious market.