eCommerce on the way towards more sustainability

The corona crisis has brought along an unprecedented boom for online retail. Online orders surged in the first half of 2020 and remained high in many parts of the world throughout the year and until today. Many eCommerce players like Amazon or Otto experienced a record holiday season and analysts expect the upward trend to continue. More and more online orders to be processed and delivered necessarily mean higher parcel volumes, more delivery routes, more packaging. Is this a positive development in times of climate change and the need for a more sustainable and eco-friendly way of life? A recent study by MIT Real Estate Innovation Lab says yes, eCommerce is more sustainable in terms of greenhouse gas emissions than traditional brick-and-mortar retail. The study is based on Monte Carlo simulations with more than 480,000 trials comparing online, traditional, and hybrid retail concepts. In about 75% of the scenarios developed in the base case, eCommerce turned out to be the more sustainable shopping alternative. Although this is good news, there is still room for improvement. Greenhouse gas emissions currently occur in the following stages along the eCommerce path:

Although some might spontaneously think so, greenhouse gases emerging from the actual deliveries is not the biggest problem. A lot of CO2 can be saved by consolidating routes and intelligent logistics management in general. And compared to traditional retail, transport in eCommerce is by far not the biggest polluter. While in brick-and-mortar retail, transport accounts for 70% of all greenhouse gas emissions, it makes up only 13% of total emissions in eCommerce. The biggest room for improvement in eCommerce is in packaging. 45% of all eCommerce greenhouse gas emissions are connected to boxes and wrappings. Returns are another aspect that produces a great share of greenhouse gas emissions in online retail. They account for 25% of emissions. Luckily, eCommerce is not only in the lead over traditional retail at the moment, minor improvements in operations can also have a huge impact in making the ecological footprint of eCommerce even smaller, according to the MINT analysis. Electrifying delivery fleets, for example, can reduce greenhouse gas emissions significantly. If both traditional and online retail had fully electric delivery fleets, eCommerce wold be more sustainable in 78% of the tested scenarios. Bundling packages and reducing the amount of packaging can save up to 36% of total eCommerce emissions. In general, eCommerce seems to be less environmentally harmful than one might think, especially when companies assume their responsibility and invest in optimizing processes even further.

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April 2021

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