E-commerce sustainability - caring for the planet pays off

Author:
Anna Meller
Published:
9.1.2023
E

-commerce companies are an integral part not only of the economic ecosystem, but also of the social and environmental one. Business decisions made at the micro level, at the company level, regarding the technologies and materials used and the distribution channels, have long-term macro-level impacts on the environment. Although sustainability is commonly associated primarily with actions related to the well-being of the planet, human beings are also at the centre of its philosophy and activities - protecting their rights to decent living and working conditions and caring for the well-being of future generations. Responsible business is not only ethical, it also contributes to improving a company's image in the market, increasing customer loyalty and, ultimately, sales. Not surprisingly, sustainable commerce is one of the most important trends in 2023.

Responsible business, or sustainable commerce

Sustainable e-commerce involves: changes in the supply chain and greater efficiency in logistics channels, the introduction of eco-friendly packaging, reduced energy consumption, a smaller carbon footprint and less waste, sourcing of raw materials and goods from ethical sources, switching to renewable energy sources and more. Properly communicating a company's sustainable practices makes customers consciously choose a brand and become more strongly attached to it because it presents their values. Such business solutions have the potential to translate into greater customer loyalty and higher profits and are an important contribution to promoting responsible business. 

Sustainable development for future generations

Sustainable development, as defined in the 1987 Report of the World Commission on Environment and Development, means "development that secures the needs of the present without compromising the fulfilment of the needs of future generations". The origins of promoting this idea in business can be traced back to 1999, when UN Secretary-General Kofi Annan called on business leaders to join the UN Global Compact, an international initiative set up to set and implement principles in the areas of human rights, labour, environment and anti-corruption. 

In 2015, all Member States of the United Nations adopted the blueprint 'Transforming our world: the 2030 Agenda for Sustainable Development' for a better future. The 17 defined goals are about transforming the world with respect for the environment, with an eye to future generations and taking into account the needs of the underprivileged in society. Currently, more than 10,000 companies from around the world, international labour organisations and civil society organisations are involved in the UN Global Impact initiative.

Sustainability in practice 

In recent years, sustainability measures have played an increasingly important role in consumers' purchasing decisions. More than half of Europeans identify companies as important actors in the fight against climate change .  44% of respondents say they choose the products of a company they know is working towards sustainability, abandoning the products of competitors about which they do not have such knowledge y (Inquiry Market Research, 2021), and 57% of consumers are willing to change their purchasing habits to reduce their negative environmental impact (IBM Institute, 2020).

In our country, sustainability is also gaining importance. More than 8 out of 10 Poles surveyed believe that actions taken by everyone personally are very or rather important for improving the environment (Ebeltoft Group, 2020)

A great support for building good practices and eco-friendly habits is the mobile app. Numerous apps are being developed on aspects such as CO2 consumption, water level testing or pollution load. An example is the mobile solution developed by Planet Patrol, with which volunteers have registered more than 450,000 pieces of litter in 113 countries. Also in the B2B sector, applications are being developed to study the carbon or chemical footprint of a business in order to reduce this burden. An example is the Chemical Footprint initiative, which helps to identify the chemical burden generated by companies. 

Practices to support the sustainability of e-commerce

66% of consumers say they are willing to pay more for sustainable products (Nielsen, 2018). Research also shows that a commitment to sustainability can result in a loyal customer in e-commerce, where loyalty is hard to come by . For Poles, sustainability is above all synonymous with pro-environmental activity. We are increasingly aware of the role that appropriate packaging and the origin and composition of the products we purchase play in protecting the environment. 86% of domestic customers also declare that they buy appliances that use less energy. 

The actions of Polish companies in the area of sustainability are therefore a response to the real needs of consumers.

Popular CSR and sustainability practices include:

  • offering the quality of good products, 
  • certified raw materials and materials, 
  • eco-friendly packaging,
  • reducing the number of supplier trips (e.g. parcel machine instead of door-to-door delivery), 
  • waste segregation and recycling, 
  • reduction of the generated pollution and carbon footprint 
  • implementing technologies for supply chain optimisation, 
  • environmental education for employees and customers. 

Conducting sustainable e-commerce is not only responsible and ethical, but also translates into increased sales because it is valued by customers. According to research, the communication of these activities has tangible results and 93% of CSR companies achieve image as well as economic benefits through this (The Chamber of Digital - Economy Report, 2021). 

Second life of products

Due to the mass scale of production and the associated pollution burdening the environment, consumer attitudes towards buying new products are changing. Used cars, electronics, furniture, books and clothes are an opportunity to get functional items at a good price and put them back into circulation. In 2020, up to 86% of respondents were willing to buy second-hand clothing. This compares to only 45% in 2016 (Global Data, 2021) . Research on the US market shows that 60% of fashion chains say they are open to introducing a second-hand clothing offer to their customers. According to 42% of US fashion respondents, it is the second-hand clothing segment that will be the most important in the next 5 years (Global data, 2021) . On our continent, the second-hand clothing market is growing eleven times faster than traditional retail of new clothes. According to For Trade magazine, 90 million Europeans will try resale for the first time in 2021, compared to 16 million in 2020 ! 

According to international rankings, the most sustainable marketplaces operating internationally are actually second-hand clothing platforms. This rapidly growing niche is still open and worth developing. However, Second Hand is not only about clothes! Poland's largest platform Allegro - was originally established as a re-commerce marketplace, i.e. for the resale of all kinds of products. A similar role is played on the market by OLX or Vinted. An interesting BuyBack & Resell initiative is being implemented by IKEA. Under the campaign, customers will be able to return used, unwanted or no longer needed furniture for which a new home will be sought. 

Don't throw it away - fix it!

Consumers are not only giving a second life to goods by buying back second-hand products. For environmental as well as financial reasons, they are increasingly willing to repair things that have broken down or become damaged. New regulations responding to this need aim to reduce global litter. Around 50 million pieces of electro-waste are generated every year, most of which are very difficult to recycle and contribute to massive environmental pollution. The deliberate obsolescence of equipment, their short lifespan and the difficulty of repairing them have become the subject of European Union intervention. The legislation, which came into force in spring 2021, is designed to force manufacturers to make their products more durable and repairable. 

Manufacturers and importers are obliged to provide replaceable accessories and components so that the consumer can restore the equipment's functionality after a breakdown. On the other hand, in the case of a more serious repair, the purchaser is supposed to be able to return the equipment to a professional service. 55% of surveyed Polish respondents declare that they have repaired a product instead of buying a new one (Inquiry Market Research, 2021) . With increasing consumer awareness, this trend will grow. Therefore, in e-commerce, a very important aspect that may determine the competitive advantage is the communication of such attributes as the quality of the purchased products, system solutions in the form of an extended warranty period, information about spare parts and service networks that enable the repair of faults and failures, preferably in the door-to-door option.  

How to communicate sustainability?

43% of consumers are more likely to choose an online retailer that offers sustainable delivery. It is therefore worth offering potential customers several delivery options with an incentive to use a solution that leaves a smaller carbon footprint in the form of an appropriate green label or a more attractive price. 

Another way to build informed customer loyalty is to conduct an internal audit against sustainability goals and publish the report on your website. There are also international external solutions in this area. CDP (Carbon Disclosure Project) is a non-governmental organisation that works across all sectors to build a low-carbon economy. A company can report its carbon footprint and other greenhouse gas emission parameters, with the aim of publishing reports generated by the Carbon Disclosure Project, just as globally known brands and the world's largest metropolises do. Another tool, for example, is the Sustainability Insight System (THESIS) Index, for assessing sustainability performance and identifying key aspects of sustainability. Once entered, suppliers can see their performance against the industry and gain insight into opportunities for improvement for each category in which they do business. Information about such activities is placed prominently on the website, translating into a positive image for the company in the eyes of the customer. 

Sustainability - a profitable investment

The crisis into which the economy is currently entering is forcing the introduction of a new business model. The public is increasingly aware that taking decisive action to stop environmental degradation and climate change is necessary for the security of our future generations. It matters to 62% of consumers that a manufacturer operates in a sustainable manner (Inquiry Market Research, 2021) . As the research shows, consumers are increasingly influencing economic actors, expecting the companies they use to minimise the negative impact of their operations in the first place. 

Sustainability activities are one of the essential elements of companies' e-commerce strategies. Appropriate communication of 'green activity', i.e. a visible message on implemented e-commerce helps to build lasting relationships with customers and generates greater and more stable revenues. Above all, sustainability activities are an investment in the future that benefits everyone - companies, the environment and current and future generations. From the point of view of e-commerce, two areas have the greatest environmental effectiveness: combating the effects of climate change and minimising the toxicity of products (Environmental Defense Fund, 2020). In order for these ideas to be part of a company's identity, regular communication is needed regarding the planning and implementation of further tasks in this area and informing the market of even the smallest progress, allowing customers to see that the company is truly living the ideas of sustainability. 

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