eCommerce

Trends Analysis: Brands, Carbon Offsetting and eCommerce Delivery

Home delivery is a tenet of eCommerce. 

The idea consumers could have purchases delivered directly to their homes was one the industry was built on. It also helped to establish one of eCommerce’s major benefits over traditional retail shopping: that it was much greener.

That may no longer be the case, however. With rapidly decreasing shipping times, the environmental impact of eCommerce deliveries is coming under scrutiny. 

Eager to keep consumers flocking to their online stores and play their part in fighting the climate crisis, major brands are putting practices in place to offset the impact of their deliveries. 

With smaller brands yet to follow their footsteps, we scrutinize whether carbon offsetting is essential for eCommerce brands or whether there is a better way to negate the environmental impact of online shopping. 

What’s the Problem with eCommerce Deliveries?

eCommerce deliveries aren’t necessarily worse for the environment than driving to the store. In theory, having one truck deliver products to a store instead of the entire neighborhood driving there is good for the environment, says Don MacKenzie, associate professor and leader of the University of Washington’s Sustainable Transportation Lab.

The problem is when consumers opt for faster shipping or order surplus items with the intention to return them, writes CBC News science and tech writer Emily Chung, Ph.D. The faster the delivery, the more it impacts the environment.

It’s the last mile where emission levels are particularly harmful. According to the World Economic Forum, last-mile delivery emissions will increase by more than 30% by 2030 in the world’s top 100 cities, reaching a total of 25 million tons.  

To meet consumers’ desire for instant gratification, brands like Amazon are working with networks of third-party carriers across the country, writes tech reporter AJ Dellinger. “Many of those companies that Amazon contracts with use large diesel trucks and vans that produce considerably more emissions than most consumer vehicles, which have become more fuel-efficient over time,” he explains.

People’s shopping habits are also causing more emissions, says Dellinger. Single item orders and strict shipping times mean deliveries can’t be grouped together, resulting in inefficient trips and higher emission levels.

Distribution centers, where products are stored prior to delivery, also emit carbon, writes Katie Fehrenbacher, a Senior Writer & Analyst at the GreenBiz Group. “Slashing emissions from these buildings requires the typical things, such as clean energy-powered electricity, efficient lighting and electric or fuel cell forklifts for moving packages,” she says.

USPS delivery truck speeds through a busy city; carbon offsetting for eCommerce concept

How Are Brands Offsetting Their Emissions?

To offset their carbon footprint, companies must first calculate their emission levels, writes the Guardian’s Jillian Ambrose. Then, they purchase credits from projects that remove or prevent the equivalent amount of carbon emissions elsewhere in the world. Typically this involves planting trees, but it can also include renewable energy generation and other projects that replace fossil fuels.

Etsy is likely the best known company when it comes to carbon offsetting. It was the first global eCommerce brand to offset 100% of its emissions from shipping in 2019. For every customer purchase, Etsy automatically purchases a verified offset, explains CEO Josh Silverman. “These purchases support environmental projects, including protecting forests that improve air quality and absorb carbon, sponsoring wind and solar farms that generate clean energy and replace fossil fuels, and developing greener methods for producing auto parts,” he explains.

They aren’t the only brand to do so, however. Luxury retail platform Farfetch committed to offsetting its entire shipping carbon footprint in 2020, writes Huw Hughes at Fashion United. Offsetting projects include renewable energy generation and forest protection and planting.

Carbon offsets were also key to helping direct-to-consumer personal care brand, by Humankind, achieve a net-zero carbon footprint, says the company’s Co-Founder and CMO Joshua Goodman.

Offsetting Taps Into Consumer Demand For Sustainability

Carbon offsets aren’t just an easy way to negate the environmental impact of deliveries; they’re also a great way to attract today’s environmentally-conscious consumer

Consumers are demanding sustainability from brands, says Nielsen. According to research that looked at different countries, genders and generations, the vast majority (81%) believe companies should be improving the environment. Almost three-quarters (73%) said they would change their own consumer behavior to reduce their environmental impact. 

Further, a 2019 survey by British logistics firm Wincanton found that 32% of British consumers “are considering buying from retailers that are more environmentally friendly in the future.” More than one-quarter says they are likely to buy from a brand that uses electric vehicles.  

Demand is one thing. The trouble is most consumers aren’t willing to pay more, University of British Columbia’s Sauder School of Business’ Katherine White, David J. Hardisty and Rishad Habib write at Harvard Business Review. Even though consumers say they want to buy from environmentally conscious brands, very few actually follow through. The researchers cite one consumer survey, in which “65% said they want to buy purpose-driven brands that advocate sustainability, yet only about 26% actually do so.”

This makes carbon offsets, which don’t increase the price of the product, even more attractive for both brands and consumers. 

electric vehicle charging system, carbon offsetting for eCommerce concept

Is Carbon Offsetting Really the Best Way to Go About It?

Carbon offsets may look great on paper, but many experts believe they aren’t all they’re cracked up to be. The biggest argument against carbon offsets is their inability to address the real problem, writes Tabitha Whiting, Communications and Marketing Manager at retrofit service, Cosy Homes Oxfordshire. “Carbon offsetting gives individuals, businesses, and even governments an easy way to buy their way out of responsibility for the greenhouse gas emissions produced by their activities,” she says.

Even the offsets themselves can be suspect. Lisa Song, an Environment Reporter at ProPublica, looked at carbon offsetting projects across the globe going back two decades and found that, time after time, carbon credits hadn’t offset the level of emissions they were meant to. In other cases, any positive impact credits had bought were either quickly reversed or couldn’t be measured. “Ultimately, the polluters got a guilt-free pass to keep emitting CO₂, but the forest preservation that was supposed to balance the ledger either never came or didn’t last,” she writes.

Sharon Beder, an Honorary Professorial Fellow at the University of Wollongong Australia, offers a damning assessment: “Carbon offsets are a greenwashing mechanism that enables individuals to buy themselves green credentials without actually changing their consumption habits, and nations to avoid the more difficult structural and regulatory change necessary to prevent further global warming.”

In the view of Greenpeace UK Digital Campaigner Alia Al Ghussain, most carbon offsetting plans are nothing more than PR efforts. “Offsetting schemes provide a good story that allows companies to swerve away from taking meaningful action on their carbon emissions,” she says. “Offset schemes also serve to make fossil fuels more palatable to increasingly eco-conscious consumers.”

How Else Can Brands Reduce Their Delivery Carbon Footprint?

If carbon offsets aren’t the cure to eCommerce’s emission problems, what else can brands do to cut their carbon footprints? 

Electricity may be one way to go. Some of the biggest eCommerce brands have committed to a fleet of electric delivery vehicles. Amazon has placed an order for 100,000 vans from Rivian, reports Shefali Kapadia at Supply Chain Dive, and will begin deliveries in 2021. IKEA has also pledged to make all deliveries electric by 2025.

In-store collection is another green alternative, says delivery management software provider Scurri CEO and Co-Founder Rory O’Connor. “Enabling customers to pick up their items from a physical store in their area and at a time that is most convenient for them is a simple and satisfactory experience for customers,” he writes. “It is a major saver on carbon footprint, allowing carriers to boost their parcel density and shipping consolidation and reduces failed deliveries. Click and collect also has the added benefit of providing retailers with an additional revenue channel as the increased footfall into physical stores boosts the likelihood of a sale being made.”

Brands could also consider collecting products from their own stores. Sourcing products (especially “oversized items”) from local in-store inventory minimizes long haul shipping and reduces carbon emissions in the process, says Bain’s Aaron Cheris, Casey Taylor, Jennifer Hayes and Jenny Davis-Peccoud. It could also be up to 30% more cost-efficient for large brands and 50% more cost-efficient for smaller brands. 

A very different delivery strategy is being tested in the U.K., reports the team at Redbox Digital. The Magway system will see parcels delivered between distribution centers and consolidation centers using an underground network of pipelines. With backing from online grocery platform Ocado, the development of an initial 52-mile network is underway. 

Consumers clearly want more sustainable brands, but this doesn’t mean carbon offsetting is necessarily the way to go about it. For companies serious about reducing their carbon footprint, reducing total emissions may be a far more effective strategy than buying carbon offsets. 

Images by: Spencer Watson, Norbert Kundrak, chuttersnap