eCommerce Companies: Your Carbon Footprint Could Get Expensive Soon
Online shopping has transformed retail. Unfortunately, it’s also helping change the environment, and not for the better.
Shipping products to individual consumers rather than to retailers is a carbon-heavy model of distribution. Unchecked, those carbon output levels would only rise as eCommerce matures.
The good news is that DTC brands and other eCommerce retailers can take action now on behalf of our environment. In doing so, they may well avoid new taxes, increase their profits and build even more loyal followings.
Here’s why reducing your carbon footprint could be the best, most profitable move your DTC brand takes in the next 12 months.
A Carbon Tax Is Coming
If the countries you ship to don’t already have a carbon tax, there’s a good chance they will in the next few years.
While the EU already has a policy to help member countries reduce emissions, the EU Emissions Trading System, it doesn’t cover sectors related to eCommerce, like transport. This might be about to change, however. Clean Energy Wire’s Kerstine Appunn and Julian Wettengel report that Germany, France, Spain and Sweden are all considering individual carbon taxes.
The New York Times’ Brad Plumer and Nadja Popovich report that though the U.S. Congress looks unlikely to pass a climate bill in the near future, it hasn’t stopped some states from enacting their own carbon taxes:
- Nine states in the northeast of the country have signed on for the Regional Greenhouse Gas Initiative, although this is currently limited to power plants.
- California has its own program that covers other polluters, as well as plants.
- Both New Jersey and Virginia could sign up to the Regional Greenhouse Gas Initiative in the near future.
Some states are looking into a separate program that would also tax transport fuels. eCommerce activity would certainly be hit by such a tax, especially if it covers emissions from transportation.
That’s because online shopping isn’t all that green, at least not currently. Much of eCommerce’s carbon footprint comes from the last mile of the shipping process, where the package is sent from a fulfillment center to a home address, writes Metro’s Faima Bakar. These deliveries used to be made in bulk to stores that were mostly in areas able to cater to freight traffic. Now that those have become home deliveries, residential areas are seeing more traffic and more vehicular pollution as a result.
Online shopping is one of the reasons Canada is struggling to hit carbon emission targets, writes Warren Mabee, Director at the Queen’s Institute for Energy and Environmental Policy at Queen’s University, Ontario. Freight trucks are the country’s fastest-growing source of emission (up 205% since 1990).
“This is the result of two seismic shifts: The rise of just-in-time delivery to big-box stores and the emergence of online marketplaces, such as Amazon or Walmart,” Mabee writes. “Our shopping choices have put more trucks on our roads and increased transportation-related emissions.”
Left Unchecked, eCommerce’s Carbon Footprint Would Only Increase
One of the benefits of eCommerce is also a curse for the environment. It’s so easy to buy things online. As a result, we are buying more than ever before, The Atlantic’s Alana Semuels reports.
In fact, at the start of 2019, online shopping sales were higher than general merchandise sales for the first time ever, reports CNBC’s Kate Rooney.
It’s not just a demand for products that’s increasing. Demand for a more convenient experience is growing, too. The number of Amazon Prime memberships is soaring — spurred by the promise of two-day delivery, among other things — and recently surpassed 100 million people.
Increasing demand for a seamless shopping experience comes at an even bigger cost to the environment, writes the team at Chain Store Age. Retailers have to find a way to deliver products within one or two days and provide a quick and easy return process. This means sending out more packages, which means putting more trucks on the road.
How DTC Brands Can Reduce Their Carbon Footprints
Completely cutting carbon emissions will be virtually impossible unless you base your entire logistics and shipping systems around zero-emission transport options. That’s just not feasible at the moment.
Offsetting your brand’s carbon emissions is both doable and effective, however. It’s the most sensible option, says eCommerce design agency Hatch. ”The goal of a carbon-neutral program is not to eradicate all carbon emissions that you associate with shipping as this would be impossible. Instead, the aim is to offset your emissions by removing equal amounts of carbon from the atmosphere.”
There are several ways you can do this, says the team at Sendle. Forestry-based offsets are one of the most popular choices, but some brands also choose to invest in renewable energy solutions, too.
Cutting Carbon Brings Other Business Benefits
When you cut the carbon emissions of your eCommerce business, you also open the door to a host of other potential benefits.
The first is reduced costs, Bain Partners Aaron Cheris, Casey Taylor, Jennifer Hayes and Jenny Davis-Peccoud write. “By doubling the average number of items purchased per eCommerce transaction and avoiding split shipments, retailers can reduce average per-item emissions by 30%, and that effort cuts shipping costs by more than 50%.”
You could also land new customers for your brand. Research by Nielsen found that 73% of consumers would change consumption habits if it meant reducing their impact on the environment.
Parcelhub’s Paul Skeldon argues that offering more green options “will unlock customer loyalty.” More and more consumers are looking to change shopping habits to improve the environment, Skeldon writes. Specifically, half of consumers only wish to support brands that provide a range of sustainable shopping options. More than half of young shoppers would switch brands if a competitor were more sustainable.
If You Haven’t Started, You’re Already Behind
Several eCommerce marketplaces and DTC brands have already begun cutting carbon emissions, and they are reaping the rewards.
This year, Etsy became the first eCommerce company to completely offset its carbon emissions from shipping, Fast Company’s Adele Peters reports. Despite already installing solar panels, building wind farms and migrating to more eco-friendly cloud storage platforms, a whopping 98% of the company’s carbon footprint comes from shipping.
By working with carbon offsetter 3Degrees, Etsy will be able to offset its shipping footprint by protecting forests, building wind and solar farms, and funding the development of a sustainable production method for car parts, Peters reports.
Thrive Market isn’t far behind. Over the last half a decade, CEO Nick Green says the company has taken steps to fully neutralize its shipping carbon footprint, remove almost all plastic packaging and eliminate waste in fulfillment centers.
The move resonated with customers. “Today, content and communications about these projects are consistently some of our most effective pieces of brand marketing,” Green says
Australian DTC beauty brand Adore Beauty introduced new warehouse management software to drastically cut down packaging. CEO and Founder Kate Morris says that although the new system took nearly eight months to put in place, it has helped reduce package size, minimize waste and save loads of cash.
“Actually the boxes are cheaper and take up less space, so it has reduced our shipping costs,” Morris says. “It’s more efficient in the warehouse because they can fit more of those boxes into each shipping cage before they have to go onto the truck.”
Reading this article is a great start, but it’s for naught if you don’t take action. Reduce your brand’s carbon footprint now, while there’s still time to avoid carbon taxes and while consumers are still assessing which brands deserve their loyalty.