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    Ethical Commerce: Sustainability Considerations for Ecommerce Brands

    8 minute read
    Ethical Commerce: Sustainability Considerations for Ecommerce Brands

    As Kermit the Frog once mused: It’s not always easy being green. But for ecommerce brands looking to stand out in an increasingly conscientious marketplace, it’s now quickly emerging as a necessity.

    Indeed, it seems as consumers learn more and more about the impact of their purchases up and down the supply chain, many have reassessed their relationships with even their most beloved brands in favor of those more closely aligned with their values (i.e., interest in “ethical commerce” is on the rise, particularly among younger shoppers).

    But you don’t necessarily have to have your ethical commerce credo all figured out overnight — especially the “being green” part: sustainability.

    Practicing transparency about your efforts toward a sustainable business strategy may well offer your brand a tremendous opportunity to both stand out on the digital shelf and delight your customers.

    This post will discuss how ecommerce brands can best position themselves to meet these shifting consumer demands, plus some common challenges of developing sustainable and ethical practices and the best ways to address them.

    Evidence of Shifts to a Sustainable Mindset

    The first is the rapid rise in favorability for sustainable shopping and practices not only among young shoppers but across other generations as well.

    One 2022 report produced by First Insight and The Wharton School notes that, in the two years since their first study exploring these attitudes, consumers across all generations saw a sharp increase in their willingness to spend more for sustainable products: In 2020, 58% of consumers across generations were willing to pay more for sustainable products; in 2022, that number had already jumped to 68%.

    “It demonstrates that consumers clearly want more than performative measures from retailers and brands when it comes to [sustainability] priorities, which will only increase in importance as Gen Z grows in influence,” the report concludes.

    And make no mistake — while many studies, as noted by Politico, suggest that ecommerce operations tend to have a lower relative carbon footprint than equivalent brick-and-mortar brands, they certainly aren’t immune from these trends and newfound consumer scrutiny.

    Challenges — And Solutions — When Implementing Ethical Commerce Best Practices

    While implementing sustainable and ethical commerce practices can be a challenging endeavor for any business, ecommerce enterprises, in particular, may face some unique hurdles. 

    Environmental Impact of 'Last-Mile' Delivery Services

    As most ecommerce operations are unable to provide in-store pick-up (with some exceptions, per Modern Retail), they rely on shipping to directly provide customers with their purchases — a practice that could have some serious ramifications for your brand’s carbon footprint.

    While many studies indeed suggest that direct delivery to the consumer can actually be more sustainable than having them drive to the store, a comprehensive review by the sustainable investment firm Generation, as noted by Politico, found that this was primarily based on some assumptions about consumer behavior that could easily shift in coming years. Specifically, assumptions such as potential customers’ number of trips, items purchased in a single visit, the amount of packaging, and the efficiency of last-mile delivery.

    While brick-and-mortar operations have their own unique carbon footprint issues to tackle — for example, Politico notes it typically takes more energy to power a retail storefront than a warehouse — pushing for efficiency in last-mile delivery is one area in which brands can make a dent in their emissions.

    What’s a Sustainable Solution for Delivery Services?

    One approach may include integrating hybrid or fully-electric vehicles into your delivery fleet or partnering with a third-party courier service that could provide this. Some delivery companies, such as UPS, also utilize systems to optimize delivery routes for efficiency  — great for both the customer experience and minimizing emissions, as noted by the delivery management platform FarEye.

    You can also incentivize customers to consolidate their orders to avoid multiple shipments and any associated social costs. 

    Supply Chain Complexity

    There are many reasons why ecommerce brands may face more supply chain complexity than their more traditional retail counterparts — a fact that may pose a challenge as you audit your business’s environmental footprint.

    Scope 3 emissions — defined as those “indirectly produced by other businesses and functions within a company’s supply chain” — have been found to account for up to 95% of a company’s carbon footprint, as noted by The New York Times.

    However, one McKinsey & Company study found that only about 25% of businesses consult with third-party operations in their supply chain about ways to reduce their emissions.

    Thus, businesses that aspire to adopt ethical commerce practices may see this as both a challenge and an opportunity. For example, Amazon and Target prioritize collaborating with their supply chain partners to reduce carbon emissions and promote other forms of ethical commerce as part of their sustainability initiatives.

    What Are Some Sustainable Solutions for Supply Chain Complexity?

    Here, greater awareness and collaboration about the impact of each stage of your supply chain is crucial.

    Approaches can range from establishing shared sustainability or emissions-cutting goals among your partners, implementing some shared best practices, or even offering incentives to those who reduce emissions to a certain degree.

    Some clothing companies, such as Levi’s, will offer discounts on future purchases when you return old clothes for recycling rather than the dumpster.

    Finally, adopting certain supply chain sustainability management platforms can also be a great first step in identifying and addressing issues throughout.

    Packaging Waste

    While managing levels of packaging waste is a challenge faced by any company manufacturing, distributing, or selling products, it can be a particular pain point for ecommerce brands striving to develop better sustainability practices.

    On top of product packaging already necessary to ship in bulk to a distribution center, additional materials are necessary for safe “last-mile” shipment, such as boxes and adequate packaging material to protect the (often single) product in transit. 

    What Are Some Sustainable Solutions for Packaging Waste?

    While likely more expensive than conventional packaging, businesses can invest in far more sustainable recyclable or biodegradable materials for their shipping needs — however, businesses can always incorporate this increase into their price or use it as a selling point to conscientious consumers.

    Brands can also incentivize customers to recycle or even return their shipping materials for store credit or other benefits. Emerging services like Boox provide these containers at scale for ecommerce brands.

    Barring that, businesses can also take steps to minimize the amount of packaging they use in each shipment. 

    Helping To Make The World — And Your Brand — Thrive

    Ethical commerce is no longer a consideration for niche brands alone. As shoppers continue to learn more about the ways their purchases impact the world — and younger generations continue to grow into larger and larger sections of the consumer economy — many brands may well miss this bandwagon at their peril.

    However, proactive strategizing, implementing new tech and management platforms, and honest transparency with your customers will go a long way in helping your company weather these trends and leverage them.

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    Written by: Chris Caesar

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