When Amazon’s third-quarter results came out last week, most of the focus was on the fact that they posted a fall in net income for the first time in two years. A primary reason for the shortfall was the investment they are currently making in faster delivery, and there was an eye-catching quote on the impact of this shift from chief executive Jeff Bezos: “[A]lthough it’s counterintuitive, the fastest delivery speeds generate the least carbon emissions because these products ship from fulfilment centres very close to the customer.”
Is it, then, accurate to equate faster delivery with positive environmental performance?
Now, the challenge with assessing whether doing something one way or another is superior environmentally relates to the sheer complexity involved in the calculation. Retail is, by its very nature, a primary contributor of emissions and waste. Even if the final-mile delivery is made by carbon-neutral bicycle, there are still all the resource and emissions involved in manufacturing and transporting whatever the item may be – not to mention the base minerals and materials that go into it – through a global supply chain.
If we were being really picky, you could even look at how resource-intensive it is to manufacture that fleet of non-emitting delivery bicycles.
So anything that is adjudged to be better or worse environmentally only ever really provides a restrictive view of the overall picture. Could ever-faster delivery be something that eventually brings a positive benefit overall, particularly if advances in technology (automated, electric vehicles etc) reach mass-adoption? Perhaps, but that shift doesn’t feel very imminent; in the medium-term the emissions from higher volumes of parcels is only really likely to get worse.
Whether it’s ‘better for the environment’ then is a question that could not be settled without deep and very varied research. However, what I’d like to argue here is that finding ways to improve environmental performance – either through reducing packaging waste, using recyclable materials or reducing emissions (at some stage at least) – is rather skirting around the primary issue; that retail has now reached an inflection point where we need to reduce the amount of stuff we are selling.
That statement, upon initial consideration, may seem absurd. Retailers exist to sell things, and seeing a drop in sales is usually interpreted as a sign they are getting something wrong. The markets certainly don’t respond well to it. But are we right to assume that measuring the success of a retailer purely through assessing the increase in their sales volumes is in any way natural, inevitable or, indeed, relevant anymore?
We have become accustomed to this idea that, due to technology, everything will inevitably get faster and faster (case in point – a few years ago I saw a Google presentation where they stated: ‘nothing has ever happened as fast as mobile before, and nothing will ever happen that slow again’). The inference is that you either get with that new reality, or get left behind.
In an online delivery sense, we’ve interpreted that quite literally to cover speed. For a tiny number of retailers, who have the national infrastructure (store estates and warehouses) to facilitate it, they can even bring in same-day delivery lead-times. If those retailers make everything they do really fast, it puts pressure on everyone else to do it – that, at its most extreme, is every retailer, every carrier, scrambling to do everything really fast.
But is that aspiration consistent with the demands of the coming decade?
The retail model we have been operating over the past decade might best be summed up by Amazon’s 2016 advertising slogan ‘thought it, bought it’, a very clever piece of marketing for their app, as it perfectly expressed their proposition of offering ultimate choice (everything is on there) supported by ultimate convenience (very easy, rapid delivery etc).
But what we have to consider is whether those values – choice and convenience – which were so important in the past decade are still those around which propositions for the 2020s should be built. The simple fact is that they are naturally at odds with environmental performance, which seems set to be one of, if not the battleground for business over the coming decade.
As already mentioned, making marginal improvements to performance – some plastics removed here, a synthetic fibre replaced there – would seem to be inadequate; a model of retail that continues to measure success by ever-increasing volumes of sales, while trying to convince the customer that it is being done in an environmentally-optimised manner, seems more likely to alienate them.
Retail is already in a pretty dire situation, both for the high street and online – the model retailers operate over the coming decade will need to be far more convincing from that perspective, or they will find it difficult to win their customers back over.
Although it seems a long way away from where we are today, and to some extent counterintuitive, the most sensible approach industry can take would be to start debating a model for retail based around selling less volume, more accurately, and shift the focus away from selling higher volumes at greater speed. That old model is incompatible with the principles likely to underpin the coming decade.
But I’m not just saying retail should go down this route because it’s the ‘right’ thing to do, or it’s moral or represents a ‘nicer’ version of itself; the external pressures are already profound and rising. While there have always been voices calling for people to stop buying things and repair old items / clothes etc, they are usually only on the margins. Today, they are mainstream. Retail is suffering from lots of problems at the moment and, while it’s perhaps hard to quantify exactly, the environmental issue – which is headline news every day – must be exerting some kind of influence over shopper behaviour.
Consider, for example, all the backlash against fast fashion – including government committee hearings – or the numerous articles that pop up on some of the biggest news sites (particularly BBC and Guardian) advising people to stop buying new things and share what they already have among family and friends. Or Oxfam’s Second Hand September, where people pledge to avoid buying new clothes for 30 days (the resulting online clothing sales growth in September? Fell -1.3%).
To be clear – people are being told, repeatedly and by reputable media organisations, to stop buying things. We can continue to pretend that those marginal gains will be sufficient (‘we’ve removed some plastic from our packaging’), or that there is an inevitability to how technology speeds everything up, so we’ll just learn to deal with it – and that customers will learn to accept it.
The smartest thing we could do, however, is use that technology to help us sell less, through making better connections across customers, retailers and things. And that will not be possible unless we acknowledge that a serious debate concerning which kind of retail model is appropriate to the coming period is overdue; because the model we have is based around values that are starting to look woefully out of date.
Andy Mulcahy is founder of the Post-Economic Institute