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IRUK Top500 The Customer Report: 2018

IRUK Top500 The Customer Report: 2018

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GUEST COMMENT Sustainable ecommerce – in hope or expectation?

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Will the online retailers ultimately invest in faster or cheaper, more sustainable delivery?
Will the online retailers ultimately invest in faster or cheaper, more sustainable delivery?

Ok, I’ll preface this article by stating that when it comes to the topic of ‘sustainability’, I have hitherto been a sceptic and asked myself whether it’s not the latest ruse to unnecessarily soak up management focus at the expense of growth and innovation. Why would a typical ecommerce outfit prioritise investment in planet-friendly initiatives when there are so many better returns elsewhere?


However, recent events have convinced me that reducing environmental impact and operational costs are not necessarily mutually exclusive. Indeed, I have come to appreciate that sustainability can actually drive efficiency and this is particularly applicable in order fulfilment and delivery.


At Fulfilment Crowd, we are thinking big and way beyond tinkering at the margins or playing to the gallery. However, no company can do it alone; so strategic partnerships and collaboration are crucial to delivering a real advantage for clients while tackling the environmental challenges we face.

 

As a service provider, our contribution to a sustainable future must focus on reducing delivery miles and the impact of shipping overheads such as packaging and energy consumption.


Success in ecommerce hangs almost exclusively on delivery, and for that reason, the industry leaders expend nearly as much effort improving their shipping, ‘unboxing’ and returns experience as actually sourcing products. Retaining customers and gaining the edge to acquire new ones is the only show in town and begs the question of what the future holds, particularly as ‘sustainability’ more and more influences buyer behaviour.


In this regard, trends are difficult to predict; while an increasing proportion of customers in mature markets are willing to pay premiums for next day delivery or hassle-free packaging, a majority still prefer the cheapest or free option. Some have even suggested that home delivery itself is a spent model, but there’s nothing to suggest an alternative is ready to take its place.

 

In the UK, unattended delivery to lockers and drop shops has struggled to penetrate the consciousness of time-pressured buyers, while autonomous distribution using fleets of unmanned vehicles and drones are still very much ‘Buck Rogers’ territory.


Aside from the competitive advantage gained from convenience, there is increasing attention being paid to the environmental impact of logistics, with a focus on reduction of vehicle emissions and packaging waste.

 

Despite the imposition of congestion charges, growing populations of major cities such as London have cancelled out their impact on emissions, so any re-invention of traffic-generating activity, such as home delivery, is fair game.

 

Shifting to evening deliveries when recipients are actually at home seems like low-hanging fruit, whilst more off-the-wall solutions include exclusive providers operating inside the M25 delivering parcels using a green electric fleet of cars, vans, bikes and pedestrians (one assumes they would use public transport at some point) from access hubs dotted around the periphery.

 

After a sharp intake of breath, the concept grew on me and would undoubtedly wipe thousands of commercial vehicles off the capitals clogged streets at a stroke. The triaging of parcels from national carriers into a sub-network may add lag into delivery timescales, but it would not surprise me if distinct solutions for urban areas emerged in the near future.


So, assuming the game moves on, will the online retailers ultimately invest in faster or cheaper, more sustainable delivery?


In my opinion, it is not a binary choice. The challenge is to employ latent capacity in our infrastructure, using applied technologies to reduce delivery times, parcel mileage and costs. For example, is it economical to dispatch a parcel from Preston bound for Lancaster to be sent 120 miles south into a distribution centre, only to rebound up the M6 hours later?

 

Moreover, are the carriers not missing a trick by operating independent networks and heavily duplicated van or trunking routes? In the airline industry, code sharing has long been acknowledged as an efficient means of leveraging capacity while participating marques maintain their sovereignty. Necessity being the mother of invention, it is not inconceivable that groupings or industry consolidation could transform home delivery with not a mention of gimcrackery such as drones and Autonomous Ground Vehicles (AGVs).


Similarly, the era of big data presents opportunities to optimise the location of a product relative to consumers. The idea of stock pooling is not new, but it relies on collaboration between erstwhile competitors. Perhaps a consolidator may come forth offering an integrated supply chain and means to broker distribution of goods from a source that is local to the customer. This opens up crowdsourcing possibilities, tapping into the ‘gig economy’ where deliveries are point-to-point and flexible, rather than networked and fixed. So, how would this work in practice?

 

Anyone who uses Amazon Prime Now may already have a clue – subject to stock availability; an order will be dispatched from a local warehouse and delivered to a place of the customers choosing by a jobbing driver equipped with mobile phone and geo-tracking application. If same-day and, ultimately, delivery on-the-go is to have a future, this infrastructure needs to be developed but, like Uber et al, technology will be the enabler, and one feels it is cloud-based software and artificial intelligence that will be pre-eminent, rather than hardware.


Amongst a flurry of new-tech challengers in the delivery space, none have yet to acquire anywhere near critical mass, with plenty falling by the wayside. This has probably curbed the pace of change in the traditional sector, where the hub and spoke networks still dominate. But while customer expectations rise and carriers still grapple with the economics of resource utilisation and failed deliveries, there must be a better way.


Aside from the last mile, the packaging is a critical element of sustainability. Merely focusing on recycled or recyclable materials is not enough, the packaging has to perform its function at the lowest possible financial and environmental cost.

 

I recently purchased four tumbler glasses online and was astonished to take delivery of an arms-width box with reams of bubble and plastic void-fill that hardly weighed more than 500g - pleased to say that there was no breakage! The realisation has dawned that we cannot continually send millions of tons of parcel plastic to landfill and much of this waste is due to the product development methodology that places emphasis on presentation of goods in a retail space.

 

As the scales tip in favour of ecommerce, should distribution-ready packaging not be a mandatory specification from the factory door? This would significantly reduce the need for secondary packaging by fulfilment centres and could be flipped into a virtue by enlightened brands tapping into an increasingly environmentally-aware audience. Of course, their hand may be forced by a directive or two from apparatchiks in Brussels keen to seize on champion projects.


So, we await drivers of change, but a change will come; I predict that early adopters and, importantly, promoters of sustainable ecommerce will reap a huge long-term benefit in a notoriously challenging market.

 

Supply-side, an integrated, universal and cost-effective delivery solution that wrings out the last drop of capacity would rely on a fusion of supply chain, order fulfilment, shipping, customer service and software expertise. Companies with such broad capability unencumbered with the ‘innovators dilemma’ are few and far between. A more likely plot is amalgamation by merger or an alliance of providers who can apply their respective expertise to offer a full-spectrum of services ranging from same premium day to ultra-economy at the lowest financial and environmental cost.


The future of home shopping is as exciting as ever but expect that sustainability will increasingly shape investment in technology and infrastructure over the next five years.

 

Author: Lee Thompson is sales and marketing director at Exact Abacus.

 

Image credit: Fotolia

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