DepOrtak Pin

DepOrtak

Open in the DepOrtak App

Go

Impact of E-Commerce on the Environment

As retail evolves, e-commerce should be able to respond to customers’ desire for “greener” products as well as “greener” product delivery.

Is E-commerce or Conventional Retail Trade Greener?

In its simplest form, the conventional retail business model consists of supplier or factory-national and/or regional distribution center (warehouse)-store-customer arriving at the store and the customer bringing the return to the store, whereas the current e-commerce business model consists of supplier or factory-fulfillment center (warehouse)-cargo transfer center-distribution of the product (order) to the customer and collection of the return from the customer.

According to the “Retail Carbon Footprints: Measuring Impacts from Real Estate and Technology” report prepared by the MIT Real Estate Innovation Lab, 2% of the total greenhouse gas (greenhouse gas, GHG) emissions in e-commerce distribution are due to logistics, 13% to transportation, 15% to buildings and facilities, 25% to returns and 45% to packaging, while 1% of the total greenhouse gas (greenhouse gas, GHG) emissions for conventional retail trade are due to logistics, 18% to transportation, 70% to buildings and facilities, 7% to returns and 4% to packaging.

According to the article “ECommerce vs Bricks & Mortar” by Generation Investment Management LLP, Greenhouse Gas emissions for e-commerce are about 17% less than conventional retail trade (Bricks & Mortar). According to this article, the average GHG emission for any one piece of product is 2,000-2,100 grams of CO2 in conventional retail trade and 1,650-1700 grams of CO2 in e-commerce.

According to Oliver Wyman’s report “Is E-Commerce Good for Europe? Economic and environmental impact study” by Oliver Wyman, the average carbon dioxide equivalent of buying one piece of clothing (400 grams) or book (350 grams) or electronic device (250 grams) is 879 grams for e-commerce and 4,052 grams for conventional retail trade. Conventional retail trade generates 4-6 times more carbon dioxide equivalent than e-commerce.

According to the report “Is E-Commerce Good for Europe? Economic and environmental impact study” report, 3% of the 4,052 grams of carbon dioxide equivalent in conventional retail trade is due to the energy consumption of devices used for technology purposes, while 20% of the 879 grams of carbon dioxide equivalent in e-commerce is due to the energy consumption of devices used for technology purposes. “Energy consumption” for “devices used for technology purposes (data center, computers, server, etc.)” in e-commerce business model is remarkable.

Although today e-commerce emits less CO2 emissions and causes less pollution than conventional retail trade, e-commerce still pollutes the environment and the expected further development of e-commerce may increase its negative impact on the environment.

Environmental Impact of Warehouses to be Used for E-commerce

According to the article “How turning retail stores into e-commerce centres can avoid massive emissions” prepared by the World Economic Forum (WEF), a 1 million m2 fulfillment center is required to generate 6 billion dollars of e-commerce revenue. During the construction phase of such a building, 1-1.5 tons of carbon emissions per square meter are generated.

“Is E-Commerce Good for Europe? Economic and environmental impact study” by Oliver Wyman, the use of land or space for logistics, store parking space for conventional retail trade is higher than for e-commerce, and according to logistics commercial real estate experts such as Savills, Prologis and CBRE, an additional 18,000 M2 of warehousing space may be required for every €1 Billion of manufacturing investment, 3 times more warehousing space for e-commerce than for regular retail, and approximately 116,000 M2 of warehousing space for every $1 Billion of e-commerce sales growth.

According to the report “Is E-Commerce Good for Europe? Economic and environmental impact study”, 29% of the 4,052 grams of carbon dioxide equivalent in conventional retail trade is energy consumption in buildings, while 19% of the 879 grams of carbon dioxide equivalent in e-commerce is energy consumption in buildings.

The Environmental Impact of Last Mile Delivery for E-commerce

According to Oliver Wyman’s “Is E-Commerce Good for Europe? Economic and environmental impact study” by Oliver Wyman, 0.5% of the total traffic (vehicle-km) in major urban areas such as Paris, Berlin and London is e-commerce and 11% is conventional retail trade, and e-commerce can save 4-9 times the time of the traffic it causes.

According to Oliver Wyman’s “Is E-Commerce Good for Europe? Economic and environmental impact study” report, 66% of the 4,052 grams of carbon dioxide equivalent generated in conventional retail trade comes from customers driving to the store and 2% from delivery to the store, while 42% of the 879 grams of carbon dioxide equivalent generated in e-commerce comes from last mile delivery and 5% from transportation to the transshipment center.

According to the “Revealing The Secret Emissions Of E-Commerce” Report prepared by Clean Mobility Collective and Stand.earth Research Group, cargo delivery companies doing the “last mile delivery” business generate 3 million tons of CO2 emissions in Europe and 4 million tons of CO2 emissions in the USA, while CO2 emissions from Last Mile Delivery are up to 50% of total transportation emissions, and 204 grams of CO2 per parcel can be generated as a result of distributing a parcel for Last Mile Delivery.

Environmental Impact of Packaging for E-commerce

According to the article “The Environmental Impact Of E-Commerce” written by Earth5r.org, approximately 165 Billion packages (e-commerce parcels or bags) are used for e-commerce every year and this number is (will be) increasing every year. According to this article, Amazon uses 450-500 Million packages (e-commerce boxes or bags) every year.

According to the report “Retail Carbon Footprints: Measuring Impacts from Real Estate and Technology” report by the MIT Real Estate Innovation Lab, 45% of the total greenhouse gas (greenhouse gas, GHG) emissions in e-commerce distribution are from packaging, while 4% of the total greenhouse gas (greenhouse gas, GHG) emissions for conventional retail trade are from packaging.

According to the report “The End of Trash, Carbon footprint of reusable packaging” by Repack.com, the carbon footprint is about 0.26 Kg CO2 for a reusable plastic bag or tote and about 0.23 Kg CO2 for a reusable cardboard box.

With the development of e-commerce, more trees are being cut down to meet the need for more shipping boxes and more plastic bags are being used, polluting the environment.

The Environmental Impact of Returns for E-commerce

“Is E-Commerce Good for Europe? Economic and environmental impact study” report, 68 grams out of 4,052 grams of carbon dioxide equivalent in conventional retail trade and 112 grams out of 879 grams of carbon dioxide equivalent in e-commerce are due to returns.

E-commerce, Greener. But Can This Continue?

According to “The Future of the Last-Mile Ecosystem” Report prepared by the World Economic Forum (WEF), if e-commerce develops by 10-15% each year as expected, the number of Last Mile deliveries will increase by 78% and the number of vehicles to deliver them will increase by 36% by 2030, resulting in a 32% increase in delivery traffic, 21% increase in traffic congestion and 32% increase in CO2 emissions. Considering that this report was prepared in 2020, the projected rates for 2030 could increase by 1.5-2 times, as the demand for e-commerce will increase much more due to the Corona effect.

More vehicles are on the road due to the increasing number of deliveries, both due to the development of e-commerce and more frequent and smaller purchases, and the frequency of stops due to non-delivery can lead to more air pollution and noise pollution.

Customers’ Preferences (Wants)

E-commerce shoppers can opt for more sustainable and greener delivery options; they can buy brands that offer environmentally responsible delivery options, pay extra for environmentally responsible delivery, and even opt out of free delivery. Customers today are asking and demanding “how green are both the products and their delivery?”

The Sustainable Last Mile, Faster. Cheaper. Greener” Report by Accenture, 43% of customers say they would choose e-commerce companies that offer more sustainable and greener delivery options, while 60% of customers say they would buy brands that offer environmentally responsible delivery options, and 42% of customers would pay extra for environmentally responsible delivery or 31% would forgo “free” delivery, according to “Sustainability in the Final Mile, Consumer Survey 2023” Report by UPS & Ware2Go.

Is Greener Delivery Possible with Current Logistics Practices?

E-commerce customers want logistics to be environmentally sensitive. For example, is it possible to have “zero environmental, air and noise pollution from product delivery” with current logistics practices and structuring?

Current logistics practices and logistics structures are not sufficient to respond to customers’ demand for “greener logistics”. In order to respond to this, different, radical and technology-oriented solutions must be developed and implemented. This solution could be the “Last Mile Warehousing” model created by DepOrtak.

Green Delivery with DepOrtak Last Mile Storage

Last Mile Warehousing is the creation and distribution of micro-ecommerce warehouses close to the consumer that enable delivery within a maximum of 2 hours of order placement.

E-commerce customers’ desire for “greener” deliveries can be realized with Last Mile Warehousing, reducing the negative impact of e-commerce logistics on the environment and therefore on urban residents.

With distribution by bicycle and on foot from micro e-commerce warehouses that are very close to consumers, and if necessary (if desired) with the consumer picking up their own order or bringing their own returns, there will be less vehicular movement, reducing air pollution, sound pollution, noise pollution, traffic congestion, traffic accidents and providing more space for pedestrians.

With Last Mile Warehousing, CO2 emissions during the construction phase can be reduced as there is no need to build large square meter e-commerce warehouses, and energy consumption leading to CO2 emissions can be reduced as equipment such as forklifts, conveyors, sorters, etc. in large square meter e-commerce warehouses will not be used.

Instead of e-commerce parcel boxes or bags, which are used in current e-commerce logistics practices to prevent damage due to the products being on the road for a long time and handled at different transshipment points, the products can be delivered with only the sales packaging in Last Mile Warehousing, which can prevent trees from being cut down and environmental pollution caused by plastic bags.

The Sustainable Last Mile, Faster. Cheaper. Greener” Report by Accenture, the use of micro e-commerce warehouses can reduce CO2 emissions from Last Mile Delivery by between 17% and 26%. For example, a 13% reduction in delivery traffic through the use of micro e-commerce warehouses could reduce 68,00 tons of CO2 emissions in Chicago (20% of the delivery vehicle) and 14,400 tons of CO2 emissions in London (17% of the delivery vehicle), and even “Zero CO2 emissions” for 14% of e-commerce Last Mile deliveries in London, for example, if the consumer walks to the micro e-commerce warehouses within a 1 km distance.

DepOrtak’s digital storage network will support the creation of the physical internet, enabling the efficient and effective use of existing storage space and the functioning of the sharing economy, as well as contributing to the realization of the goals envisaged for the Green Deal, supporting environmental protection, ecological sustainability and the fight against global warming.

A greener world and a better quality of life can be possible with e-commerce logistics that will be restructured with “Last Mile Warehousing” offered by DepOrtak.

NOTE: A customer is the person or organization that purchases the good by making a payment, while a consumer is the person or organization that uses the good. A customer need not be a consumer, while a consumer can also be a customer.

SIGN UP FOR FREE

You may also be interested in the following articles

Home Page Up Ask An Expert