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EP1 What is Sustainable eCommerce & Why Should You Care?

sustainable-ecommerce-podcast

EP1 What is Sustainable eCommerce & Why Should You Care?

sustainable-ecommerce-episode1

To understand the full context of Sustainable eCommerce, we first need to understand the scope of eCommerce as a business model.   We also need to consider why it matters, and if you run an eCommerce business, why you it matters to you.

Why Should You Care About Sustainable eCommerce?

Unless you’ve been living under a rock these past few years, I’m quite sure you’re familiar with the horrifying amount of plastic making its way into our ocean, and the resulting focus on reduction of single use plastics.  But specifically in regards to eCommerce, perhaps some statistics could help set the scene.  According to eMarketer, our industry has doubled its market share of overall global retail sales from 10% in 2017 to over 20% in 2022. 

ecommerce-growth-2017to2022

That makes the ecommerce industry an absolute powerhouse, with over $6T in annual sales worldwide!

As a result of this growth, it’s estimated that over 1 billion tonnes of plastic packaging waste were produced in 2019, and while I haven’t been able to find any reputable current statics, you can bet your butt its higher in 2022 after the pandemic surge in growth. Despite the trend towards recycled paper packaging, nearly 250 million tonnes of paper packaging is still made from virgin wood pulp every year, equivalent to about 8 billion trees.  Only around 15% of packaging is thought to be recycled, while estimates in the US suggest that nearly 40% of all landfill is actually packaging waste, much of it from online sales.

Its quite clear then that as an industry, we have to act differently, for the good of our planet.  But, it’s not just environmentally conscious brand owners that are paying attention. Knowledge of the plastics problem in particular is changing consumer purchasing behaviour the world over, particularly in millennials & Gen Z. You can find all manner of citations to suggest that up to 90% of consumers now actively prefer to purchase from sustainable brands.  With supply chain efficiencies improving all the time, can you really afford lose market share to more sustainable conscious brands?

Finally, thanks to the lobbying, it is becoming politically beneficial for governments the world over to start setting goals on things like Carbon Emissions,  and implement regulations on packaging materials. If Australia is behind the game, yet has still set a net zero target for Carbon emissions by 2050.  That may seem a long way off (and indeed it is), but if ecommerce is 20% of the retail industry, how soon can you expect regulation to start forcing the issue?  The EU has already enacted plastic packaging constraints on a whole raft of verticals. How long before similar regulations get introduced in your area?

 

So choosing to focus on sustainability isn’t just good for the environment, although that’s probably enough on its own. Consumers are actively seeking brands that make them feel good about their own contribution, and are often willing pay more when they find them.  That means that choosing to operate sustainably now (before regulation forces everyone’s hand) gives you a competitive advantage!

How Should We Define eCommerce?

It’s tempting to think of the scope of ecommerce as just being online sales. Consumers click a button a website or shop channel and sometime later, their purchase arrives magically at their door. 

Perhaps 15 years ago you could think of eCommerce under this narrow definition – just the act of purchase. For me, that’s not what ecommerce really is any more. Going way beyond the digital expansion of high-street retail, eCommerce today encompasses many business models and has enabled a new generation of entrepreneurs and business owners that was almost unthinkable in the 90s and highly impractical in the early 2000s. It includes of course brand manufacturers of all sizes who develop novel products to meet a niche. It also includes private labellers, drop-shippers and digitally-native retailers (whether or not they also have a physical presence).

There’s certainly some truth to the notion that selling stuff online is a more sustainable approach than operating a physical storefront.  An eCom store doesn’t have any of the related energy costs like ambient store temperature control, keeping the lights on, not to mention the consumer energy spend in getting to the store. 

So what then is Sustainable eCommerce?   There aren’t really any consistent definitions that to me adequately sum it up, but I like to think of

Sustainable eCommerce simply as the practice of growing a direct to consumer, online business without leaving a negative footprint on the world.

 

Sustainable eCommerce is the practice of growing a direct to consumer, online business without leaving a negative footprint on the world.

As that phrasing suggests, it’s a goal-orientated definition, that requires ongoing attention.  To me it does also have to be about growth. A stagnant or declining business is a dying business. And a dying brand is not very useful to the world.

 

The Four Pillars of Sustainable eCommerce

As a practice, ecommerce can be distilled into 4 pillars, Sustainable Production, Sustainable Distribution, Sustainable Marketing & Sustainable Management.

Sustainable Production

Sustainable Distribution

Sustainable Marketing

SustainableManagement

Sustainable Production

In this, we share responsibility with any physical product brand, whether they sell online or not.  We’re talking in this pillar about cradle-to-grave product stewardship. If you’re a brand manufacturer, then for you this pillar includes things like choosing sustainable materials.  That might include the selection of organic or sustainably engineered materials (like cork, tree rubber, jute, vegan leather, plant-based plastics). Or it could also include the careful selection of non-virgin / recycled materials like post-consumer or Ocean Plastics as well as recycled paper, reclaimed wood, or even things like recycled tyres, ceramics or batteries. 

It also includes engineering your product in such a way that the materials can be upcycled, recycled or perhaps easily composted at end of life, and as well as ensuring minimal consumption of resources through its lifetime. If your brand is an online retailer, private labeller or drop-shipper, then this pillar includes conscious supply chain management, including sourcing from sustainable & ethical suppliers.  

 

For all business models, it also includes making conscious decisions about where your suppliers are based.  The carbon footprint of purchasing from or working with factories in your home country is likely much lower than purchasing more cheaply from factories in China, and this is where Sustainable management and Sustainable Marketing overlap.  While making values-based choices to source locally where possible, your business still needs to generate sufficient profit.  Educating the customer to the positive impact your choices are making can support the higher prices you’ll need to maintain healthy margins.

Sustainable Distribution

Regardless of your business model, if your brand serves customer demand directly through an online channel, then the Sustainable Distribution pillar should become a core focus in your journey to sustainability. Clearly, making conscious choices regarding shipment & product packaging is central to this pillar.  There are plenty of recycled paper-based alternatives to things like bubble wrap, packing peanuts etc, and there are also plenty of sustainable shipment packaging companies now making things like re-usable delivery pouches and satchels from recycled plastic, and even organic compostable materials.  Given the sheer volume of packaging that ends up in landfill, compostable packaging certainly has my vote!

Distribution though is also about more than just packaging materials. Can you choose a fulfilment or shipping partner that gives due consideration to their carbon footprint, like Sendle? Are you storing your goods in fulfilment centres connected to green or renewable energy? Are your customers able to choose to offset their shipping with carbon credits?  Equally, how are you handling post-purchase distribution, including returns & end of life product take-back?

Sustainable Marketing

Fundamentally marketing is about communication. Its about understanding the customer’s needs and connecting with them in such a way that your products are an obvious choice. With that in mind, Sustainable Marketing MUST include telling the story of how your brand is tackling the relevant sustainability issues.  Customers are increasingly choosing sustainable brands, and failing to tell your story properly undermines the customers ability to choose your brand. 

You SHOULD champion it, you’re doing great work!  But marketing in a sustainable business takes finesse and balance. Care is needed to ensure your narrative doesn’t accidentally stray into greenwashing territory. The safest way is to ensure your sustainability initiatives are transparent and include plenty of proof. 

Beyond that narrative, there is a growing uneasiness around balancing sales velocity with hyper-consumerism. Sustainability advocates are increasingly critical of major sales events like Black Friday.  Offering ultra-deep discounts to acquire customers is seen as encouraging excess consumption, leading at best to unnecessary shipment footprint but also a surge in landfill from discarded items. It can raise valid and potentially severely brand-damaging questions about how ethical your brand’s supply chain is, such as was the case for Pretty Little Thing offering 99% off bikinis.

While we’re on the topic of communication, the fact that eCommerce brands are direct to consumer, means that you not only have the ability to engage your customers, but in my view also the duty to educate customers on the impact of their choices. There are thousands of ways you can approach that. From simple fact-based awareness videos, email content to subscribers, all the way through to things like suggesting sustainable alternatives to items a customer has already selected in their cart. This is truly about using your brand presence to influence downstream change for a better planet.

Beyond communication though, marketing has a footprint all of its own.  There are some obvious things. If you’re distributing flyers, printing brochures or adding in-box insert promotions, you can obviously take a look at recycled paper as well as sustainable inks. 

For most eCom brands though the bigger issue is the carbon footprint associated with their digital marketing.  

Talking about digital carbon footprint usually gets a reaction somewhere between a mic-drop and an eye-roll. The simple fact is, digital marketing happens over the internet. The internet sends data (your website, an email, an instant message, a product image, a brand video, etc) from your hosted servers to the consumers device – and that requires power.  Studies have shown content-rich emails could result in up to 50g of CO2 being released. A typical web page might release 2g for every page load.

These may seem like small numbers, but multiply that by the number of pages viewed per year, or the number of emails you might send to a database of 100,000 subscribers, and you can quickly understand why digital carbon needs to be taken seriously by eCom brands.

Sustainable Management

By that we don’t mean ‘sustainability management’.  We’re talking about the practices of business management needed to operate and indeed grow a thriving & profitable sustainable ecommerce brand.

Of course, we’re talking about balancing profit with purpose, that’s not new. It’s also about the structures, the tools and the leadership required to be able to sustain your purpose both throughout your team and for the long haul.

In world where eCom brands are often built almost entirely virtually (my brands were no exception), it can be easy to ignore the importance of leadership, but in fact sustainable brands must have strong, ethical and values based leadership at their core. How else can you communicate and embed your principles and empower your teams to act in congruency with your brand?

As you scale up from being a solo-preneur you quickly realise you can’t do everything, and in today’s world where it is, lets face it, tough to find high quality team members, building and communicating your powerful narrative to your teams might just be the difference between long-term and valuable team members and punch-card employees.

If you’re in the fashion space or make products from some kind of fabric, you’ve probably given consideration as well as investment to having your products certified by organizations such as GOTS, The Rainforest Alliance or Eoko-Tex.  But having you given though to relevant certifications for your business?  Probably the world’s best known business-level certification for purpose-driven brands is the BCORP process.  They have a team based here in Australia. While it’s a heavily involved process, I recommend you get started with their free online questionnaire. It will give you some incredible insights as well as form a roadmap for becoming a more sustainable business.

Lastly, but by no means least, Sustainable Management includes sustainably managing one’s own energy, health, mindset and vitality.  As we’ll hear from my guest next week, sustainable growth is about finding the right pace for YOU. There is no right answer here – but there are many wrong answers. If your business is having a positive impact on the world, then it needs you at the helm.  If you burn yourself out, or can’t support yourself financially, or destroy your family relationships, your are NOT serving the world, because ultimately, THAT is not sustainable.

 

So that was a huge amount of ground to cover, and If you listened for this long, firstly thank you! I appreciate you!  Secondly, my hope for this podcast series is to break down the 4-pillars I’ve outlined into actionable and bite-size chunks, all intertwined with tried and tested techniques for growing your business as well as inspiring stories from other entrepreneurs blazing a trail & building sustainable brands.

Giles Smith - eCommerce Coach

About Your Host: Giles Smith

eCommerce Coach & Mentor
Giles is a serial entrepreneur, eCommerce growth expert, coach & mentor. Views, Knowledge & Opinions shared in this article are drawn from over 20 years experience in building 6, 7 and 8-figure businesses as well as working with agency clients and personal coaching clients.