The COVID-19 outbreak has brought along an unprecedented boom for online retail. Online orders surged in the first half of 2020 and remained high in many parts of the world throughout the year. Many e-commerce players such as Amazon and Otto experienced a record holiday season. Analysts expect the upward trend to continue. More and more online orders are being processed and delivered. Ultimately, this means higher parcel volumes, more delivery routes and more packaging. A recent study by MIT Real Estate Innovation Lab says that this is a positive development in times of climate change. In addition to the need for a more sustainable and eco-friendly way of life.
E-commerce is more sustainable in terms of greenhouse gas emissions than traditional brick-and-mortar retail. The study is based on Monte Carlo simulations with more than 480,000 trials comparing online, traditional, and hybrid retail concepts. In about 75% of the scenarios developed in the base case, e-commerce turned out to be the more sustainable shopping alternative. Although this is good news, there is still room for improvement.
Packaging is the greatest polluter in e-commerce
Although some might spontaneously think so, greenhouse gases emerging from the actual deliveries is not the biggest problem. A lot of CO2 can be saved by consolidating routes and intelligent logistics management in general. And compared to traditional retail, transport in e-commerce is by far not the biggest polluter. While in brick-and-mortar retail, transport accounts for 70% of all greenhouse gas emissions, it makes up only 13% of total emissions in e-commerce. The biggest room for improvement in e-commerce is in packaging. 45% of all e-commerce greenhouse gas emissions are connected to boxes and wrappings.
Returns account for 25% of emissions
Returns are another aspect that produces a great share of greenhouse gas emissions in online retail. They account for 25% of emissions. Luckily, e-commerce is not only in the lead over traditional retail at the moment. Minor improvements in operations can also have a huge impact in making the ecological footprint of e-commerce even smaller. Electrifying delivery fleets, for example, can reduce greenhouse gas emissions significantly. If both traditional and online retail had fully electric delivery fleets, online retail would be more sustainable in 78% of the tested scenarios.
Reducing the amount of packaging can save up to 36% of emissions
Bundling packages and reducing the amount of packaging can save up to 36% of total e-commerce emissions. In general, online retail seems to be less environmentally harmful than one might think. Especially when companies assume their responsibility and invest in optimizing processes even further.