With the advent of online retail, shopping has never been more convenient. Millions of products can be ordered online and sent to your doorstep in a matter of days, or sometimes even faster. Although convenience is at an all-time high, faster deliveries come with a hidden cost. To keep deliveries on time, retailers need to make less-than-efficient decisions in their supply chains that often come with negative environmental repercussions. Consumers continue to demand faster and faster delivery times. Keeping up with customer expectations while simultaneously managing your environmental impact will allow you to stand out amongst competitors.
The first major sacrifice that retailers make to keep deliveries on time is to reduce order consolidation. If an order needs to be fulfilled quickly, a retailer might choose to send several packages from different warehouses that are closer to a customer instead of sending a single package from a warehouse that is farther away. Now we need two or more delivery trucks to fulfill the order instead of just one if a slower shipping option was chosen. Extra delivery trucks result in more miles traveled, higher fuel consumption, and more greenhouse gas emissions. Not only does less order consolidation lead to more trucks on the road, but it also creates a greater need for packaging materials. By splitting a single order into two parcels, we have effectively doubled the consumption of cardboard and dunnage. Although most packaging materials are recyclable, according to The New York Times nearly 25% of them end up in a landfill due to contamination.
Faster deliveries also lead to less efficient logistics networks. Historically, retailers could wait to send out a delivery truck to ensure the trailer is completely full, resulting in greater fuel efficiency per package. Waiting is no longer an option when dealing with expedited shipping. Retailers need to utilize less-than-truckload (LTL) shipping more frequently to ensure packages reach their destination on time. This means delivery trucks are sent out with empty space left on the trailer which results in poor fuel efficiency on a per-package basis. In cases where ground transportation is too slow to meet a deadline, air freight is used, causing even lower fuel efficiency and greater greenhouse gas emissions than ground transportation.
One might argue that ordering online is actually more sustainable than traditional shopping since only one vehicle is needed to deliver dozens of people’s packages. Although this would be the case if consumers only used e-commerce to shop, most people still go to brick and mortar stores in conjunction with shopping online. The combination of delivery trucks and personal vehicles on the road only adds to congestion and pollution. While brick and mortar sales have been slowing down recently, and will likely start to decrease in the future, physical stores are a long way from becoming obsolete according to The Insights Association. The shift away from physical stores is promising for improving efficiency, but a reduction in emissions won’t occur until the majority of shopping is done online.
So, what can retailers do to mitigate the impact of expedited shipping?
One option is to incentivize consumers to choose slower and more efficient shipping methods. Something as simple as a message informing customers about the potential environmental benefits of slower shipping can be effective. These incentives could also come in the form of order discounts or special rewards. For example, Amazon offers customers a $1 discount on their next order if they choose to forgo free 2-Day shipping. Encouraging slower shipping gives retailers more time to efficiently consolidate orders and fill trucks. Allowing for more time before delivery also reduces the need for air freight, as traditional ground transport is fast enough to meet the deadline. Although the consumer sacrifices shipping speed, they gain the convenience of receiving their orders in one box, the satisfaction of making a sustainable choice, and the incentives they received from the retailer. All parties stand to benefit from slower shipping.
Another solution is to improve inventory positioning. By intelligently stocking inventory closer to consumers, we can reduce the frequency of unconsolidated orders which results in higher customer satisfaction. Not only does positioning your inventory closer to the consumer improve delivery times, it also reduces the cost and environmental impact of “the last mile”. While this change can only stand to improve your supply chain, it can be tricky to implement. Accurate demand forecasting and market research is a prerequisite to being able to move inventory closer to the customer. Building out these models will lead to improvements in your supply chain beyond reducing your carbon footprint.
While meeting customers’ expectations is the top priority, it’s important to be aware of your operation’s environmental impact. After all, reducing your environmental impact can only help by improving brand reputation, improving legal compliance, and potentially saving money.
Learn more about how to reduce your carbon footprint while exceeding customer expectations at bricz.com.
Contributor: Adam Born