Sustainable E-Commerce: How to Become a Greener Retailer

Apr 27, 2023 9:30:00 AM
12 min read

Cartoon earthWith Earth Day passing this last weekend, we thought it was fitting to focus our attention on the growing number of e-commerce retailers implementing sustainable practices into their businesses.

The demand for online products and services has soared, with sales predicted to surpass $1.3 trillion by 2025.  

As a result, both consumers and e-tailers understand that changes are necessary in order to protect our planet. While the topic of climate change isn’t going away any time soon, there are ways online businesses can make an immediate difference. Unfortunately, many retailers face the challenge of balancing the scales between being an eco-friendly business and generating a profit.

Person gaining machine learning insights with binocularsThe good news? Research from Forrester found that 53% of brands say improving sustainability is the topmost priority this year and 40% are already providing more environmentally-friendly packaging. Whether you’re at the beginning of your sustainability strategy or just looking for more ways to reduce your online store’s carbon footprint, this article will provide helpful recommendations and considerations to implement green initiatives throughout your e-commerce business.

Ready to start? Let’s go!

Understanding Sustainable E-Commerce and Why It Matters

Also known as green e-commerce or green e-tailing, sustainable e-commerce is the practice of handling online transactions in a way that helps the environment and prevents the depletion of natural resources. In simpler terms, it’s about selling products to customers in a way that reduces waste and minimizes (or negates) carbon emissions.

Though employing sustainability measures in your e-tail business isn’t mandatory, it can make a huge difference in our planet’s future. Besides being the ethical decision to make, practicing green initiatives comes with many advantages for both your business and the environment:

It meets your customer’s expectations.

Two hands shakingAccording to Nielsen, 73% of consumers have modified their habits to diminish their environmental impact, and 72% are already buying more sustainable products. By providing greener options, you’ll be satisfying a large population of shoppers who expect the same from your online store.  

It enhances your brand reputation.

Right now, Millennials are the world’s second biggest spenders, with a purchasing power of $600 billion. Of this cohort, 80% believe sustainability is important. 70% of Gen Z agree. But it’s not just these two generations that are adopting sustainable practices—or judging retailers who aren’t doing the same. By showcasing that you’re an eco-friendly e-tailer, you’ll gain business credibility, which goes a long way in today’s highly competitive market. You’ll also be positioning your e-commerce store ahead of the curve on potential legislation pressure.

It attracts new customers and retains existing ones.

Happy shopper with shopping bagsDid you know that 88% of consumers are more loyal to a company that supports social or environmental issues, or that half of them rank sustainability as a 'Top 5' value driver? Demonstrate your support of greener initiatives, and you’re sure to attract mindful shoppers while also increasing the loyalty of current customers.

It reduces business costs.

When you cut down on the amount of energy your e-commerce store uses and the waste it produces, you’ll inherently see a reduction in expenses. In fact, according to McKinsey, these efficiency improvements can boost operational profits by as much as 60%.

It has a positive impact on the environment.

Any time your actions can better our planet, that’s a good thing.  By implementing green e-commerce initiatives, you’ll be contributing to many benefits, such as:

  • Less waste by using recycled and compostable materials
  • Lower carbon emissions resulting from manufacturing and shipping goods
  • Improved air quality by reducing pollution from transportation and production
  • Protection of ecosystems and the wildlife that relies on them
  • Fairtrade standards, which help eliminate the need to turn to unsustainable industries

Green E-Commerce Best Practices

Happy shopper giving thumbs up to computer, computer giving thumbs up backFrom sourcing to transporting and packaging, every product has a unique carbon footprint. Being a sustainable seller means making decisions that consider the use of resources while also finding a balance between customer expectations and sales targets. Sounds like a lot to think about, right? Luckily, we’ve narrowed down some of the best (and easiest) ways to integrate greener practices profitably.

Source and sell more eco-friendly products.

Here’s an interesting fact: 72% of consumers value product sustainability more than a brand name. As an online retailer, one of the easiest (and smartest) things you can do is provide more products that are sustainable. When choosing green products, focus on ones that use recycled packaging to lower the use of single-use plastic. Depending on what you sell, check to see what ingredients or materials were used to make the products.Two hands reaching out about to shake

Another option is to partner with manufacturers/suppliers that use sustainable
practices. Be sure to do thorough vetting during the selection process, as  companies that make fabricated claims about their products can come back to reflect poorly on your own brand. Never be afraid to ask your suppliers the tough questions. If they’re unwilling to answer, chances are, they’re not aligned with your environmental values.

Tip: Incentivize customers by offering promotions or loyalty rewards around green products. Not only will this appeal to the 70% of consumers willing to pay more for sustainable products, but it will also highlight how serious your business is when it comes to promoting sustainable options.

Switch to sustainable packaging.

Open boxSingle-use plastic is no laughing matter. Plastic packaging from e-commerce sales has risen substantially over the last few years from 2,077 million pounds in 2019 to 3,027 million pounds in 2022. This equates to landfills full of harmful—and unnecessary—waste.

Swapping out plastic for other sustainable options is one of the best things an e-tailer can do for the environment. When sourcing alternate options, here are some key points to keep in mind:

  • Use recycled and biodegradable materials like cardboard or PHA plastics, and fillers such as tissue paper, corrugated bubble wrap, or die-cut kraft paper.
  • Choose the appropriate packaging size to prevent unnecessary waste. 
  • Avoid packaging with different materials that can make it difficult for customers to recycle.
  • Consider reusable packaging, which lets your customers return the package they received their item in back to you or the third-party company responsible for the shipment
  • If an order needs to be sent in more than one shipment, give the customer the option to wait a bit longer and consolidate their packages.
  • Inform your customers on how your packaging can be recycled by adding steps directly onto the box or on a recyclable insert.

Choose greener shipping options.

Magnifying glassOnline order shipments play a tremendous role in damaging our planet due to the transfer of merchandise between warehouses and points of sale. As digital sales continue to grow, more and more planes, trains, ships, and trucks are being used to transport parcels around the globe, causing a rise in toxic CO2 emissions.

The Climate Portal at MIT asserts that freight cargo is responsible for eight percent of global greenhouse gas emissions, with trucks being the primary perpetrator. Fortunately, there are solutions that you can take that their customers will get behind. That’s right, over half of all shoppers are interested in receiving their e-commerce orders through sustainable delivery methods, and are even willing to wait longer for it if it’s being shipped in an eco-friendly way.  

To lower e-commerce delivery carbon emissions, here are some earth-friendly approaches you can apply right away:

  • Allocate inventory to several fulfillment centers, which pares down shipping costs, improves delivery times, and reduces carbon emissions—all while enabling you to collect, pack, and ship orders from the distribution center nearest to each customer.
  • When possible, ship from local stores 
  • Look at sourcing from local and regional suppliers.
  • Offer Buy Online, Pick Up In-Store (BOPIS), which cuts the number of delivery vehicles needed and is already being used by half of all online shoppers. (Source: Morning Consult)
  • Choose a delivery partner with sustainable shipping programs, like FedEx, DHL, and UPS.
  • Invest in electric options for your delivery fleet, which will eliminate your company’s scope 1 emissions and ensure less pollution when delivering to your customers.
  • For emissions you can’t minimize, consider purchasing carbon offsets that support climate protection projects that reduce CO2 emissions, such as regenerative agriculture and improved forest management.

Go paperless.

Though most are small in size, retail receipts consume 250 million gallons of oil, 10 million trees, and one billion gallons of water annually in the US alone!

Floating piece of paperGoing paperless isn’t just good for the environment, but also for your online business. How? When you transition to digital receipts, you’ll automate more of your processes and offer better security for your customers so garbage and recycling trolls won’t be able to find new identities to steal. As a bonus, you’ll have more room to add valuable promotions, incentives, and other details (website link, social handles, upcoming events, and so much more) to your e-receipt—which equates to more sales and increased brand awareness.

In case you’re wondering if your customers will miss paper receipts, 89% of shoppers say they’d like retailers to offer digital receipts as an option.

Tip: Eliminate even more paper by using return codes instead of printed sheets. All a customer has to do is show their code to the delivery company. Easy peasy, and way less garbage!

Lower your return rate.

Letters@2xReturns double delivery emissions and generates more packaging waste, making them a menace to both e-commerce retailers and the environment. By curtailing product returns, you’ll be able to yield less back-and-forth shipping. How can you achieve this? The answer is pretty straightforward: Prevent returns from happening in the first place.

Most items are returned because they didn’t fit, were damaged during
shipment, or didn’t reflect what the customer saw online. The most successful way to prevent returns is to confirm your product information is as accurate as possible. Product descriptions should be able to answer any question a consumer has about a specific item. Make sure to include everything from sizing and measurements to care instructions to how it will benefit the shopper. These details should always be provided with a series of high-quality photos that showcases the item from a variety of angles. You can also include a video that features the product being used to mitigate any other hesitations a potential buyer may have.

By having detailed content, your customers will get a clearer picture of what your products are like, resulting in less disappointment when they receive their orders.  

Another way to minimize returns is by preventing orders from arriving damaged. Ensure all items are securely wrapped with enough (eco-friendly) padding and reinforcing materials. Finally, guide your customers through how using carbon-neutral shipping services lowers the impact of the returns. You might be surprised at how many will actually appreciate the information.

Upcycle, resell, or donate.

Re-commerce is a big trend this year, and it doesn’t seem to be slowing down any time soon. It’s also a great way to do something positive for the environment. Far too often, retailers tend to toss unwanted merchandise, creating more waste in an already garbage-filled world. Next time you’re about to throw items away, give one of these three alternatives a try instead:

  • Give leftover stock or fabric a new life by upcycling it into something new that you can sell online or to give to others for use.
  • Resell previously owned products—used or new—online at a reduced price, which reduces waste and gets you one step closer to a fully circular supply chain.
  • Rather than throwing them away, donate returned items to those who might need them.

If you’re still wondering whether these options could work for your e-commerce business, consider this: By 2027, the global second-hand market is expected to reach $350 billion!

Minimize your deadstock.

As we mentioned in our last point, overstocked items tend to go to waste. Any time you can reduce deadstock—the products in your store that are less likely to be sold—you’re moving one step closer to a sustainable waste reduction solution.

Person with computer chip for brainOne of the easiest ways to avoid too much stock is by predicting your inventory needs more precisely. The best way to do this is by utilizing demand forecasting through Artificial Intelligence. This innovative software can help you manage inventory levels more accurately by integrating with all of your existing data sources and automatically updating your ordering plan. You can also use it to predict inventory levels for items with no historical data.

According to McKinsey & Co, this relatively new forecasting tool has already been able to reduce excess inventory by 50% – quite the win for sustainability measures!

Be transparent about your sustainable practices.

Last but certainly not least, is full disclosure. Implementing green practices into your e-commerce business is wonderful, but it can go to waste if nobody knows about it. If there is ever a time to talk your business up, it’s now.

Two shoppers high fivingCustomers are inclined to buy from brands that align with their own values. With climate change at the forefront of many peoples’ minds, informing shoppers about the actions you’re taking toward sustainability is pivotal. In fact, 44% of global consumers are more likely to buy from a brand that’s committed to sustainability. Let this audience know you’re on their side, and you’ll be a lot closer to reaching your goals, both environmentally and economically.

Here are some tips on how to get the word out:

  • Communicate your efforts through a variety of channels – from your website to your social pages, and via email to your subscribers.
  • Make sure everything you say is 100% truthful to avoid any concerns of greenwashing—and make sure to have proof to back up your statements.
  • As you reach your sustainability goals, update communications around your efforts, even if they seem small.
  • Add trusted industry certificates and seals to your website to add credibility and verify your willingness to meet environmental regulations.

Giving the Green Light on Sustainable Shopping

Whatever the industry, we’ve got quite the road ahead to make this planet a healthier, cleaner, and safer place for future generations. But with more retailers taking the necessary steps to reduce their carbon footprint, positive change can take place. Get your e-commerce business on a greener path now, and you’ll be helping bring a positive impact to your customers, your business, and the environment.

As Barack Obama once so eloquently said, “We are the first generation to feel the effect of climate change and the last generation who can do something about it.”

It's Not Easy Being Green

storyplantWant to increase your impact on environmental change, delight your customers AND increase revenue at the same time? Granify can help you achieve all three, through personalized recommendations that are tailored to your shopper's unique intent, helping you decrease your return rates. Reach out today to learn more about how our machine-learning technology can help you reach your sustainability goals.

Lets Chat