The future state of our planet is a widely held social concern that is closely related to economic issues. Although technology is generally seen as detrimental to the environment, think about long- and short-haul flights, and TVs and electronic gadgets burning fuel when left on standby; there are some arguments that e-commerce and digital communications can have environment benefits. These benefits are also often beneficial to companies in that they can make cost savings while positioning themselves as environmentally concerned
Potentially, online shopping through transactional e-commerce can also have environment benefits. Imagine a situation where we no longer travelled to the shops, and 100% of items were efficiently delivered to us at home or at work. This would reduce traffic considerably! Although this situation is inconceivable since most of us enjoy shopping in the real world too much, online shopping is growing considerably and it may be having an impact. Research by the Internet Media in Retail Group (www.imrg.org) shows the growing importance of e-commerce in the UK where over 10% of retail sales are now online. In 2007 IMRG launched a Go Green, Go Online campaign where it identified six reasons why it believes e-commerce is green. They are:
- Less vehicle-miles. Shopping is the most frequent reason for car travel in the UK, accounting for 20% of all trips, and for 12% of mileage. A study by the Swiss online grocer LeShop.ch calculated that each time a customer decides to buy online rather than go shopping by car, 3.5 kg of CO2 emissions are saved.
- Lower inventory requirements. The trend towards pre-selling online – i.e. taking orders for products before they are built, as implemented by Dell – avoids the production of obsolete goods that have to be disposed of if they don’t sell, with associated wastage in energy and natural resources.
- Fewer printed materials. Online e-newsletters and brochures replace their physical equivalent so saving paper and distribution costs. Data from the Direct Mail Information Service (dmis.co.uk) shows that direct mail volumes have fallen slightly in the last 2 years, (at the time of publication) reversing an upward trend in the previous 10 years. This must be partly due to marketing e-mails which the DMA e-mail benchmarks (www.dma.org.uk) show number in their billions in the UK alone.
- Less packaging. Although theoretically there is less need for fancy packaging if an item is sold online this argument is less convincing, since most items like software or electronic items still come in packaging to help convince us we have bought the right thing – to reduce post-purchase dissonance. At least those billions of music tracks downloaded from iTunes and Napster don’t require any packaging or plastic.
- Less waste. Across the whole supply chain of procurement, manufacturing and distribution the Internet can help reduce product and distribution cycles. Some even claim that auction services like eBay and Amazon Marketplace which enable redistribution of second-hand items can promote recycling.
- Dematerialization.. Better known as ‘digitization’, this is the availability of products like software, music and video in digital form.
If companies trading online, can explain these benefits to their customers effectively, as HSBC has done, then this can benefit these online channels.
But what does the research show about how much could e-shopping reduce greenhouse gas emissions? A study by Finnish researchers Siikavirta et al. (2003), limited to e-grocery shopping, has suggested that, depending on the home delivery model used, it is theoretically possible to reduce the greenhouse gas emissions generated by grocery shopping by 18% to 87% compared with the situation in which household members go to the store. Some of the constraints that were used in the simulation model include: maximum of 60 orders per route, maximum of 3,000 litres per route, working time maximum 11 h per van, working time maximum 5 h per route, loading time per route 20 min, drop-off time per customer 2 min. The researchers estimated that this would lead to a reduction of all Finland’s greenhouse gas emissions of as much as 1%, but in reality the figure is much lower since only 10% of grocery shopping trips are online. Cairns (2005) has completed a study for the UK which shows the importance of grocery shopping – she estimates that car travel for food and other household items represents about 40% of all UK shopping trips by car, and about 5% of all car use. She considers that a direct substitution of car trips by van trips could reduce vehicle-km by 70% or more. A broader study by Ahmed and Sharma (2006) used value chain analysis to assess the role of the Internet in changing the amount of energy and materials consumed by businesses for each part of the supply chain. However, no estimates of savings are made.
Source: Dave Chaffey (2010), E-Business and E-Commerce Management: Strategy, Implementation and Practice, Prentice Hall (4th Edition).
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