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Sustainable commerce

Sustainable commerce

Sustainable commerce refers to a suite of practices and measures used to create greater environmental and social sustainability in business practices, product design, and supply chains.

Sustainable commerce refers to developing products or purchasing products that use sustainable materials (either organic, recycled, or natural) as well as ecological products for packaging and ecological solutions for shipping. For the consumer, sustainable commerce can include supporting local suppliers or vendors, which can overall reduce carbon emissions, especially if those retailers use sustainable commerce practices. The three tenets of sustainable commerce include: social equity, economic viability, and environmental protection. A large consideration to a sustainable commerce model includes transparency throughout the product's lifecycle to help consumers feel good about their purchases.

Typical breakdown of the triumvirate of concerns central to sustainable commerce.

Sustainable commerce practices are especially important for e-commerce companies, where the use of new technologies and the logistics necessary for shipping products to consumers can have a large environmental impact. This is especially true as more commerce shifts from brick and mortar to online retail.

Environmental

The environmental side of sustainable commerce includes shipping and logistics, business efficiencies, and packaging materials.

Shipping and logistics

For sustainable commerce, the shipping and logistics side can be as simple as working to reduce the overall carbon emissions of shipping a product to and from warehouses and to customers, either from a warehouse in an e-commerce solution or in a storefront. The use of either climate-neutral or environmentally friendly shipping solutions across a supply chain can reduce the overall carbon footprint of a product or a company.

With the increase of demand for transparency, retailers take on a greater risk of product liability, which can cause financial and reputational risk. This comes with consumer demands for safer products with greater transparency into the product supply chain and material sourcing. Retailers can, in turn, take steps and influence the sustainability of products and practices in their supply chain through investments, which can extend to investing in initiatives to accelerate the development of safer and more sustainable products.

Sustainable delivery companies

Business efficiencies

Business efficiencies can be as simple as running offices and stores efficiently by implementing recycling programs, utilizing alternative energy sources, and using recycled materials where available.

Other efficient business practices include offering augmented or virtual reality technologies that would allow users to see clothes or other products on their bodies or in their homes prior to purchasing, thereby reducing the volume of purchases and returns. However, this would remain limited based on the sophistication of the customers' technological capabilities. A simpler option would be for a retailer to offer clear and detailed information about a product so consumers can be better informed in their purchases. An alternative in the clothing example would be for a retailer to offer understandable and simplified color languages and detailed size specifications.

As well, moving away from the popular "try-and-return" business model can reduce the waste involved in such a model. For example, in the beauty industry, a company such as Taobe has used samples based on a consumer's beauty profile to help consumers find the product that fits their interest or goals. This offers to solve the same problems the "try-and-return" model tries to solve.

Businesses could also offer delivery points for consumers, or vice versa, so consumers in apartments, urban environments, or other hard-to-reach locations can have an assured delivery point. A delivery point would reduce missed deliveries, decrease the environmental impact of multiple delivery trips, and improve the overall efficiency of the delivery route. Companies can also offer order consolidation in the form of free shipping, such that a consumer may have to wait a little longer, but their order can be shipped in bulk and reduce the overall shipping costs, packaging costs, and carbon footprint of a purchase.

Packaging materials

Perhaps the most readily understood part of sustainable commerce is the materials used for shipping products, either to a retailer or from an online retailer to a customer. The use of ecological or recyclable products for packaging can reduce the overall impact of shipping products. Meanwhile, some companies have offered consumers the option to plant trees at the time of purchase as a carbon offset. The problem of packaging also extends to a shipment being properly packaged to ensure the product arrives intact to further reduce returns and replacements and, in turn, reduce the overall impact of a purchase, both with transportation and landfill costs.

Example of packaging solutions designed to be biodegradable.

Packaging material companies can also find new ways to use previously wasted materials. This can mean using compostable boxes, paper tape, and recycled wrapping. Some companies have included prepaid mailing labels in order to encourage the consumer to return the packaging solution for the company to reuse. Other companies are developing packaging materials from materials such as corn starch, which breaks down completely in a short period of time.

Sustainable packaging companies

Social equity

For companies in the sustainable commerce model, social equity involves working to provide positive change either in their organization or outside of the organization where possible. This includes having an ongoing commitment to employee enrichment opportunities, developing community through outreach projects and programs, educating employees and customers about sustainability, and, where possible, supporting local, fair trade, and socially responsible businesses.

Image of where the various parts of a pair of jeans are sourced from.

Social equity measures can include offering customers transparency, if not visualization, of the supply chain of a product for a better consumer understanding. Transparency gives the customer a better possible understanding of the cost of sourcing components or parts, where those pieces are supplied from, the potential labor conditions of those sources, the carbon footprint of shipping and sourcing those parts, and the overall environmental and social implications of the sale of a product.

Economic viability

The economic viability of sustainable commerce refers to the possibility of engaging consumers and developing sustainable ways of developing, selling, and shipping products to those customers. This likely includes the development and use of newer technologies to change how products are sold and consumed, and would also likely require a change in the mindset of consumers in how they interact with products.

There is a demand from consumers interested in sustainable commerce that companies not promote profit over the environmental and social impact the company can have. However, companies that embrace sustainable commerce and related practices can increase consumer interest, with a reported 70 percent of global consumers willing to change their consumption habits to reduce the overall impact of their purchases.

Transparency
An example of transparency in the pricing of a product.

Transparency into where products are sourced, who manufactures those products, where they travel from, how much workers are paid, how much the prices are marked up, and where the cost specifically comes from are important factors in how consumers can interact with a product. These transparency factors are also important for a company to consider in terms of how they can engage with consumers about their products. This could include developing applications to allow customers to set parameters and store preferences. These could include preferences for how customers want to shop, delivery speed, environmental impact, and allowing them to choose how they want to interact with the value chain of a product. For example, a customer could prefer to select a product sourced from a small, startup manufacturer rather than a global multinational. However, such a solution would require retailers and businesses to offer consumers data that those retailers and businesses are traditionally hesitant to offer.

Alternative purchasing models

Alternative purchasing models, outside of a single-owner purchase, can offer consumers new ways to interact with products. Models such as pay-for-use, subscription, or leasing can offer different ways for products to maintain value through a lifetime. These models have been used already in the automotive, home entertainment, lighting, and high-end fashion industries. They offer a way for consumers to use items that are seldom or single-use items without purchasing it on their own and later throwing them out, but rather recycling them through a market so others with similar needs can use these items for a period of time.

Secondhand shopping, or thrift-shopping, especially in fashion, offers an alternative and sustainable commerce model. This allows companies to offer secondary services, such as curation services, to the consumer in place of offering novel products. These companies can reduce their environmental impact without having any need for storage facilities, and instead act as a facilitator for sales between sellers and buyers, similar to companies such as eBay or Etsy.

Recommerce

Recommerce is the selling and buying of open-box of non-new inventory. This offers retailers a way to keep goods out of landfills. This can also prolong the lifetime of products and reduce the number of new products manufactured for greater sustainability. Recommerce options, especially in the case of second-hand shopping, also work to encourage durability in products rather than disposability, which could, in turn, appeal to consumers who may be uninterested in purchasing used items, but still have a desire for durable products that will last them longer and also reduce their overall environmental impact.

Sustainable retailers and e-commerce companies

COVID-19 and Sustainable commerce

The COVID-19 pandemic saw an increased use of e-commerce solutions. Close to 60 percent of shoppers during the 2020 holiday season purchased from online stores, whereas 30 percent of those same shoppers in 2019 made their purchases online. With the increase in online shopping has come an increase in concern about where products are sourced and their sustainability. This includes a 54 percent increase in consumers who have reported being willing to change their purchasing habits to reduce environmental impacts, with a reported 44 percent of consumers looking for more sustainable purchasing options.

Although sustainability is not self-evidently related to the COVID-19 pandemic, the increase of e-commerce and the related packaging, a more visual sign of the material demand of e-commerce, and the awareness of online tools available for interrogating and understanding the impact of products (be they social or environmental) has increased. Meanwhile, the concern over security of global supply chains in the wake of fears of the spread of the virus through shipping lines and the complete closure of those shipping lines due to local closures has led to greater investigation of outsourcing; this previously robust system that created efficiencies and interdependencies for firms has seemed more vulnerable during the COVID-19 pandemic and, in turn, led to a call for more sustainable business practices.

Sustainable commerce in education

Based on increased pressure from students and from the industry, a growing number of business schools are expanding efforts to embed sustainability into courses and research. Previously, courses covering environmental impact, social impact, and sustainability topics were curriculum add-ons; these topics have now been made mandatory towards graduation in some universities. A few schools are overhauling their master of business administration (MBA) degrees and requiring courses in sustainability. Other schools are revising core content to offer specializations and out-of-classroom learning opportunities so students can better understand sustainability.

Timeline

March 16, 2021
Adidas pushes online sales and sustainability in five-year plan
March 16, 2021
Familiprix announces a new step in the rollout of its sustainable development strategy.
March 12, 2021
PAC Machinery introduces material for sustainable e-commerce mailer bags.
March 2, 2021
Cocokind adds sustainability information to secondary packaging
February 17, 2021
Nate Faust, Jet co-founder, is building a more sustainable e-commerce experience with Olive.
February 17, 2021
As online shopping booms, startups are beginning to develop more sustainability solutions
January 15, 2021
Sustainable packaging to rise with e-commerce.
December 16, 2020
Customers are choosing to pay more for sustainable shipping at Davines.
December 10, 2020
Beaufille launches website with sustainable collection
October 7, 2020
Recommerce strategies are on the rise and the Walmart and ThredUP partnership seems to validate the mindset and strategy.
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People

Name
Role
LinkedIn

Further reading

Title
Author
Link
Type
Date

Achieving Sustainable E-Commerce in Environmental, Social and Economic Dimensions by Taking Possible Trade-Offs

Judit Olah, Nicodemus Kitukutha, Hossam Haddad, Miklos Pakurar, Domician Mate, Jozsef Popp

Web

December 24, 2018

Can E-Commerce and Sustainability Co-Exist?

Web

January 11, 2017

Can Food Waste Boost Sustainable Commerce?

PYMNTS

Web

January 8, 2020

Guide to Greening Your Ecommerce: Developing a Sustainable Business Model

Web

IBM Study: Majority of Global Consumers Embrace e-Commerce, Sustainability for the Holidays Amid COVID-19

PRNewswire

Web

November 17, 2020

Poshmark Keeps It Social in Sustainable E-Commerce

Laura Forman

Web

January 19, 2021

Sustainability in Commerce: How To Grow While Staying Green - Salesforce Blog

Holly Dresden

Web

August 20, 2020

Sustainability in Ecommerce + Steps for Becoming Eco-Friendly (2021)

Susan Meyer

Web

March 18, 2020

Sustainable Commerce - Teknomadics Adventure Travel

Web

Sustainable e-commerce business tips | Sana Commerce

Stephanie Neusser

Web

March 26, 2020

The next big step: Three ways we can build sustainable commerce

Joseph Ballard

Web

April 12, 2018

The Rise of Sustainable E-Commerce | byrd

Web

May 7, 2019

The roadmap to sustainable e-commerce - EDF+Business

Web

Documentaries, videos and podcasts

Title
Date
Link

COVID-19 is causing a sustainable shift towards E-Commerce: Croxon

April 29, 2020

Creating the future of sustainable online shopping

July 23, 2020

Sustainability and e-Commerce

September 23, 2020

Sustainable business: It's not just about the why | Jeremy Moon | TEDxScottBase

January 25, 2017

SXSW Eco 2015 - The Future of Sustainable Commerce

October 20, 2015

Companies

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CEO
Location
Products/Services

References

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