Every good thing comes at a cost. For Americans, one such thing is online ordering — but the cost is steeper than many may realize.
In 2021, e-commerce sales represented an estimated 14.2% of total U.S. retail sales. But experts project that by 2025, e-commerce’s share of the retail pie will grow to nearly 22% as customers continue to order through online channels.
With all of that growth, something has to give. And right now, it’s the environment; supply chains can account for up to 90% of a company’s carbon footprint, and an uptick in e-commerce sales won’t help matters. To handle burgeoning online orders, businesses large and small are investing heavily in their warehousing and transportation networks. But many remain ignorant of the impact their e-commerce operations can have on the planet.
Research by international supply chain and logistics consultancy Scala revealed that while the vast majority of businesses expect e-commerce activity to continue — or even increase — disproportionately few are taking the steps necessary to quantify and shrink their carbon footprint.
Of the 22 businesses surveyed, not one believed that e-commerce activity would fall below pre-pandemic numbers, and the majority felt that it would increase further. While most respondents in the grocery space saw both in-store and online orders increase, nearly nine in 10 nongrocery businesses reported a “significant increase” in online sales during the pandemic. An additional two-thirds reported a decline in physical sales in favor of e-commerce orders.
As a result of that shift, businesses are spending their money differently. For example, the survey revealed that over a third of companies reported using more warehouse space to keep up with online orders. Two-thirds said they needed to increase their warehouse staff, while half said they had seen an increase in packaging costs.
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What’s more, an additional two-thirds of respondents reported an increase in transportation requirements. Yet fewer than one in five businesses surveyed had reliable metrics to track the environmental impacts of their e-commerce operations — and nearly a third said they had no measures in place at all.
“This lack of strategic foresight can, in many ways, be traced back to the lack of processes and frameworks in place to measure businesses’ increased carbon footprint, meaning that many may have no idea as to the scale of their current emissions profile,” said John Perry, managing director at Scala.
“Put simply, without measurement, you can’t manage,” he continued, “and we would urge businesses that do not currently measure the full scope of their carbon footprint to take steps to address this shortfall as a matter of urgency.”
That doesn’t mean that companies have given up entirely. In fact, according to Executive Director Rob Wright, “a large proportion (68%) of companies have taken steps to reduce emissions, offering inspiration for the rest of the industry to both learn from and build upon.”
Wright described a few measures that companies have taken thus far, such as reconfiguring packaging in order to load more items onto each pallet, reducing the number of pallets that need to be moved. Other businesses introduced larger trailers — capable of holding 30 pallets rather than the 26 that fit on a standard 53-foot dry van — and double deck trailers to load more pallets onto each truck.
But without knowing what their carbon footprint looks like, businesses could struggle to reduce emissions long term. More than three-quarters of companies surveyed said they had plans in place to better measure that impact, but as it stands, just 36% have planned actual actions to reduce carbon emissions in their e-commerce businesses.
“The events of the past two years have changed our shopping habits, and subsequently the demands placed upon our supply chains, irrevocably,” explained Perry. “Given this, the number of companies that currently have no plans or long-term strategies in place to address this step-change is both surprising and concerning.”
Perry recommended a multifaceted approach for companies to start building more sustainable e-commerce businesses. His first suggestion was for companies to map their supply chains by tracing where they spend their money, who their suppliers are and who provides them with services.
With mapping in place, businesses can better measure their emissions, which is the second piece of Perry’s approach. Only 18% of companies surveyed had reliable metrics to track emissions, despite his assertion that “there is now the software and expertise available to scientifically measure emissions across businesses’ entire carbon footprint.”
Lastly, Perry suggested that companies try not to spread themselves too thin. He recommended focusing on the portions of the supply chain that are producing the most emissions rather than trying to reduce emissions at every touch point.
“The problem companies have when it comes to sustainability is getting started — we can’t keep saying we’re setting targets for decades away when we need action now,” he warned.
To read more of FreightWaves’ coverage of sustainability in the transportation industry, click here.