(Advertorial) E-commerce is the fastest-growing segment of Europe’s retail markets. Online shopping is getting easier: people can place orders through social media, at virtual shopping events, and even using smart speakers. This is great for manufacturers and service providers, online stores and internet retailers. But it’s not such good news for the supply chain or the environment.
Since the Covid-19 pandemic, online sales channels have won a permanent place in shoppers’ hearts. But not every online store is heading for success.
Today’s online shoppers are more critical than ever of their buying experiences and less likely to commit to specific brands or online stores. They want the widest possible choice at the best prices, with convenient purchasing processes and the fastest delivery without their packages getting damaged.
It should also be as sustainable as possible.
According to a global report, 70% of online shoppers will stop buying a brand if its sustainability policy turns out to be inadequate.
That’s why it is essential to have a global presence, sufficient availability and, preferably, to make the process as efficient and sustainable as possible for the consumer.
In terms of logistics, this involves tremendous challenges.
For one thing, the ongoing transport shortages, high fuel prices and the rising costs of wooden pallets needed for transport are making things difficult. In addition there is also the increasing pressure from consumers and authorities to prevent packaging waste and wastefulness. In turn, e-commerce traders are having to deal with rising cardboard prices and landfill costs.
The following questions concerning the supply chain should be asked to operate an efficient and sustainable e-commerce business.
1. How complex is your chain?
Where are your bottlenecks?
What could be standardised and simplified?
Shoppers tend to order small quantities, and suppliers often deliver in multiple packages. Furthermore, other countries and regions may have different rules and requirements. When it comes to special sales, end-of-year sales, or unexpected circumstances such as the pandemic, you must be able to react quickly and flexibly to fluctuating supply and demand.
2. Are you aware of your hidden costs?
Are you aware of the hidden costs in your supply chain, such as transport and packaging (e.g. pallets)? What costs could you reduce or even eliminate?
In e-commerce, just like in the traditional supply chain, you have to factor in hidden costs such as using, storing, and transporting goods and even pallets.
This is because the e-commerce sector mainly works with disposable wooden pallets. Due partly to the global lockdowns, there are shortages in the international timber market, which have driven up timber prices by as much as 400%. Pallet prices today are double those of a year ago. And there is no prospect of a structural recovery bringing the prices back down to their previous levels.
So, some things that may seem trivial can impact your cash flow and profit margins.
3. Just how much waste is there in your chain?
Where in your supply chain do you produce waste, and how much?
What would be the best way to eliminate or reuse that waste?
The risk of waste and wastefulness is exceptionally high in complex and fast-moving supply chains such as e-commerce. Frequent transport journeys with low product numbers in half-loaded trucks – i.e. empty miles – are certainly not uncommon. Sometimes there is too much stock that can get damaged, the outer cartons are too large for the product, or there are too many different types of packaging waste, including cardboard packaging and even disposable pallets.
Failure to act may turn out to be an expensive mistake. But getting started is not always easy either.
So, what is the best way to eliminate wastefulness?
And how can you find and implement practical solutions in your business?
An additional question to ask yourself:
4. Is your business model ready for the circular economy?
In a circular economy, products or parts of products are reused. At the end of their life cycle, they can be used again as raw materials to make a new product.
Some examples are modular buildings with elements that can be reused after demolition, lime waste from water treatment plants that can be used as a raw material for carpets, sugar cane as a raw material for biodegradable cosmetics packaging, or wood waste as a raw material for building materials such as MDF panelling.
Other examples are sharing systems based on the principles of the circular economy, such as shared bicycles, shared cars, overnight stays, laundrettes and even pallets.
The advantages of the circular model:
- The environmental impact is reduced because you help stop the depletion of natural resources and reduce air pollution and waste.
- You increase customer loyalty because consumers are increasingly turning to brands with a sustainable approach to the environment.
- The supply chain has greater flexibility because you are less dependent on the supply of new raw materials or other materials. You also reduce the risk posed by macroeconomic events, such as the COVID-19 pandemic, or changing political contexts, such as the aftermath of the Brexit.
- Furthermore, you will save on the costs of purchasing, storage, distribution, transport, recycling and even landfill.
For more information about dealing with waste and wastefulness, please download this online guide (in Dutch) for circular e-commerce.
It contains more information about the differences between and advantages of recycling and reuse. It also offers practical examples and tips for starting or developing a circular approach.