Sustainability issues of online shopping: The dilemma of convenience over sustainability

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  Quantumrun Foresight
• September 21, 2023

Insight highlights

The increasing popularity of online shopping has raised environmental concerns due to the significant carbon emissions associated with product manufacturing, delivery, and disposal. Major retailers are taking steps to address sustainability issues, such as reducing emissions through electrification and setting climate goals. However, challenges remain, including job losses in traditional retail, the need for government regulations, and the digital divide among consumers.

Sustainability issues of online shopping context

The COVID-19 pandemic significantly accelerated the trend of transitioning to online shopping. According to the US Census Bureau, e-commerce sales surged by almost 32 percent in 2020 compared to the previous year. In response to the increased demand, delivery companies like Amazon, FedEx, and UPS, as well as food delivery services, packaged multiple purchases using cardboard and plastic, and recruited thousands of additional drivers to ensure timely delivery to customers' homes.

The environmental impact of online shopping is a pressing concern with significant implications. The entire process of producing and delivering the products we consume, from the extraction and processing of natural resources to their shipment, usage, and disposal, is responsible for approximately half of the global emissions, as stated by the United Nations. The UN also predicts that global material consumption could double in the coming decades.

Brands and retailers play a crucial role in these supply chains. Major companies are only beginning to thoroughly analyze and understand the complete carbon footprint generated by their extensive networks. They are identifying the sources of emissions and setting targets to reduce them. Many of these companies find that their suppliers and customers contribute significantly to their climate impact. Moreover, in January 2021, the World Economic Forum released a report indicating that the increasing demand for delivery services could cause a surge of over 30 percent in emissions and traffic congestion in the top 100 cities worldwide by 2030. 

Disruptive impact

To address the increasing sustainability concerns around e-commerce, major retailers are pledging carbon emission reduction through electrification. For example, Amazon has made significant progress in reducing emissions associated with its operations. Despite expanding the size of its buildings, the company managed to decrease emissions from the electricity it purchased by 4 percent. The retailer is actively working towards achieving 100 percent renewable energy, a crucial element of its plan to reach net-zero emissions by 2040. Amazon also plans to deploy 100,000 electric vans over the next decade.  

Meanwhile, Target has significantly reduced emissions from its operations, achieving a 26 percent decrease in purchased electricity since 2017. However, these efforts have been overshadowed by increased emissions from activities within its supply chain, such as transportation and consumer use of its products, which saw a 16.5 percent rise. In response, Target aims to have 80 percent of its suppliers establish science-based climate goals by 2023, aligning them with global climate targets. Additionally, the retailer is actively working towards cutting emissions from its buildings and vehicles in half by 2030.

Such efforts by retailers can open opportunities for electric vehicle (EV) manufacturers, charging and solar installation providers, and green building renovators to collaborate with retailers and logistics suppliers. Likewise, these investments can fast-track research and development of alternative fuels, such as hydrogen, and the development of autonomous last-mile deliveries, which can optimize the routes taken. 

Implications of sustainability issues of online shopping

Wider implications of sustainability issues of online shopping may include: 

• Increased carbon emissions due to transporting goods from warehouses to customers' homes. Using individual packaging for online orders can also lead to more waste than bulk shipments to physical stores.
• The development and adoption of increasingly efficient and automated logistics systems, secure payment platforms, and sustainable packaging solutions.
• Increased public demand for e-commerce fulfillment centers and delivery services that feature environmentally-friendly practices. This demand may result in new investments into warehouse automation, recyclable and compostable packaging, and new bundled (green) delivery options.
• Some traditional brick-and-mortar retailers marketing their physical stores as environmentally friendly (compared to e-commerce) since they encourage shoppers to pick up products in person. This brand image could be bolstered by featuring domestically manufactured products instead of imported goods.
• Governments potentially establishing regulations to ensure online retailers invest in environmentally friendly logistics practices, carbon taxes to offset excess parcel deliveries, as well as new logistics-specific ESG reporting requirements.
• New societal norms may grow among younger generations away from pervasive consumerism (e.g., fast fashion) toward more considered shopping habits from local retailers.

Questions to consider

• How often do you shop online instead of in physical stores?
• What are some ways your favorite brand promotes sustainable practices in its online stores?