Building sustainability into digital fulfilment commerce provides hard commercial benefits for retailers if it’s done right, says Romulus Grigoras, Cofounder and CEO at OneStock.
Retailers can be forgiven for wondering how they should continue their journey to sustainability. The media is full of often conflicting advice as to the best way ahead.
There is however agreement that sustainability is important; Accenture’s research into the topic showed that 99% of chief executives from the world’s leading organisations believe sustainability is critical to their future success. The majority also see a clear link to business value.
Our own consumer research, undertaken in May 2021 among over 2,000 UK consumers, supports this view. 52% of UK shoppers said they would be more loyal if they perceived a retailer to have sustainable practices, while 41% would even be happy to pay more for delivery to know it was a greener option.
Consumers are not yet convinced
Right now though, there is a perception that retailers are not doing enough. Almost two thirds (65%) of UK consumers felt retailers could do more to make delivery and fulfilment sustainable and 37% didn’t consider the retailers they shopped with to have a sustainable agenda. Worse, 54% weren’t aware that the retailers they shopped with had sustainable delivery and fulfilment options.
So, retailers are dealing with a perception as well as an operational problem. Their challenges are how to actually demonstrate sustainability, how to communicate it to customers and how to contain the inevitable rise in their costs, particular if a green delivery tax is levied by the Government. Opinion is divided as to if and when this tax will be introduced but given that the Government already gets 6% of its income from green taxes, it is quite likely to come at some point.
Consumers often want speed and sustainability
Fortunately, there are a number of solutions to both the communications and the operational challenges. Consumers are already aware of what those might be when 67% said retailers should use technology to make fulfilment greener. 48% even said they would be prepared to wait longer for a delivery if they knew it was a greener option. However, 59% said sustainability shouldn’t impact speed when it comes to fulfilment – almost six in ten said they expect retailers to make delivery greener whilst keeping fulfilment fast.
What is the answer to this seeming paradox? Depending on how retailers propose to manage the implementation of systems to handle green delivery taxes to reduce their carbon footprint, it is bound to be seen by any CFO or logistics professionals as another cost on the business in market that is already competitive and margin-pressured.
In terms of technology, the solution depends on having a system that gives the consumer more choice. Systems that allow retailers to declare the carbon footprint on the delivery upfront give customers a clear choice if they want to prioritise speed over sustainability. For example, the customer can compare how carbon emission vary by fulfilment type, whether they’re collecting an item in-store versus an express home delivery from a warehouse. This option finally brings full loads back onto the agenda.
Mitigate carbon emissions AND costs
However, there is another way to mitigate both carbon emissions and costs, and that is integrated, automated order management that is personalised to each customer and has full visibility into stock availability and location. Both sides benefit because the retailer can select the most efficient delivery method – whether its sustainable last-mile options like electric vehicles or push bikes couriers and warehouse or store, which in turn are based on the customer’s preferences.
The sustainability elements break down into several areas – shorter journeys because orders are fulfilled from the nearest location to the customer. In addition, any stores that are in review for closure because of a lack of footfall can return to profitability by fulfilling online orders through click and collect or click and deliver.
The retailer is also in a position to communicate one to one with customers about their sustainability credentials but to also to demonstrate it through each order, which is important if they ever have to provide proof in the event of green taxes. The sustainability benefits then continue through a reduction in returns, as customers are given a personalised service throughout the journey and able to express their preferences at each stage.
Longer term, once the retailer and customer are connected at a more personal level, the retailer can offer more sustainable services such as reduced or zero packaging, returnable packaging, fully digital communications with no paper trail and order bundling. At this level, both parties are fulfilling their sustainable ambitions.