How E-Commerce is Driving Sustainability
Sustainability; a word that evokes the dichotomy of purpose and dread for many brand owners. The cost implications can be daunting, however the drive to reduce impact on the environment can be a motivator and a conversation starter between brands and their consumers. In a 2015 study, Nielsen found that 66% of consumers said they would pay more for sustainable brands. As the retail landscape continues to shift, with U.S online retail sales estimated to exceed $520 billion by 2020, consumer pressure, warehousing, shipping and convenient e-commerce purchasing are challenging brands to think beyond the in-store retail space and be more sustainable.
E-retail giant Amazon.com Inc powered nearly 34% of total retail sales growth in the U.S. last year and remains the #1 Internet Retailer ranked by web sales. According to Digital Commerce 360, Amazon’s annual revenue for 2018 was $232.89B, an increase of 30.93% from 2017.
Though it can be argued whether its drivers were cost and profitability or corporate responsibility, Amazon has dedicated multiple initiatives to the reduction of packaging waste and sustainability. In 2008, Amazon recognized that online orders don’t need the same attention to security as retail packages do and launched its “Frustration-Free Packaging” initiative, aimed at creating easy-to-open, recyclable, less waste packaging. As of 2017, Amazon saw reduced packaging waste of 16% and eliminated more than 305 million shipping boxes.
More recently, the Wall Street Journal reported in December 2018 that Amazon is tired of selling “CRaP” items - a catchy acronym for those items that “Can’t Realize a Profit.” Typically, these are fast moving consumer goods, which usually sell for less than $15 and are bulky or heavy, making them expensive to ship. Amazon has pressured manufacturers of these products to make a change to their packaging and supply chains. In February 2019 it was announced that manufacturers with products that meet the qualifications of the program and do not comply, will be charged a surcharge of $1.99 on every item shipped. Those that update their packaging to meet the new requirements before the deadline, will be rewarded with a credit of $1.00 on every item shipped. These incentives have brands listening.
BRANDS EMBRACING A SUSTAINABLE LIFESTYLE
With years of research and reformulations, Proctor and Gamble recently unveiled an “Eco-Box” for its Tide detergent. With 60% less plastic and 30% less water, the Tide Eco-Box is lighter, smaller and doesn’t require secondary packaging for shipping. “The Tide Eco-Box is designed to keep the convenience of online shopping for the consumer but reduce the overall impact of that convenience on the environment. Ecommerce isn’t a trend anymore, it’s a reality, and we’re excited to keep innovating for it,” said Isaac Hellemn, brand manager for e-commerce innovation in P&G’s Fabric Care group. The Tide Eco-Box is now being sold on Amazon.com.
Photo: Business Wire
Unilever has also embraced a sustainable path with the launch of the Unilever Sustainable Living Plan, aiming to decouple Unilever’s growth from its environmental footprint. As part of the initiative, Unilever removed over 1,100 tons of plastic from its skin care product packaging in 2018. Its investment in sustainability is paying off. Last year, Unilever reported its 26 most sustainable brands delivered 70% of its turnover growth and grew 46% faster than the rest of its business.
There’s no doubt that the focus on waste reduction through product and packaging innovations is having a positive impact, but the biggest question remains, will it ever be possible to have a circular economy? Terracycle says yes.
THE NEW CIRCULAR ECONOMY
Established in 2001, recycling/upcycling and waste management company TerraCycle has grabbed headlines for its ability to recycle the “non-recyclable” and its partnerships with some of the biggest brands like Nestlé, Coca Cola, Unilever, Proctor & Gamble, Clorox, Mars and PepsiCo.
At the 2018 World Economic Forum, TerraCycle introduced Loop, what is being considered a circular shopping platform. Using the ‘milkman model,’ consumers will shop products on the Terracycle website, receive them at their doorstep and when finished, the products will be picked up, washed, refilled and sent to another customer. “We did a lot of reflection and realized that the foundational cause of garbage is disposability and single-use. We tried to come up with a way to solve for disposability but maintain the virtues of disposability, which are convenience and affordability,” said Tom Szaky, TerraCycle’s CEO and co-founder in a recent interview with GreenBiz.
Through its partnerships, Loop has tasked brands to create durable, reusable and “counter-worthy” packaging for consumers. A costly enterprise when multiple resources must be dedicated to the development and technology of not only the packaging, but the implementation of the refillment process. Besides owning a 2% stake in Loop, Proctor & Gamble has dedicated 10 of its iconic brands to the launch, with Unilever adding another 9. In total, 300 products will initially be available on the new platform representing multiple categories including beauty, home, food and beverage.
Photo: P&G and Business Wire
Will reusability and big brand backing be enough to incentivize consumers to purchase products on the relatively unknown Loop website versus the time-tested favorite Amazon? As of December 2018, Amazon had 101 million members of its Prime Loyalty Program in the United States, as reported by Consumer Intelligence Research Partners. If Loop can prove successful, there could be a huge opportunity for a future takeover by Amazon. As the behemoth e-retail giant, Amazon could leverage its distribution prowess to stock the reusable packaging as well as provide the convenience of returns both online and at its 500 Whole Foods stores in North America. However, only time will tell if consumers are ready for a truly sustainable, circular economy.