BY UNI SALLNÄS, FREDRIK ENG-LARSSON, MARIA BJÖRKLUND, MARIA HUGE-BRODIN, LINNEA HAAG, LOUISE BLUMENTHAL, AND DANIEL JOHANSSON
Logistics plays a key role in the environmental impact of e-commerce, and the growth of e-commerce means that consumers are increasingly able—and willing—to influence the environmental sustainability of logistics. Particularly in the latter part of the supply chain—often referred to as the “last mile”—consumers have significant power to influence outcomes.
Consumers can influence this through, for example, their choice of delivery location (e.g., home delivery or to a pickup point) and their choice of delivery times, ranging from a few hours to several business days. Different combinations of delivery location, delivery time, and consumer behavior—such as traveling by bike or car to a pickup point—result in varying environmental impacts. These are complex relationships that ultimately determine which option is the most climate-friendly.
Growing Interest in Sustainable Alternatives
Surveys show that consumers are increasingly willing to choose sustainable delivery options when selecting a shipping method. There are also some e-retailers who have taken the lead and worked in various ways to encourage more of their customers to choose more sustainable delivery options. But despite growing interest from consumers, e-retailers, and logistics companies alike, very little is actually happening.
Challenges for Climate-Smart Deliveries
In the Vinnova-funded project, we have ”Sustainable Distribution in E-commerce: How Can Climate-Smart Delivery Options Be Facilitated?”, which is run by Linköping University and Stockholm University in close collaboration with Stadium and Apotek Hjärtat, examined the challenges associated with offering climate-smart delivery to consumers. In our work, we have tracked the introduction of climate labeling for delivery options and interviewed individuals at various levels within the organizations. Through this work, we have identified various barriers that prevent e-retailers from offering climate-smart deliveries.
Sustainability Is Not High on the Agenda
A key prerequisite for enabling climate-smart deliveries is that sustainability is high on the agenda for e-commerce companies. E-commerce companies seem to be in broad agreement on this, and without support from management, it will be difficult to drive this development forward. For companies where sustainability is low on the priority list, this becomes an organizational barrier, making it difficult to work toward offering climate-smart delivery options.
Person-dependent competence
Another organizational barrier highlighted in our interviews is the expertise of e-retailers. It is challenging to maintain the right expertise related to, for example, setting requirements for carriers and calculating emissions. Sustainability issues are also often perceived as being driven by dedicated individuals who certainly get things done, but there is a risk that this expertise becomes overly dependent on specific individuals and is not effectively integrated into processes and work practices.
Difficult to Verify Logistics Companies' Climate Efforts
Furthermore, e-retailers’ trust in logistics companies is a very important factor in enabling them to offer climate-smart delivery options. E-retailers must feel confident that they can rely on the climate-smart delivery options marketed by logistics companies. Currently, with logistics companies offering various types of services under different names, it is challenging for e-retailers to maintain an overview and understand exactly what kind of logistics service they are procuring, as well as to compare solutions from different logistics companies.
“Reports and follow-ups often vary in format and are structured according to different frameworks—frequently based on templates—which makes it difficult to compare different freight forwarders with one another,” says Louise Blumenthal, Head of Logistics Development at Apotek Hjärtat.
Technology imposes limitations
Another major challenge is one of the few technology-related barriers we have identified: the purely computational aspect is something that e-retailers find troubling. E-retailers want to gain better insight into emissions from e-commerce distribution, preferably at the order or package level, but such solutions are currently lacking. At least for e-retailers that work with multiple distributors and want to be able to compare them fairly. Comparing emissions across different logistics companies is particularly complex, partly because logistics companies use different calculation methods.
Who will lead this effort?
Another barrier is the difficulty in determining who should take the lead in promoting climate-smart e-commerce deliveries. E-commerce retailers recognize that they have an important role to play in pushing for change, but also that logistics companies bear a significant responsibility for driving this development forward.
“Here, collaboration between e-retailers and logistics companies is crucial; services and arrangements are developed based on needs and cost levels, and a high level of maturity and interest on the part of the e-retailer is essential for progress,” says Louise Blumenthal.
Risk of Impact on Competition
Furthermore, there is a competitive aspect that e-retailers need to take into account. More and more people are becoming aware that the delivery option listed at the top of the checkout page is chosen more often than the other options. By ranking logistics companies in a certain order, the share of orders each provider receives is likely to be influenced, and this is a very important factor in negotiations between logistics companies and e-retailers. When sustainability enters the equation, the situation becomes even more complex. Logistics companies can use both cost and environmental arguments in their negotiations with e-retailers to secure the coveted top spot.
Risk of greenwashing
If we turn our attention to the relationship between e-retailers and consumers, the credibility of e-retailers in the eyes of consumers is absolutely crucial when developing climate-smart delivery options. E-retailers do not want to run the risk of being accused of greenwashing, and it is clear that communicating about sustainability is a complex issue. How can a complex environmental message be communicated credibly in a decision-making situation that most consumers spend only a few seconds on?
”It’s important for consumers to understand what options they’re being offered, so they can ask themselves, ”If I choose this option, am I really making a difference? And what exactly does “climate-smart” mean?’ Customers shouldn’t have to be experts or very knowledgeable to be able to make the right choice,” says Daniel Johansson, Supply Chain Director at Stadium.
It is also important to understand consumers in order to market delivery options appropriately. However, one e-retailer points out that what consumers say they want to do is one thing, and what they actually do is another—a distinction that is important to understand when developing climate-smart delivery options.
Conceptual Confusion
There are various terms used to describe what is marketed as a ”climate-smart” delivery option. Within the scope of the project, we found that only a few e-commerce companies have any kind of sustainability aspect linked to the delivery options available to consumers. For those that did, the terminology varied significantly. Terms such as ”completely fossil-free,” ”fossil-free delivery,” ”climate-smart delivery,” ”environmentally efficient,” ”eco-friendly,” and ”climate choice” appear in Swedish e-retailers’ checkout pages. In some cases, a single e-retailer offers several different options, and in other cases, these terms are linked to a specific distributor. All in all, this mix of terms is confusing for consumers. Here, e-retailers play an important role in making things easier for consumers, but the confusion over terminology is also a barrier for e-retailers.
External parties: a barrier or an enabler?
To overcome the barrier of conceptual confusion, there is an opportunity here for the authorities to help (or hinder) through standards and guidelines. For example, labeling schemes—such as the one the Nordic Swan is currently developing—and the industry agreement ”Fossil-Free Delivery” could improve the situation. It’s worth noting that e-retailers are not in agreement on whether laws or regulatory measures from authorities are the right way to go. Apotek Hjärtat was an early adopter of its own labeling system for climate-smart delivery options, but points out that this is resource-intensive and requires frequent updates. This is where external parties can contribute and ensure consistency.
Go ahead and give it a try
Despite all the barriers, we see that Apotek Hjärtat, Stadium, and a few other e-retailers actually offer various types of ”climate-smart” delivery options. We need companies that lead the way and dare to experiment in order for progress to be made. This willingness to take risks stands out as a key enabler for ultimately being able to offer climate-smart delivery options to consumers.
“You need to be open to change and willing to try new things. Right now, we’re investing in and testing heavy-duty electric trucks in Norrköping. It takes courage, curiosity, and consistency to gradually reduce our climate impact.” “No one remembers a coward!” says Daniel Johansson.
All credit to climate-smart and e-retailers
In this article, we have chosen to focus on the perspective of e-retailers. There are other stakeholders who are also crucial to the success of climate-smart distribution. Two examples of such stakeholders are logistics companies, which distribute e-commerce orders to consumers, and companies that develop freight selection systems, such as TMS (Transport Management System). From the research project’s perspective, we are also interested in these perspectives, and the project will focus on the distributors’ perspective in the next phase. We therefore invite companies that wish to participate in the development of climate-smart deliveries to contact us.
From Climate-Smart to Sustainable E-Commerce Distribution
This article discusses climate-smart e-commerce distribution. This is a step in the right direction, but in the long run, the concept will need to be expanded to include sustainable e-commerce distribution, which encompasses more environmental aspects beyond carbon dioxide emissions, as well as social aspects such as drivers” working conditions. It’s clear that the development of climate-smart deliveries is complex in itself, and including even more aspects is even more challenging. However, that doesn’t mean e-retailers shouldn’t work to offer climate-smart deliveries. We hope this article will inspire you to actively work toward helping—and perhaps even ”nudging”—consumers in their choices, thereby increasing the sustainability of e-commerce deliveries.
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Uni Sallnäs, Associate Professor of Logistics, Linköping University.
Fredrik Eng-Larsson, Associate Professor of Operations Management, Stockholm University.
Maria Björklund, professor of logistics, Linköping University.
Maria Huge-Brodin, professor of environmental logistics, Linköping University.
Linnea Haag, Assistant Professor of Logistics, Linköping University.
Louise Blumenthal, former Head of Logistics Development, Apotek Hjärtat.
Daniel Johansson, Supply Chain Director, Stadium.
