Why regional e-commerce companies must prioritise sustainability

While the Covid-19 pandemic may have propelled the growth of the e-commerce sector, a shift in shopper preferences and the convenience the segment offers indicate that it will continue to boom even after the outbreak recedes in the future.

The surge in e-commerce has also transformed the concept of urban delivery, last-mile, and associated technologies. Demand for last-mile delivery is increasing and is expected to grow by 78 per cent globally by 2030, according to a World Economic Forum (WEF) report.

However, this trend in its current format – and with expected forecasts – appears unsustainable as the growing consumer base and purchasing power will have adverse environmental implications on a broader scale. Rising demand for online shopping and time-definite deliveries is expected to weigh heavily on sustainability as urban density, air pollution and traffic congestion scale.

“To satisfy customers’ ever-rising desire to buy products online, without any intervention, the number of delivery vehicles in the top 100 cities globally will increase by 36 per cent until 2030. Consequently, emissions from delivery traffic will increase by 32 per cent and congestion will rise by over 21 per cent,” the WEF report reads.

“Rapid urbanisation, increased number of online customers, product availability, rise in demand for faster delivery of parcels are some of the factors contributing to the growth of last-mile delivery services. High cost associated with failed delivery due to lack of address systems and non-availability of customers, poor route planning and the use of inefficient transport vehicles adding to the carbon footprint of package delivery, vehicle noise pollution and urban congestion, are the factors relevant to the development of sustainable last-mile strategy,” says Sivan T J, senior consultant, Supply Chain and Logistics Practice, Frost & Sullivan.

“Strategies adopted by service providers are expected to focus on cutting down emissions generated by last-mile transportation. Some of the strategies include optimising route navigation and scheduling with real-time information about traffic congestion and increasing the use of alternate fuels and autonomous vehicles to combat challenges associated with sustainability issues.”

Taarek Hinedi, vice president of FedEx Express Middle East and Africa operations, adds: “The key to a more efficient and sustainable approach in logistics is reducing the transportation requirements, and as a result we’re seeing more companies create more efficient supply chains. Consolidating packages within circular routes instead of point-to-point trips means greater delivery efficiency and a more sustainable logistical model.”

An integrated approach could come into play to optimise the last-mile ecosystem and minimise the impact on customer service.

Three transition roadmaps – the WEF report suggests – include electric vehicle (EV) regulation for inner-city areas, deliveries during night-time and before/after working hours, data-based connectivity solutions such as dynamic re-routing and load-pooling, and multi-brand parcel lockers and boxes.

“Such a scenario could reduce CO2 emissions by 30 per cent, congestion by 30 per cent and delivery costs by 25 per cent by 2030 when compared to a ‘do nothing’ baseline,” the report adds.

Innovative solutions are also being introduced to address the issue. Roxo, FedEx’s SameDay Bot – an autonomous delivery device designed to travel on sidewalks and along roadsides, safely delivering smaller shipments to customers’ homes and businesses – made its first international appearance outside the United States in Dubai in October 2019.

“The innovation was welcomed by the Roads and Transport Authority (RTA) and customers alike. This innovation fits well with the UAE National AI strategy 2031 and Dubai Autonomous Transportation strategy, which support the adoption of robotics and artificial intelligence technologies,” says Hinedi.

In addition to greater traffic congestion and increased greenhouse gases, the shift to online shopping has also led to an exorbitant usage of packaging materials. Most of the waste ends up in landfills or in the environment. Bearing sustainability concerns in mind, local online businesses are working towards rolling out measures to mitigate the impact of packaging waste and move forward responsibly.

“We are currently implementing more sustainable packaging and packing guidelines and look forward to rolling out our learnings across the entire noon group,” opines Maya El Ayach, SVP, Growth and Digital Strategy, noon.

Meanwhile, UAE-based luxury e-commerce platform Ounass also launched eco-friendly boxes made from recycled materials as its default packaging in 2019.

Greener solutions
In the wake of rising consumer awareness and calls for environmental change, companies can make a compelling case for sustainable practices by integrating business engagement with eco-friendly policies. Additionally, tapping into the sensitivities of ‘conscious consumers’ will go hand-in-glove in cultivating sustainability within supply chains, in-store and online marketplaces.

In 2020, e-commerce giant Amazon launched its ‘Climate Pledge Friendly’ programme to help customers discover and purchase sustainable products. Consumers can browse for products that have one or more of the sustainability certifications. The company is also working towards powering its operations with 100 per cent renewable energy by 2025.

Meanwhile, FedEx Express’ Hinedi asserts that in the 2019-2020 fiscal year, the company avoided more than three million metric tonnes of CO2 equivalent emissions globally as a result of enterprise-wide fuel and energy saving initiatives. That is equivalent to the carbon offset of more than four million acres of US forests in one year.

“Sustainability has always been a key focus of our operations. Our innovative solutions include the use of robotics – including autonomous robots inside select warehouse facilities – to optimise package sortation and pickup, packaging innovations to minimise materials and waste, and other advancements to reduce emissions, traffic congestion, and noise during last-mile delivery,” she adds.

“We recognise that the long-term health of our business is directly connected to the health of our planet and local communities, and that’s why we’re committed to ‘reduce, replace, revolutionise’, which we apply across key areas like aircraft efficiency, vehicle efficiency, sustainable facilities, and sustainable materials and recycling.”

With sustainability taking priority across this region, players who are keen to succeed in the longer-term must integrate a greener approach in their operations. The customers of tomorrow will care.