E-Commerce Is Saving Fashion But Destroying the Planet | Intelligence, BoF Professional

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LONDON, United Kingdom — E-commerce is booming. But the welcome boost to fashion’s bottom line is creating a mountain of waste — and consumers are starting to notice.

In Europe alone, Bernstein projects the growth rate of online fashion will triple this year to account for more than 20 percent of total sales — the equivalent of five years of growth in about six months. Those orders will largely be packaged in cardboard or plastic, then loaded onto gas-guzzling trucks, planes and ships. Many will then be returned, requiring another journey halfway around the world before often winding up in a landfill.

Tackling these issues is a growing priority for many companies, as consumers and regulators demand action on waste and climate. Though manufacturing is still responsible of the lion’s share of fashion’s overall impact, as e-commerce continues to grow and become an even bigger part of consumers’ lives, it is facing mounting scrutiny.

“We see a clear link between sustainability and continued commercial success,” said Kate Heiny, director of sustainability at Zalando.

Last year, the German e-commerce giant found more than 60 percent of its emissions were the result of customer deliveries and returns, though that calculation didn’t include the footprint of the third-party brands it stocks. That’s something the company plans to incorporate going forward, making deliveries a much smaller proportion of overall emissions. Still, They were largely responsible for the 6 percent increase in the company’s footprint in 2019.

“The holy grail of our strategy… is to decouple economic growth from environmental impact,” Heiny said.

The Packaging Problem

When The Iconic, an Australian online retailer, committed to using more sustainable packaging, it didn’t expect the process to take 18 months or require an overhaul of its signature branding.

The company initially considered compostable packaging, but abandoned those efforts because most Australians don’t have convenient access to composting facilities. Eventually, it settled on recycled pouches made from 100 percent post-consumer plastic waste.

We see a clear link between sustainability and continued commercial success.

That still came with compromises. The packaging has to be dropped off in special collection bins to ensure it will be recycled (though these are more common than composting sites). And The Iconic’s traditional branding, a white logo on a black background, proved hard to print on the new material — the black never really looked black and the white ink had a tendency to run. The company flipped the colourway.

“That’s an incredibly iconic part of our brand, those black bags, so to change to white was a huge deal,” said Jaana Quaintance-James, chief sustainability officer at Global Fashion Group, which owns e-commerce platforms including The Iconic and Zalora.

As a starting point, brands should be thinking about the materials they’re using. Can they be reused, recycled and repurposed, and have they been manufactured in a responsible manner to begin with? Can they be made lighter so they require less energy to ship and is there a way to eliminate single-use plastic? There are a growing number of options available, though they can be more expensive and require careful analysis to understand whether they really do represent a better alternative.

Plus, the packaging has to look good.

“We still need to create some theatre for the customer because you don’t have the store touchpoint,” said Robert Lockyer, founder and chief executive at luxury packaging provider Delta Global. “You can still do that and have a sustainable offering.”

Lean Logistics

For retailers like Zalando, packaging is a major source of waste, but shipping is the biggest driver of direct emissions. Reducing the number of journeys between warehouses and customers’ homes, and finding cleaner modes of transportation, is key to reducing e-commerce’s carbon footprint.

It makes commercial sense too. A brand that doubles the average number of items customers purchase per order, and manages to send those items in a single shipment, will reduce average emissions per item by 30 percent and cut shipping costs by more than 50 percent, according to a 2017 report by Bain & Company.

That’s not always easy. Large brands might stock items in different warehouses. Holding up a multi-item shipment because one product is out of stock isn’t always an option when customers expect their orders to arrive as quickly as possible. It can be difficult to bundle orders to individual customers in many different locations as well.

To simplify the final leg of delivery, commonly referred to as the “last mile,” Zalando has trialled private delivery and return points at people’s houses, as well as in local shops, that consolidate pick-ups and drop-offs in one location. Elsewhere, the company is partnering with regional carriers to use more environmentally friendly delivery methods like cargo bikes or electric vehicles. Where it can’t reduce its impact, it offsets the emissions.

Getting delivery right is only half the battle. Returns rates for online apparel purchases are notoriously high.

Some companies have also taken a bet — seen by some as risky — that customers will tolerate slower delivery times in order to reduce the environmental impact. The Iconic used to offer express delivery for free, but now it charges for the service. Simply encouraging customers to opt for slower shipping has resulted in sizeable emissions reductions, it says.

“If you provide free express shipping people will of course take it, but what’s shown by that shift is people really didn’t need it that fast so the benefit from a carbon reduction perspective was significant,” said Quaintance-James.

Getting delivery right is only half the battle. Returns rates for online apparel purchases are notoriously high, meaning more miles travelled for each package. Then there’s the problem of what to do with unsold items, which may no longer be in style or season.

According to returns technology company Optoro, more than 5 billion items worth around $400 billion are returned every year in the US alone. The company estimates that generates around 5 billion pounds of waste to landfill and 15 million tons of carbon dioxide.

Many companies now provide much more detail about how a product fits at the point of purchase. Some are experimenting with software that allows customers to better see how a garment will look on them, but many consumers still buy items online in multiple sizes, intending to return any that don’t fit later.

Brands are getting more sophisticated in how they handle the inflow. Optoro uses machine learning to figure out the best destination for unwanted items, which could include sending them back to the store or on to an outlet store or a charity shop. The company says its seen an inflow of inquiries following the outbreak of Covid-19, and forecasts a looming challenge for brands who have benefitted from an uptick in online sales and sought to entice customers with an extended timeline for returns.

“We predict there’s going to be a flood of returns coming back in the near future, once people start to bump up against extension windows,” said Optoro’s Senior Vice President of Marketing, Larissa Summers.

Future-Proofing

For all the advances, many retailers are just getting started. Companies need to act quickly to understand where they can make the biggest difference and which partners to work with to drive change.

Beauty brand Tatcha has committed to ensure all the packaging for its products is recyclable, reusable, refillable or compostable by 2023. Behind that strategy lies a complex matrix of decisions that takes into account the characteristics of each product and how to holistically reduce its impact. That could mean deciding to use a different shipping method to offset the impact associated with weightier glass packaging or experimenting with new materials.

We need a different type of infrastructure.

“One of the things that makes it challenging is thinking what resources do we need, what’s the cost, what’s the implications for our partners and suppliers?” said Tatcha’s Chief Marketing Officer, Sarah Curtis Henry. “There’s a whole ecosystem we work with.”

For the industry to really move the needle will require working with non-traditional partners. For instance, effectively shifting to packaging that generates less waste requires investment in recycling technology and infrastructure. Similarly, experiments with reusable packaging are only really effective if brands can figure out a way to incentivise consumers to actually return it and the logistics to get it back in circulation.

“We have a circular economy product in a world that is designed for linear stuff,” said Jonne Hellgren, chief executive and co-founder of reusable packaging service RePack. “We need a different type of infrastructure.”

On the other hand, many see a window of opportunity opened by the current crisis, as consumers and executives re-evaluate the business models they want to support.

After the financial crash in 2008, there “was a very clear shrinking of the market for sustainability; it was very much seen as a discretionary spend at that point,” said Stuart Lemmon, managing director for North Europe at sustainability consultancy EcoAct. “We are not seeing that with Covid… Clients, even those badly hurt by lockdown, are really prioritising sustainability, and particularly their response to climate change.”

Related Articles: 

How to Survive the Future of Retail

Will Fashion Ever Be Good for the World? Its Future May Depend on It

Fashion’s Growth-Focused Business Model is Not Sustainable. What’s the Solution?

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