Ecommerce Can Trigger Ecosystem Change For A Greener Supply Chain

By Hemant Badri October 07, 2023

The increased emphasis on environmental consciousness has shed a spotlight on the e-commerce sector and its efforts to minimise the carbon footprint within its intricate supply chain

Ecommerce Can Trigger Ecosystem Change For A Greener Supply Chain
Across the e-commerce industry, there is a growing emphasis on running data centers on renewable energy sources in alignment with sustainability goals. Shutterstock

In recent years, e-commerce has experienced an unprecedented surge, marking a significant shift in the way we conduct business and trade especially in our country. For instance, e-commerce activities in the Asia-Pacific region represent over 70% of global e-commerce, according to some reports. Moreover, in India, the data from Redseer Research and Analysis shows that gross merchandise value (GMV) of the country’s e-tailers touched $60 billion in FY2023.

As this industry sees heightened fervor, especially in the wake of the upcoming festive season, it has become increasingly established that this vigorous growth must be paralleled by an equal sense of responsibility, particularly towards our environment. Several ecosystem stakeholders, including consumers, suppliers and delivery services, heavily depend on the e-commerce sector during, and in the run up to the festive period. Therefore, sustainable practices in place can truly make a positive impact, not only over the immediate course of time but in the long run too.

It is imperative that the e-commerce sector collectively addresses its environmental footprint amidst the festivities, which call for excessive packaging, increased transportation and energy consumption, associated with the upswing in online purchases. What is also not unnoticed is that in this pursuit of a future woven with environmentally conscious threads, the e-commerce sector can be seen embarking on a journey of transformation that aligns with a cleaner environment. This voyage towards a more sustainable future is not merely an afterthought, but a conscientious effort to weave eco-friendliness into the very fabric of e-commerce operations benefiting both the industry and the planet.

The increased emphasis on environmental consciousness has shed a spotlight on the e-commerce sector and its efforts to minimise the carbon footprint within its intricate supply chain. In this era of innovation, prominent figures in online retail are breaking free from conventional norms. Many are pioneering initiatives that champion ecological integrity, are redefining age-old practices, and charting a trajectory that doesn't solely refine business strategies but also shapes a more sustainable world for generations to come.

The integration of electric and hybrid vehicles into delivery fleets is a significant focal point. In India, the transition to electric vehicles is imminent, supported by a substantial $96.8 million allocation from the government's Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME) initiative. To facilitate this shift, a range of incentives has been introduced to encourage EV adoption. The collaborative effort of manufacturers, charging infrastructure firms, fleet operators and corporate clients is essential for achieving complete electrification of e-commerce delivery fleets. This commitment not only substantially curbs greenhouse gas emissions but also propels the adoption of cleaner transportation technologies.

Role of Technology in Building a Greener Supply Chain 

A subsequent stride involves the establishment of micro-fulfillment centers, a concept gaining rapid traction. These compact, automated warehouses, strategically positioned in urban zones, minimise distances covered during the final leg of deliveries. This approach not only optimizes storage but also significantly truncates transportation distances, effectively reducing emissions and delivery durations.

Transitioning to technology represents a significant milestone for the e-commerce sector. Whether involving automated guided vehicles, cross-bed sorters, or robot-assisted automated packing machines, the remarkable progress of technology has wielded a transformative influence, particularly within the last mile. The amalgamation of these technological strides underscores the e-commerce industry's dedication to fusing technological prowess with environmental mindfulness. These systems enhance warehousing and packaging efficiency while significantly reducing energy consumption, thus effectively mitigating their carbon footprint.

Data-Powered Enhancement 

A pivotal tool in fostering sustainable e-commerce logistics is data-driven optimisation. Commencing with customers initiating their online shopping journey through keyword-based searches, this avenue becomes an ideal conduit to discern their preferences. A deep comprehension of keyword traffic patterns within the marketplace lays a sturdy foundation for a potent data-driven strategy. This method empowers businesses to unearth implicit and explicit customer preferences, enabling them to adapt and fulfill evolving demands.

Green Packaging Intelligence 

Furthermore, the burgeoning realm of e-commerce has ushered in a surge of discarded shipping boxes and packaging materials, culminating in unwarranted waste. Here, the role of green packaging intelligence comes to the fore. By harmonising product attributes with sophisticated algorithms, this approach suggests apt packaging types and sizes, minimising materials and costs, while notably shrinking the e-commerce operations' carbon footprint. Ultimately, the trajectory of sustainable transformation is molded by evolving consumer preferences and behaviors, with a substantial majority seeking eco-friendly and socially responsible products.

Adherence to IGBC Guidelines and Transition to Renewable Energy 

In the pursuit of sustainability, the e-commerce industry is leading the charge in pioneering transformative changes in supply chain management, reshaping the ecosystem, and setting new standards for environmental responsibility. One of the key drivers of this sustainability journey is the adoption of greener supply chain initiatives, with a strong commitment to reducing environmental impact.

A significant example of this transformation lies in the construction of supply chain facilities. Many large e-commerce facilities are now being designed and constructed with sustainability at the forefront. These facilities not only aim to reduce energy and water consumption but also align with the guidelines set forth by organisations like the Indian Green Building Council (IGBC). Embracing IGBC guidelines, eco-friendly construction practices and energy-efficient designs are prioritised, further solidifying the industry's dedication to responsible and sustainable operations.

Data centers, critical to e-commerce platforms, are also undergoing significant transformation. Across the industry, there is a growing emphasis on running data centers on renewable energy sources, such as solar power, in alignment with sustainability goals. Furthermore, e-commerce companies are increasingly investing in renewable energy to power their data centers, demonstrating a collective effort to transition away from traditional energy sources. These initiatives underscore the industry's recognition of the importance of reducing its carbon footprint.

Beyond their own sphere, e-commerce organisations must play a pivotal role in fostering a greener future in the ecosystem at large. Their investments in sustainability radiate positive effects across allied sectors, encompassing brands, sellers and channel partners. The strategic embrace of eco-friendly logistics practices not only shrinks carbon footprints but also sets a precedent for other industries to emulate. As the voyage towards sustainability unfolds, the e-commerce sector emerges as a vanguard force in the global battle against climate change.

(Hemant Badri is the Senior Vice President and Head of Supply chain, Customer Experience, and ReCommerce, Flipkart Group.)