Online shopping has a number of its perks— shopping in the comfort of your own home, the ability to compare prices and products, and having your purchases delivered straight to your front door. With the advent of mammoth e-commerce companies, these services are becoming cheaper and faster. During the winter holidays, this has become a staple from purchasing gifts to snagging sweet deals during boxing week. For me, watching packages arrive at my front door in breakneck speeds (one package having had arrived hours after placing the order) made me wonder what the environmental impacts are from having free 2-day shipping, as well as the additional packaging required to ship my single item compared to bulk shipments to brick-and-mortar stores.
Over the past few years, we’ve seen a huge boom in online shopping. According to Statista, the number of people who choose to do their shopping online worldwide was 1.66 billion in 2017 and is estimated to reach 2.14 billion people in 2021. With increasing economic globalization and technological advances, more and more people are gaining access to the web with global markets right within their reach. Amazon is one of the biggest enablers for this, and while it provides a variety products and services in different markets, most of its revenue comes from its online stores which continues to achieve steady growth. From online stores alone, Amazon generated a net revenue of $68.5 billion in 2014 which had grown to $108.35 billion in 2017.
I always had the assumption that online shopping had a greater environmental impact than traditional shopping, with the added delivery trucks on the road and additional packaging it required. This was always something that I’ve felt slightly guilty about but was something I did anyway for the sake of cost savings and convenience. After a bit of investigational work, the results I found were surprising.
In an Environmental Analysis of US Online Shopping conducted by the MIT Center for Transportation and Logistics, results showed that online shopping overall does, in fact, achieve a smaller carbon footprint than traditional shopping. In the analysis, shopper behaviours are broken down into three distinct categories.
In the diagram below, you can see what kind of supply chain activities are associated with each type of behaviour, and the amount of emissions resulting from those activities.
What’s interesting to see here is that Cybernaut behaviours are almost on par with the E-Informed or Impulse Traditional Shoppers, with the highest footprints going to Modern Shoppers. The lowest carbon footprint belongs to the Cybernaut.
Within the Cybernaut behaviours, we see that the largest variabilities in carbon emissions is from freight transport, which is the difference between standard shipping (Cybernaut) and express shipping (Impatient Cybernaut). The largest emissions in this category come from the additional packaging, which remains constant for all Cybernauts with the exception to store pickups.
Now if you’re surprised by the significant difference in emissions between customer transportation and freight transportation, the reason for this is that companies like Amazon have developed incredibly advanced logistical systems that allows them to be very efficient when delivering packages. But with the widespread use of free 2-day shipping, it makes me wonder if this has any negative impact of the efficiency of these systems. I decided to investigate further into some of Amazon’s numbers.
On Statista it was revealed that Amazon actually loses money when it comes to shipping products. As shown in the chart below, in 2016 Amazon racked up a bill of $16.17 million to cover shipping costs with shipping revenues (from Prime memberships by-purchase shipping fees) covering only about 55.5% of that compared to 64% in 2006. However, looking at Amazon’s current growth, they’re more than making up for the loss by the number of product sales they make. But the decreased revenue to costs ratio may be a good indicator of the dropping efficiency of their delivery logistics. While I can’t say for sure, we can speculate that this drop in efficiency may be due to the increasing number of two-day deliveries that pushes the current system out of maximum efficiency. This would require additional freighters and delivery tricks, resulting in higher monetary and environmental costs.
Amazon Shipping Revenues and Costs (2006-2016)
Based on these findings I can conclude that yes, you can shop online guilt-free, which seems to trump the traditional brick-and-mortar stores. However, it depends on how you choose to do it. Making trips to physical stores to compare products and prices is a sure way to increase your carbon emissions, so either consider doing all your research beforehand and making your purchase in a single trip, or getting the item shipped to your home. Consider whether you need to have your purchase as soon as possible, or if you wouldn’t mind waiting a few days longer. If it takes longer to get to you, it’s likely that fewer emissions it will be produced- speed and convenience come at a price. As for the biggest culprit of emissions for online shopping, extra packaging can pose as an issue as well. While there’s not much we can do about this since this decision is in the hands of the organizations, we can try to support companies that use less packaging or try to recycle or reuse as much of the packing material as you can. As we transition further into the world of online shopping, hopefully, more companies will turn to greener alternatives for packaging, using more post-consumer recycled materials and fewer plastics.
So what kind of shopper are you? What can you do to change your shopping habits? Hopefully, I was able to shed some light on some of these questions. If you’d like to find more on the analysis conducted by the MIT Center for Transportation and Logistics, you can find the link here.