Clean Data, Clean Planet: How Online Retailers can use Data Analytics to Reduce Their Carbon Footprint

Operational efficiency in ecommerce has never been more important. Inflation has tightened margins and supply chain issues have caused havoc with inventory planning. In tandem, the world’s focus on climate change and carbon neutrality has turned businesses’ attention to how they can raise their environmental credentials. A recent Europe Ecommerce report highlighted that 94% of Chinese, 76% of Europeans and 69% of Americans surveyed said they would boycott carbon negative companies.

The acceleration of the digital economy has led to technological innovation in many aspects of retail operations. New tools make data available to retailers like never before and are the linchpin to improving efficiencies, reducing waste, saving energy and assessing overall carbon footprint. The annual third-party logistics study found that 98% of third-party logistics providers (3PLs) and 93% of shippers believed data-driven decision-making was essential to the future of supply chain activities, while another study illustrates that approximately 79% of companies that maintain high-performing supply chains can enjoy above-average revenue growth. Effective deployment of data is integral to keeping a company’s profits high and its impact on the planet low.

Here are some of the ways retailers can reduce their carbon footprint using new tooling and data analytics:

Improving Freight’s Environmental Capabilities

With issues in ports arising from COVID-19, some retailers switched from sea to air to secure supply of product from manufacturing hubs such as China or India. Newly developed freight booking tools have made it easier and more efficient to book containers on large cargo ships, thereby reducing the need for air freight, which is generally seen as producing a larger carbon footprint. Shipping companies can obtain information through GPS tags to help locate containers and ships in real time. Live data helps harmonize communication to manage ship arrivals, berthings and departures safely and efficiently. This level of instant intelligence limits delays, saves energy and ensures speed of passage.


Making the Warehouse Energy Efficient

Retailers with sufficient international presence should maintain stock levels in local territories to reduce transport of product across the globe. For example, a UK-based business with traction in Europe should consider warehousing stock in Germany, Poland or the Netherlands to shorten the fulfillment process.

Data analytics can provide a business with updates on product orders and product availability prior to purchase, and also immediate access to the manufacturing details. This will diminish unnecessary product journeys and surplus supply. Analytics allows warehouse managers to determine customer behaviors, how they evolve, as well as what to expect from manufacturers and other parts of the supply chain. This deep insight means decisions are evidence-backed and thorough — products are predicted, procured and delivered, optimizing costs and energy.

More data availability in warehousing has led to retailers repositioning products to increase efficiencies. Automation in warehousing has many environmental benefits, including the advantage of occupying a smaller physical footprint — one that requires less energy, water and manpower. Furthermore, products can be stacked with an aim of space optimization, and an automated storage and retrieval system (ASRS) can select products from anywhere in a compact grid.

Third-Party Logistics Providers (3PL) and Fulfillment of Product

New 3PL tools help make fulfillment of product easier for retailers. More nuance can be used in decision making on various 3PL providers depending on product type, shipping address, etc. Data platforms are capable of tracking the speed, cost and reliability through the full order journey as it travels to the customer. Retailers must become acquainted with the ideal system for accessing all parts of their supply chain in order to manage inventory better, ensure fulfilment of product and reduce its carbon footprint in the process.

Analysis of Stock to Help Reduce Waste

Many retailers will evaluate stock position, and any excess stock may be liquidated or discounted while the stock is still suitable for sale. Perishable goods need to be tracked in warehouses for “best before” dates, as waste can easily occur if close monitoring is not in place. Data interrogation can show current inventory status, ensuring products that might have been discarded are potentially saved, as only the correct number of items are stored at any given time or they are redirected in time to alternative destinations.

Predictive analytics takes things a step further. Based on social media analysis on consumer sentiment. for example, an AI model would be able to project demand for a particular type of product over upcoming weeks, allowing businesses to alter their stock accordingly rather than repeat buying items in bulk regardless of customer preferences.

Recycled Content in Products

Many retailers have moved to more recyclable packaging materials to reduce their carbon footprint. Not only is this important but the continued monitoring of packaging materials is crucial to prevent shortages that may lead to the substitution of suboptimal packaging.

Approximately 40% to 60% of consumers cite plastic packaging as an important aspect of sustainable consumption. They also put it in first place when given a list of environmental concerns pertaining to retailing. The 2022 Europe Ecommerce Region report surveyed retailers to see how many are working toward a more circular product model. In terms of amount of material recovered and recycled, results ranged from 30.9% in the Netherlands to 1.3% in Romania. There is room for improvement, and astute data solutions can support more effective and reliable sourcing of recycled materials.

Preventing, Reducing and Managing Returns

Ecommerce returns rates are on the rise, growing by 95% between 2014 and 2019. Stock returned to retailers is often landfilled — considered financially unviable to circulate back into inventory. Reducing the friction and complexity of returns for retailers will improve relationships with customers and keep transport and energy expenditure at a minimum — an environmental win.

New advancements in technology can also reduce returns at source. There is every possibility that in the future companies will be offering VR technology for customers to try on digital garments, providing live feedback and, most importantly, placing orders a customer is certain about, helping to minimize customer purchases that eventually result in returns.

Remote Working

Studies show that by 2028, 73% of all departments will have remote workers, while another report states that the uptick in remote workers was equal to taking 600,000 cars off the road for a year. Similarly, working from home half the week can reduce emissions by 54 million tons every year. Some ecommerce retailers will reduce their carbon footprint by allowing remote working for staff, thereby reducing commuting and the energy costs alongside it.

Good for Profits and Planet

With governments, retailers and manufacturers synchronizing efforts to improve our collective green credentials, the field of data analytics is rising to the challenge: providing more precise and incisive ways to track shipments, monitor demand and helping to modify product type and materials sourced by businesses.

Global crises have made consumers more discriminating and retailers more creative. Investing in tools that reduce a company’s carbon footprint isn’t just good for the planet; it also results in efficiencies, supply chain visibility and deep understanding of the customer, ultimately helping drive profits while at the same time investigating and addressing its impact on the environment.

Fran Quilty is Co-founder and CEO of Conjura , a leading ecommerce analytics solutions provider. Quilty is a former Accenture data analyst, now serial entrepreneur who has been part of the creation of three complementary businesses serving the ecommerce sector over the past four years. One of which, revenue-based financing business Wayflyer, achieved unicorn status in just over two years. He is on a mission to make data analytics accessible to ecommerce companies of all sizes. Conjura works with many scale-up and mid-tier ecommerce operators in the UK, Europe and the U.S. In addition, the Conjura platform is used by PE and VC organizations to make investment decisions in consumer businesses.

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