Clean Data, Clean Planet: How Online Retailers Can Use Data Analytics to Reduce Their Carbon Footprint

Operational efficiency in e-commerce has never been more important. Inflation squeezed margins and supply chain issues wreaked havoc on inventory planning. At the same time, the world’s attention to climate change and carbon neutrality has drawn companies’ attention to how they can improve their environmental credentials. A recent European e-commerce report pointed out 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 key to improving efficiency, reducing waste, saving energy and assessing carbon footprint overall. The annual third-party logistics study found that 98% of third-party logistics providers (3PLs) and 93% of shippers believe data-driven decision-making is critical to the future of supply chain businesses, while another study shows that ‘about 79% companies that maintain well-functioning supply chains can enjoy above-average revenue growth. Effective data deployment is essential to keep 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 tools and data analytics:

Improving the environmental capabilities of freight

With problems at ports resulting from COVID-19, some retailers have moved from sea to air to secure product supply from manufacturing hubs such as China or India. New freight booking tools have made it easier and more efficient to book containers on large freighters, reducing the need for air freight, which is generally considered to produce a larger carbon footprint. Shipping companies can get information from GPS beacons to help locate containers and vessels in real time. Live data helps streamline communication to manage vessel arrivals, dockings and departures safely and efficiently. This level of instantaneous intelligence limits delays, saves energy and ensures speed of passage.

Make the warehouse energy efficient

Retailers with sufficient international presence should maintain inventory levels in local territories to reduce product transportation across the globe. For example, a UK-based company with traction in Europe should consider warehousing inventory 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, as well as immediate access to manufacturing details. This will reduce unnecessary product trips and oversupply. Analytics allows warehouse managers to determine customer behaviors, how they are changing, and what they can expect from manufacturers and other parts of the supply chain. This in-depth knowledge means that decisions are evidence-based and thorough – products are planned, purchased and delivered, optimizing cost and energy.

The greater availability of data in warehousing has led retailers to reposition products to increase efficiency. Automation in warehousing has many environmental benefits, including the benefit of occupying a smaller physical footprint, which requires less energy, water, and labor. Additionally, products can be stacked for space optimization, and an Automated Storage and Retrieval System (ASRS) can pick products from anywhere in a compact grid.

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

New 3PL tools make product fulfillment easier for retailers. More nuance can be used in decision making on various 3PL providers based on product type, delivery address, etc. Data platforms are able to track speed, cost and reliability throughout the order journey as it travels to the customer. Retailers need to familiarize themselves with the ideal system for accessing all parts of their supply chain to better manage inventory, ensure product fulfillment, and reduce their carbon footprint in the process.

Inventory analysis to help reduce waste

Many retailers will assess the stock position, and any excess stock may be liquidated or reduced while the stock is still fit for sale. Perishable goods should be tracked in warehouses for best before dates, as waste can easily occur if close monitoring is not in place. Data querying can display current stock status, ensuring that products that could have been discarded are potentially saved as only the correct number of items are stocked at any given time or they are redirected to new items in time. other destinations.

Predictive analytics goes even further. Based on social media analysis of consumer sentiment. for example, an AI model would be able to project demand for a particular type of product over the coming weeks, allowing businesses to change their inventory accordingly rather than repeat buying items in bulk, whatever regardless of customer preferences.

Recycled content in products

Many retailers have switched to more recyclable packaging materials to reduce their carbon footprint. Not only is this important, but continuous monitoring of packaging materials is crucial to avoid shortages that can lead to suboptimal packaging substitution.

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 retail environmental concerns. The Europe 2022 e-commerce region report surveyed retailers to see how many are working towards a more circular product model. In terms of the amount of material recovered and recycled, the results ranged from 30.9% in the Netherlands to 1.3% in Romania. There is room for improvement, and smart data solutions can support a more efficient and reliable supply of recycled materials.

Prevent, reduce and manage returns

E-commerce return rates are on the rise, crescent of 95% between 2014 and 2019. Inventory returned to retailers is often landfilled – considered financially unviable to return to stock. Reducing returns friction and complexity for retailers will improve customer relationships and keep transportation and energy expenses to a minimum – an environmental win.

New technological advances can also reduce yields at source. It’s entirely possible that in the future, companies will offer VR technology to customers so they can try on digital clothing, provide live feedback, and most importantly, place orders that the customer is certain of. which will help minimize customer purchases that will eventually result in returns.

Remote work

Studies show that by 2028, 73% of all departments will have remote workers, while another report says the rise in remote workers is equivalent to taking 600,000 cars off the road for a year. Similarly, working from home half the week can reduce emissions by 54 million tonnes each year. Some e-commerce retailers will reduce their carbon footprint by allowing staff to work remotely, reducing travel and the associated energy costs.

Good for profits and the planet

As governments, retailers, and manufacturers synchronize their efforts to improve our collective green credentials, the field of data analytics is rising to the challenge: to provide more accurate and incisive ways to track shipments, monitor demand, and help change the type of product and materials purchased by enterprises.

The global crises have made consumers more demanding and retailers more creative. Investing in tools that reduce a company’s carbon footprint isn’t just good for the planet; it also translates into efficiencies, supply chain visibility, and a deep understanding of the customer, ultimately helping to generate profits while studying and addressing its impact on the environment.

Fran Quilty is co-founder and CEO of conjured , a leading provider of e-commerce analytics solutions. Quilty is a former Accenture data analyst, now a serial entrepreneur who has helped build three complementary businesses serving the e-commerce industry over the past four years. One of them, revenue-based finance company Wayflyer, achieved unicorn status in just over two years. His mission is to make data analytics accessible to e-commerce businesses of all sizes. Conjura works with many large and mid-size e-commerce operators in the UK, Europe and the US. Additionally, the Conjura platform is used by private equity and venture capital organizations to make investment decisions in consumer businesses.