Econnections: scale sustainable solutions for e-commerce has been saved
Econnections: scale sustainable solutions for e-commerce
Accelerating sustainability and growth
Deloitte has partnered with several major e-commerce players to develop the Econnections programme, with a mission to accelerate sustainable e-commerce. Our approach is fast and specific: each year we identify practical sustainability challenges, and bring together collaborators from the e-commerce industry, knowledge, and innovation expertise to select and pilot solutions.
Go directly to
- Motivating innovation
- Actionable innovations
- Valuing sustainability
- Talking clearly in the customer’s language
- Collaborating across the whole value chain
The result is the rapid scaling of sustainable solutions that benefit the entire e-commerce chain. Along the way, e-commerce businesses gain access to knowledge and innovation; start-ups and scale-ups find real-world, large-scale applications for their solutions; and knowledge partners gain insights that can inform future initiatives. Here, we share some of those insights, from our first wave of pilot projects.
For many businesses, sustainability is typically driven by both compliance and competition, and the difference can often come down to pace. What starts as a customer preference today might become a statutory requirement in a few years’ time, so the speed at which an organisation changes can make the difference between simply staying in the game and being ahead of it. The question is no longer whether a business becomes sustainable, but how and when to do it.
However, through our Econnections conversations, we discovered a hesitance among participants to undertake full-scale, in-house sustainability programmes until major clients demanded a zero-carbon service or product. With competing priorities for budget and resource, sustainability was not always perceived as a commercial imperative. We helped these companies understand that pioneering sustainable solutions not only has a commercial benefit, but can also be used to position the company positively in the market. This gentle reframing helped kickstart our exploration of the solutions available from innovative providers, which together we could scale at pace.
With e-commerce, responding to these external drivers can create short-term tensions with existing internal priorities – for instance, account teams focused on maximising revenue have no incentive to lower emissions. These tensions can be difficult to resolve at an operational level, and often need additional motivation from board or sustainability functions. Conversely, we found that innovations driven and owned by operational teams tend to be faster to implement and more effective, because those teams are closer to the everyday reality and can recognise useful solutions. The challenge, therefore, is how to embed a sustainability ethos through all business operations, in a way that empowers innovation within individual functions. Within the Econnections product packaging pilots, those responsible for packaging are involved, not just the sustainability department; in electric vehicle pilots, transport teams are involved.
A challenge for sustainability initiatives is that business benefits are often assessed solely on a cost basis, or whether they’re financially viable. Our perspective adopts three further lenses, sustainability, desirability, and feasibility, which can give a broader picture of whether a change is worth making, or at least worth trialling. From our pilots, we’re finding that viability continues to be a high priority in businesses. Sustainability, desirability, and feasibility are often overlooked, and could be given greater significance, to help identify useful initiatives that can be implemented quickly.
One current pilot involves using slightly more cardboard in packaging, to offer greater protection for products. Although ostensibly a more expensive and carbon-intensive approach, the overall benefit is that fewer products are damaged in transit, which reduces wastage in both product and delivery aspects, to bring financial and environmental benefits.
Business models tend to focus on annual results, while sustainability often requires a more holistic and long-term perspective, toward goals for 2025 or 2030. The benefits of sustainability-centred innovation can’t always be assessed on the same timescale, or in the same terms, so a useful approach might be to disconnect the long-term benefits from the investment it requires in the near term. For instance, sustainability-centred innovation could be built into annual budgets as a general provision; this allows future benefits (by any measure) to be judged independently of present costs and makes it possible for implementation to prioritise longer-term sustainability.
Talking clearly in the customer’s language
Across many pilot projects, we found that a confusing variety of language is used by different businesses to describe their sustainability goals, such as ‘carbon positive’ or ‘climate neutral’. This creates difficulty for customers when comparing suppliers on sustainability, but is already a recognised issue in many industries, which are seeking to develop common sustainability standards.
E-commerce serves many types of customers, with a variety of subjective, and sometimes inaccurate, perceptions of sustainability. For example, there is a general belief that plastic is undesirable, whereas the reality might be more complex: paper packaging has a bigger environmental cost upfront, but plastic packaging creates greater negative effects after being used. It is therefore hard to determine which type of packaging is truly the most sustainable (National Geographic Society, 2022).
The question, then, becomes how to reconcile customer perceptions of sustainability with the reality. It may not be enough simply to publish headline numbers, but to offer a more open and transparent rationale, which allows customers to assess not only outcomes, but also the ethos behind them.
Collaborating across the whole value chain
Traditionally, the e-commerce value chain comprises commercial, transactional interfaces between each member, whether in materials, manufacture, packaging, or delivery. This sets each player’s priorities – and limits their responsibility – to providing a product or service and receiving payment for it. A more sustainable value chain requires each player to recognise broader, collective goals and move together to achieve them.
With webshops and logistics providers, we see that their strategic priorities can overlap. For example, air in parcels represents wastage in both packaging (for webshops) and transport. While a carrier might wish to minimise air, the product supplier has control over it, and working together can bring mutually beneficial results. Similarly, a webshop with clear sustainability goals could motivate other players in the value chain, such as outward logistics or returns handling, to pursue their own sustainability initiatives.
Piloting the move forward
With the large scale of businesses involved in e-commerce, major collaborations can be slow to get started. This is where the Econnections pilot project approach has great value, by creating a sandbox for trial and experimentation, without requiring expensive or irreversible business commitments. Such exploration could involve an innovative solution, or application in a new context, or collaborating with different partners.
From the programme to date, three key factors have been observed to impact progress positively. First, involvement of board-level members who demonstrate high-level commitment to the project. Second, a rigorous selection process for recruiting start-ups and scale-ups. Third, all participants seeing themselves as embarking on a journey together and treating the programme as a collective process from which to learn, alongside a goal to be achieved.
Find out more about the programme, our partners and scale-ups, and this year’s pilot projects, at the Econnections website.
The participating scale-ups of 2022 and their sustainable solutions are highlighted in the spotlight stories at the website