Sustainability has been the talk of the town recently, with brands launching several sustainability initiatives to do their part in protecting Mother Earth. These include Carlsberg Singapore’s latest sustainable packaging; Zara pledging to use 100% sustainable fabric by 2025; and Burger King and KFC halting the distribution of straws and plastic lids for dine-in customers in Singapore.
Meanwhile, the Tokyo 2020 Olympic Games will also feature podiums made from recycled plastics, and medals manufactured from precious metals. During the recent National Day Rally 2019 speech, Singapore’s Prime Minister Lee Hsien Loong said everyone could do their bit to promote sustainability and mitigate climate change.
“In Singapore, we generate a huge amount of waste – whether from excessive packaging, food waste or electronic waste,” he said. To combat this, he suggested small steps such as switching off lights, reducing waste, reusing and recycling more. While much coverage has been given to offline sustainability efforts, companies should also turn their attention to the eCommerce space, especially since its popularity has exploded over the years.
According to a 2018 study by Google and Temasek Holdings, the gross merchandise value (GMV) of eCommerce in Southeast Asia is expected to exceed US$100 billion by 2025, an exponential increase from the predicted US$23 billion in 2018. By 2025, the GMV for Singapore’s eCommerce market is predicted to hit US$5 billion, while Malaysia’s and Indonesia’s will hit US$7 billion and US$53 billion respectively, the study said.
There is no end in sight to the growth of eCommerce, and as such, companies need to start thinking about sustainable eCommerce and the types of initiatives they can implement. Currently, it is common for brands to post small objects in an oversized box or include several air pillows in the box to prevent the items from being damaged. Nonetheless, brands are gradually implementing sustainable eCommerce initiatives such as having recyclable packaging or reducing the use of plastics in their shipments. But is this enough?
Scratching only the surface?
Chinese eCommerce giant JD.com is no stranger to sustainable eCommerce. Since 2017, it has eliminated the need for about 27,000 tons of disposable packaging, equivalent to 20 laps around the equator. It has also introduced about 100 million biodegradable packaging bags into its supply chain and is deploying reusable green boxes in 30 cities across China. It is now in the process of converting vehicles in its fleet to new energy vehicles, saving an estimated 230 tons of carbon emissions so far.
Additionally, by switching to paperless operations and using electronic invoices, as well as optimising the size and material used for paper boxes, JD.com has saved 91 tons of paper, equivalent to more than six million trees. The company’s affiliate, JD Foundation, was also launched in September 2014 with the commitment of integrating social resources for social good, with a focus on environmental protection and social innovation.
In a statement to Marketing, Feng Gao, head of the green stream initiative at JD.com’s logistics unit, JD Logistics, said sustainable eCommerce cannot be achieved by the company’s efforts alone. He believes this can only be done through the cooperation with partners, and as a result, it launched the “Green Stream Initiative” in 2017, together with major players such as LEGO, Nestlé, Unilever, P&G and Wyeth to promote the use of sustainable, greener packaging materials throughout the supply chain.
In its collaboration with P&G, for example, both companies designed packaging which simplified information such as brand logos. The type of neutral packaging can also be reused multiple times, he said, thereby reducing waste significantly. It also offers packaging directly to P&G warehouses to be used for deliveries to JD customers, avoiding the need for multiple packages.
“Chinese consumers today are far more aware and care much more about sustainability than at any time before,” he said. He explained that in recent years, JD has leveraged its in-house logistics fleet to collect used clothes from households throughout China to raise awareness of sustainable development in the retail industry.
“Our customers have embraced this effort with passion and commitment. So far, we have collected 1.6 million items of clothing, 500,000 toys and 200,000 books. In addition, our logistics fleet has collected more than 5.4 million paper boxes in the last two years,” he said.
He said that JD consumers had responded well to its sustainable eCommerce initiatives, and while it currently does not quantify the cost savings, Gao said JD believes these efforts are “the correct things to do”. He also said that JD plans to continue leading the industry and promote positive societal change. Meanwhile, sustainability has become a “larger priority” for popular local fashion eCommerce brand Love, Bonito, according to its co-founder Rachel Lim. The company’s actionable steps are two-fold, she said, beginning with waste prevention and waste conversion.
Following Love, Bonito’s rebranding this year, she said it had overhauled its packaging, replacing all poly mailer bags with biodegradable ones and making the swap for 100% recyclable paper bags. She added that reducing its carbon footprint, without sacrificing the quality of the customer’s experience, were steps in the right direction for Love, Bonito. “Waste prevention must also begin internally. As a company, we’re developing an internal checklist of sustainability down to how we use our office supplies, implementing responsible printing practices, and more,” she said.
Simultaneously, the company is taking a longer term strategy for waste conversion. Instead of sourcing from bigger export factories as Love, Bonito continues to expand, Lim explained it had chosen to work with smaller-scale local factories with a shared mission to build a sustainable business, and consistently improve working standards and technical capabilities. “Right now, we are exploring a partnership with a fabric mill which aims to redirect textile production waste, regenerating it to power the whole factory,” she said.
Getting consumers into the picture
As important as it is for brands to kick-start the sustainability journey, it is also crucial for consumers to buy into the idea of sustainable eCommerce. JD Logistics’ Gao said that to increase awareness and participation among consumers, it launched a service that allows them to easily choose to use reusable packaging on the billing page. Those opting to do so will return the packaging – a “green box” that can be used about 10 times – to delivery personnel after receiving their order. Customers who choose the packaging are rewarded with JD’s Jingdou loyalty points, which can be exchanged for products on JD.com.
According to Gao, JD predicts the service can save about US$4.6 million per year if 10% of orders use the new packaging. Meanwhile, this year, the Chinese government rolled out a slew of new recycling requirements to enable consumers and businesses to more accurately sort their trash and recycle properly. The new regulations require the sorting of trash into four categories – dry waste, wet waste (kitchen waste), recyclables and hazardous waste.
Hinging on this latest initiative, JD AI Research, a unit under the company that focuses on cutting-edge innovation in AI, developed simple solutions to make recycling easier for consumers, and an open API to help partners develop trash-sorting solutions outside of the JD retail ecosystem.
For example, consumers can simply speak to their JD smart speaker to activate a function in which they describe the waste they wish to discard, and the speaker analyses the request and provides the appropriate recommendation. Across continents, Zara launched the home collection programme for consumers in Spain, Beijing and Shanghai, taking advantage of online orders. If they prefer to recycle from the comfort of their home, rather than visiting the stores, consumers can request a free collection of their clothing each time they place an online order. The courier will see that the package reaches the NGOs Zara works with, along with other clothing items collected in stores.
Read the rest of the article in Marketing magazine's September print edition.