Ecommerce: logistics should be smarter to be greener
People hear a lot about smart logistics, see those videos of autonomous robots in ecommerce warehouses or fully automated conveyors sorting thousands packages per hour. But all those dramatic improvements in logistics remain quite invisible to consumers. The buying process does not seem to have evolved at the same pace.
There are still some limits to online shopping that can prevent consumers from pushing the button, or to do it with the appropriate peace of mind. For example, when you order something, depending on the retailer, a few minutes or a few hours after, you cannot cancel your order. You are asked to refuse the package during the delivery, or to return it.
Another example is, in my opinion, more critical, because related to the sustainability of online purchases. I might be the only one to do so -though I hope not- but when I do online shopping I try to make it the most “sustainable” possible. Indeed, I attempt to gather all that I need in a one shot order addressed to a specific retailer. The goal? To minimize the numbers of cardboxes utilized but also the space occupied (as the boxes/packages used are rarely full) in aircrafts and trucks that I hope are totally filled, but also and more specifically to have the delivery made at once: one remittance, one box.
In the ecommerce sector (B2C) the last mile is the most impactful in terms of CO2 and air pollution but also in costs for the carriers and the retailers. As a consequence, we may think that such optimisation is encouraged by all stakeholders. But, in reality things are different. Indeed, when you buy from a marketplace or a large retailer (the major ones being in general both marketplaces and vendors), you can’t do such optimisation. You can buy various things on a specific day from the same retailer, but because goods are coming from different warehouses (/countries) vendors (on a marketplace), the goods will often come in different boxes and sometimes a different day or with a different carrier. I do not know about you, but personally I experience it often.
Another issue, when you place an order, if later you realize that you forgot to buy an item, most of the time (always?), you cannot simply add it to your last order (I mean in the same box/delivery). So you know that you will have to do the same day another order and as a consequence receive an additional package, potentially a different day. Or, you make the choice to wait for the next opportunity to place a grouped order to try to make a more optimized and sustainable purchase
I totally understand that the optimization I am looking for would be a challenge for all the actors of the ecommerce ecosystem and that it is not aligned with the current market dynamics and consumer expectations. One of the most critical barriers to such a change relates to speed. Retailers try to differentiate themselves by offering deliveries that are always faster. Creating a lot of constraints in the supply chain and preventing any flexibility in the process. Fast deliveries imply that each and every step of the process must be completed quickly. Especially the first ones related to the preparation of the order. The objective is to have the boxes filled out and ready to be shipped as quickly as possible. Once the package is on the gate and ready to be put in the truck, their job is done. And no more changes can be done in the order.
Other challenges related to operations, processes and IT also have to be considered. Indeed, it is not only about adding “intelligence” with software. Currently, carriers consolidate the packages transported and delivered according to the destination (/consignee address): Country-City-Zip Code-Round. We propose to consider adding a new layer of operations that would enable a pre-step of consolidation, based on the consignee. The goal would be to consolidate the purchases made by a consumer during a certain period of time on the same ecommerce website. As a result all the items that were purchased by a customer can be placed in a single package and delivered at once. Doing such work means dedicated operations, warehouses with the appropriate equipment and software to deal with an additional complexity. A place where all the purchased items are gathered to be consolidated by consignee.
How it could look. For example, an order placed by a consumer on a day 1 at 1.00 PM will remain open during the time needed to gather all the goods put in the card in this consolidation warehouse. It means that during this step, or a certain period of time, the consumer will be able to change its order (remove and add things). The retailer can also accept changes and inform the consumer that it means adding delays. To continue with this example, let’s imagine that the order is ready to be shipped on day 2 at 1pm. The package is then closed and sent to – as it is currently the case – the carrier. For smaller companies, it could be just about delaying operations (before closing the package) as all the goods are in the same warehouse, the goal being to give more time to consumers to change their mind. For bigger ones, as stressed above and shown in the graph below, it would be a little bit more complex. Dedicated operations would be necessary for storing and consolidating all the items purchased by a consumer, before actually making the orders non editable and shipping them.
The benefits for ecommerce and carriers could be significant: optimized last mile operations, less boxes used, vehicles loading optimized thanks to the additional delays to fill them (to fulfill the current promise of speed forces carriers/retailers to have some of their trucks half filled leaving warehouses). It is also important to stress that a consumer that has more time to modify its order, is less likely to do returns.
From a general perspective, everyone would benefit from these improvements: raw materials used as waste would decrease (with less cardboard used) and the GHG and pollutant emissions related to transports would be reduced.
See also:
Ecommerce: night deliveries are the disruption!
It’s About Connecting, Not Delivering