The True Cost of Damage: Understanding the Sustainability Impact of E-Commerce Packaging
E-commerce is getting to be quite a crowded space across Asia. It’s identified in a UN ESCAP report as the fastest growing region in the global e-commerce marketplace, contributing 4.5 percent of the overall GDP. This rapid growth can be largely attributed to a number of factors: The region is home to more than 50 percent of the world’s online retail sales, it has an increasingly high internet penetration, it has a fast-growing class of young and affluent shoppers, and there’s a lack of available organized retail.
This growth leads to an exponential increase in shipping and deliveries across Asia. Consider the new record-setting US$30 billion in sales Alibaba made on Singles’ Day 2018, for example. Touted as the world’s biggest online shopping event, more than one billion separate orders were processed, with nearly half of consumers buying an international brand such as Apple or Nike.
However, in that same vein, it’s worth considering a corresponding rise of damaged products during the delivery process that is adding to the fulfillment challenges faced by e-commerce companies.
For a long time now, these companies have settled upon an acceptable amount of loss to damaged goods during the shipment cycle. Ranging anywhere from one to eight percent, there are a variety of tools and processes to keep damage rates within this threshold such as quality control checks and returns tracking reports. Companies keep an eye out for spikes that indicate a problem, and the rest of the damage is just written off as a loss. It’s the “cost of doing business,” many would say.
But putting a stop to damage during shipments isn’t just a better business decision. It’s also a sustainability imperative.
The Damage Drain: Permissible or Preventable?
At Sealed Air, we’re in the business of protective packaging. Since our invention of Bubble Wrap® more than 60 years ago, we have been preventing damage in small parcel shipments ever since. We believe there are significant benefits when companies lower “allowable” damaged rates. Some of these benefits could be retaining customers, minimizing costly returns, and most importantly, reducing the company’s overall impact on the environment.
Very often, when a retailer looks for sustainability gains inside the shipping cycle, it looks to the recyclability of the packaging – measures such as swapping plastic air pillows for materials that can be tossed directly into recycling bins.
But here’s the thing: For retailers looking to reduce overall environmental impact, it’s important to note that manufacturing and disposing of packaging materials accounts for just five percent of the environmental impact of shipping. So, if a retailer used a packaging material that was “carbon neutral” and was recycled 100 percent of the time – just because a material is recyclable doesn’t mean it’s recycled – at best, the company would only be improving its environmental footprint by five percent.
Assuming a damage rate of just one percent, almost half (48 percent) of the total environmental cost of shipping comes from damage. So where should you start? Striving to reduce the five percent impact of interior packaging materials, or getting damage rates below one percent?
There’s no denying that materials that are easily disposable are part of the equation in enhancing the environmental footprint. And the sustainability values of a company are clearly conveyed by the materials used to deliver goods. These are conversations we must continue to have and solutions we must continue to innovate.
Beyond the Recycle Bin: Getting Consumers to See the Bigger Picture
Those of us who have expertise in the challenges of the fulfillment journey have a duty to educate consumers on why certain packaging materials are chosen over others. The true sustainability impact comes less from whether or not it’s made of recycled material or if it can be recycled curbside. The impact lies in the ability to eliminate the risk of damage and of that item doubling, or even tripling its environmental footprint.
Being “recyclable” isn’t a silver bullet for Asia. The region isn’t going to be able to recycle its way out of the environmental problems that e-commerce creates. Making more products recyclable is a big step, but those solutions should also require less energy to produce, fewer trucks for transport, less fuel for the trucks and more recyclability at end of life.
This is a complex issue, and at a time where there is enormous – and justified – consumer pressure on plastics, this is a nuanced conversation to have with businesses and consumers alike.
Brands, retailers and consumers will need to learn that ensuring an item is delivered undamaged, using materials that were sourced, created and applied using the least amount of waste and energy is what will lead to truly sustainable outcomes.
Sealed Air’s goal is to continue leading the development of solutions that eliminate waste with the optimal amount of material. To accomplish this goal, we are committed to using more materials that enable a circular economy.