How Digital Technology Is Supporting a Circular Future for eCommerce

Growing emissions and decreasing resource capacity have sparked an increasing
interest in a circular economy model among ecommerce companies worldwide. In
contrast to the linear economy, where each new innovation (i.e., switching hub,
phone, appliance) renders existing offerings obsolete, a circular economy
considers sustainable design from the beginning — and in each stage — of product
development and use to give material goods a different life cycle. Many
ecommerce companies are considering how this approach, with the support of
digital technology, can reduce their footprint and help consumers do the same.

However, there are challenges associated with realizing circular models.
Rethinking and overhauling product development to be sustainable from the
beginning is a feat in itself. Changing overall business operations to lay the
groundwork for becoming a more environmentally friendly company is also a
notable task. But a circular economy also expects a lot from end users — who
must unlearn ingrained consumption and disposal habits to now use products in
new, more sustainable
ways.
It’s a lot to consider and problem-solve.

Capitalizing on ‘green’ tech

Fortunately, these are challenges that technology can help organizations
address. As we know, online purchasing/ecommerce inherently provides
environmental benefits such as paperless transactions, faster
purchase-to-delivery, fewer carbon emissions and more; but layering supplemental
technology on top of an already “green” purchasing cycle furthers these
benefits.

For example, data and analytics allow ecommerce companies to source valuable
information to help maximize their operational efficiency, better understand
consumer behaviors to design sustainable products that get used and reused,
rethink
packaging
and delivery
methods
to reduce waste and emissions, and more.

To get the most out of data and analytics, benefitting their company, customers
and the planet, organizations need to first identify effective data solutions —
then, actually use them. According to the World Economic
Forum,
only 9 percent of companies are actively using software that supports data
collection, analysis and reporting on Environmental, Social and Governance (ESG)
activities. Additionally, an SAP Insights research center
survey
found that only 21 percent of business executives were completely satisfied with
the quality and availability of data collected for sustainability.

Shifting consumer preferences

There is certainly some work to be done on the ecommerce side. But with that
effort comes great opportunity — there is strong consumer interest in
purchasing circular
products,
as well as some big expectations that must be addressed. A recent
study
by Footprint found that 63 percent of consumers
are willing to pay more for products and services if they help protect the
environment. 68 percent are more likely to choose a brand, store, or restaurant
that uses sustainable packaging; and 77 percent are more likely to buy products
if they can be sure they were packaged sustainably.

The same survey found that the onus is on companies to create this sustainable
change. 87 percent of surveyed consumers agreed that companies have a
responsibility to protect the planet and its people; 85 percent said brands
should play a major role in solving sustainability because they’re the ones
causing the problem; and 78 percent said that companies and brands are not
currently doing enough to protect the planet.

Turning plans to action

So, how can ecommerce companies make change a reality? As with most forms of
organizational transformation, the first step is to assess where the company is
in the transition to a circular model; then, develop a strategic plan based
specifically on where the company aspires to be. Technology and consultancy
resources, like SAP’s Sustainability Advisory
Service,
can help companies better understand where they are and what they need to do to
achieve their sustainability goals.

Once a plan is established, digital solutions exist that can help ecommerce
companies operate more sustainably throughout their transition to a circular
model. For example, the ecoinvent Association created
a
tool
to easily import simplified and vendor-agnostic carbon-emission factors — also
called life cycle impact assessment (LCIA) scores — into product footprint
management solutions. Queen of Raw offers
dashboards
to help track environmental benefits and monetize waste within a global
marketplace.

And on the consumer-facing side,
Identify
by Everledger uses cloud and blockchain technology to
help tackle greenwashing and share more accurate and transparent product origin
stories. In one example, Everledger powered a Web3 brand with MCQ — a new
line born from Alexander McQueen —
using blockchain technology to give items a longer life cycle, extending the
life of garments into their second and third use.

The future of ecommerce lies in a circular model, and more and more digital
tools are helping to make that future a reality.