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Thursday, 16 July 2009

Is Selling Online Green?

More small to medium sized business people and entrepreneurs are thinking GREEN. What does that mean?

Simply put, it means they are thinking about how they can contribute to help make us all environmentally sustainable.

We have all heard about the Global Warming crisis and the effects of more carbon dioxide in the atmosphere. Every day each of us contributes to the problem – and some of us are contributing to the solution.

There is an enormous body of knowledge that has been written about Global Warming so I am not intending to start this from basics. If you are looking for more information about Global Warming or the Carbon Problem then you might start at these website links:

http://www.wwf.org.au/ourwork/climatechange/whatisglobalwarming/
http://www.environment.gov.au/settlements/gwci/index.html
http://www.science.org.au/nova/091/091key.htm
http://www.1degree.com.au/carbon_calculator

So how does Information Technology fit with the general perception of GREEN?


Currently there is great pressure on service providers to ensure that infrastructure and processes have minimal carbon footprints. Underpinning the service providers’ systems there is a significant amount of infrastructure that uses large amounts of power and generates lots of heat, which means it needs lots of cooling, which means even more power consumption.
 
Service providers such as eCorner keep the infrastructure that runs your online stores in data centres, apart from your own infrastructure.

eCorner uses Macquarie Telecom as its service provider, an organisation which is part of The Green Grid - http://www.thegreengrid.org/, and which has a stated process to lower its carbon footprint by using energy efficient equipment and processes. Similarly, eCorner has invested in new and more efficient hardware using suppliers who offer a recycling capability.

The Information and Communications Technology (ICT) industry is responsible for less than 2% of the worlds CO2 emissions. To put that in perspective, transport creates more than 12% and industrial processes nearly 10%. But ICT is still responsible for more than aviation or cement, two very dirty industries. 



More importantly, it has been conclusively shown that organisations can reduce their overall carbon footprint by over 80% by adopting better use of ICT – see http://www.smart2020.org.

 
Is eCommerce a GREEN enabler?

Can eCommerce (selling online) Business to Business (B2B) or Business to Consumer (B2C) reduce carbon footprint by reducing CO2 emissions?

A 2009 Carnegie Mellon Study finds shopping online results in less environmental Impact.  

“Buy.com's eCommerce model demonstrates reduced Carbon Dioxide Emissions and Energy Consumption compared to traditional retailing.”

You can read the full story at http://www.cmu.edu/news/archive/2009/March/march3_onlineshopping.shtml.
 
Selling online minimises many activities that contribute to the carbon footprint problem.

Jump in Your Car

In the normal course of going shopping many of us will jump in the car and travel to the mall or local shopping centre. Over Christmas 2008 traffic jams and car park congestion at many malls around Australia was staggering. At Macquarie Centre near Sydney there was over a one hour wait to access the car park. Although this is a peak retail season it is a vivid example of retail driving CO2 emissions (no pun intended).

According to a European study by Beauvais Consultants, transport contributed 1.1 kg – 4.7 kg of CO2 for every 100€ worth of purchases – “Setting Up Superstores and Climate Change” source  Beauvais Consultants 2008 - www.vtpi.org/superstores.pdf. These are European derived results however given Australia lower quality car and truck emission standards and longer travel distances we can summise that these results would not be lower in Australia.

So by simply searching and buying online we can reduce CO2 emissions as well as our stress levels. And many small to medium sized eCommerce businesses operate without an office. So the operators also benefit from not having to jump in the car to go to work.

Empty the Warehouse and Inventory

Traditional retailers will often handle goods many times before they are delivered to the consumer. Goods may be sent from the manufacturer to the wholesaler; from the wholesaler to the distribution centre; from the distribution centre to the warehouse; from warehouse to store; back to distribution and finally to the consumer ... maybe.

But not only do goods get moved around, they also get stored in very large purpose-built warehouses that consume space and energy and all contribute to CO2 emissions.

There are many different online retailing models, but if we look at some of the consumer electronics products providers you will find that the product bought online generally is shipped directly from the manufacturing facility to the consumer. A good example is Dell. So handling, packaging and shipping are greatly reduced, as is the carbon footprint.

But even small online businesses fare well in this area. Most will ship as directly as possible, utilising mass shipping services like Australia Post.
 
More and more we are seeing some products like music, video, books and games being delivered electronically without packaging, shipping or media. Not only does this reduce CO2 emissions but it also reduces cost to the online retailer. This is due to the need for no inventory, no physical shipping and no media to buy or leave on the shelf.

Increasing numbers of consumers and businesses are buying Green. In a recent survey by Online Marketing World, “How Green is eCommerce”, www.onlinemarketworld.com. Two thirds (64%) of respondents said that their company was buying Green products.  

Other Issues

Retail activity causes many other contributors to the carbon footprint. These include packaging and printing, waste from retailers, retail store power consumption and transport for retail store staff.
 
Online retail still needs to manufacture and ship products, but this can be done much more efficiently than by traditional methods. There is still consumption and emissions of CO2 by the equipment used by the many millions of online merchants and their service providers. But the pendulum swings to the positive side for eCommerce compared to traditional retailing. 

We should all be constantly looking at better and greener ways to do business, and we should promote those as part of our unique sales proposition.
 
Following is a link to a couple of quick carbon footprint calculator - http://www.1degree.com.au/carbon_calculator or http://www.abc.net.au/tv/carboncops/calculator.htm.

I would like to acknowledge the valuable contribution to this article by Graeme Philipson of Connection Research - http://www.connectionresearch.com.au/, thank you Graeme.
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