A Blog by Jonathan Low

 

Nov 19, 2012

Questions Raised About Relative Merits of Online vs Retail Shopping as Holidays Approach

Forget Thanksgiving. There are 72 hours until the Holiday Shopping Season starts.

At least that appears to be the message if one trolls the media looking for common interest stories.

And certainly the presumption is that this fight is all but over. Humans surveyed may continue to list shopping as one of their favorite social activities, but merchants are assuming that ecommerce is going to dominate this year. Preparations suggest that sales on Black Friday (so called because it is the day when most retailers' profit statements go from red to black)will see a greater increase in online sales than ever before.

The merchants are proceeding on this assumption, allocating resources - and promotions - to the net to an unprecedented degree.

A debate has arisen about some of the putative benefits of this change. The primary focus has been on the relative 'green-ness' of virtual vs physical shopping. The presumption has been that - of course! - online is more environmentally sound. the data, however, suggest a different and perhaps more surprising conclusion. That, as the following article explains, the cost-benefit is not nearly as clear as our not very well researched assumptions would have it. That all of the effort that goes into the fulfillment end of ecommerce may be as much or more environmentally demanding as all those cars heading to all those malls.

The partisans in this fight are by no means objective. Their economic interests are front and center. But the points they raise, either way, suggest both that the debate is far from over - and that our assumptions about the relative merits of our own behavior remain open to interpretation - and revision. JL

Barney Jopson reports in the Financial Times:
Shoppers who take to the internet should start considering the environmental impact of ecommerce, according to the head of Toys R Us, a largely bricks and mortar retailer battling online rivals.
“It’s very ungreen,” Jerry Storch, Toys R Us chief executive, told the Financial Times.

“[People are] just so enraptured with how cool it is that they can order anything and get it brought to their home that they aren’t thinking about the carbon footprint of that. But that will change.”

Mr Storch was speaking ahead of the holiday shopping season, whose high point in the US after Thanksgiving this week has already been pre-empted by a rush of online offers.

The convenience of ecommerce and its threat to bricks-and-mortar stores have been well documented since Jeff Bezos founded Amazon in 1994, but questions about its environmental impact have got less public attention.

On its website Amazon says: “The efficiencies of online shopping result in a greener shopping experience than traditional retailing.”

Academic studies have not reached such a definitive conclusion.

Jason Mathers, a senior manager at the Environmental Defense Fund, an advocacy group, said: “The details matter. There is not a simple answer. There are certain advantages that the ecommerce system could have, but doesn’t necessarily have.”

The energy use and carbon emissions of home delivery compared with store shopping depend on several factors: the vehicles used, distance travelled, number of products bought, failed deliveries, and returned goods.

Mr Storch said: “Driving a truck down a country lane in rural Connecticut to deliver a package is hardly the greenest way of product delivery to occur.”

“I don’t mean to slam anyone,” he added, noting that Toys R Us sold $1bn of goods over the internet last year – 7 per cent of total sales – and that many were delivered to people’s homes.

“That’s what customers want.” But he said: “People are going to start realising, wait, I’m already … taking my children to school. The store is right there. I can just pick it up.”

A 2009 study from Heriot Watt university in Edinburgh said: “While neither home delivery nor conventional shopping has an absolute CO2 advantage, on average, the home delivery operation is likely to generate less CO2 than the typical shopping trip.”

In the same year a study at Carnegie Mellon university found that buying a flash drive from Buy.com cut energy use and CO2 emissions by 35 per cent compared with traditional shopping.

Timothy Kenyon, director of GfK’s Green Gauge survey, said a small segment of consumers – often affluent, educated women – were willing to alter their behaviour based on environmental concerns.

Another small segment would never do so, while a large group in the middle could be persuaded by practical arguments.

“If you can link green messages to something pragmatic like ‘It’s going to save you money’, then on a mass scale you might see more pick-up,” he said.

With advances in smartphones, store IT systems and logistics, Mr Storch said customers had many more ways of getting a product than simply buying it at their local store or getting an online order sent to home from a warehouse.

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