The Green Gap: Synchronizing Customer and Retailer Sentiment on a Sustainable Final Mile

It's impossible to ignore the prominence of sustainability discourse in today's society — it's ubiquitous and omnipresent. The marked shift in the perception of consumers and businesses towards this issue is not only noticeable, but also intensifying.

Ambitious objectives in the coming decades and beyond are concentrated on making considerable leaps in our thought processes, operations, consumption patterns, and how we invest in the sustainability solutions of tomorrow, today. Attaining these lofty goals will necessitate regulatory guidance, ingenuity, and deeper collaboration between consumers and enterprises.

This is particularly pertinent in the retail sector, as companies explore methods to design and produce their offerings in progressively environmentally friendly ways. When executed properly, it transcends mere "greenwashing" and becomes a strategy to boost a company's brand image and foster customer loyalty. Everyone feels good about the decisions they're making — from sourcing and manufacturing to the ultimate utilization of products.

One aspect that has remained relatively untouched is directly tied to the continual rise of e-commerce and the acceleration effect of the COVID-induced lockdowns of 2020. Before 2020, home deliveries of purchases were a comfortable norm. During 2020, home deliveries became an absolute necessity. Post 2020, this rapid adoption trend endures. Our preference for "home-delivered goods" remains at all-time highs.

Reflecting the 33 percent spike in e-commerce in 2020, U.S. package volume — the actual parcels arriving at your doorsteps — soared by an equal measure in 2020 and has kept on expanding (accounting for a period of normalization) thereafter. As of 2022, U.S. package volumes demonstrated the following traits:

• 21.2 billion total packages shipped by USPS, UPS, FedEx, and Amazon Logistics
• 64 packages per U.S. resident
• 162 packages per U.S. household
• $198 billion in package carriers' revenue in the U.S.

How the retail sector, along with their alliance with the parcel carrier industry, caters to and delivers the ever-swelling volume of e-commerce purchases presents both a challenge and an opportunity. Think about your own consumption: How frequently do delivery trucks pull up at your address? Every day? Multiple times a day? The statistics imply it's happening with increasing regularity, and we've essentially become desensitized to it.

Additionally, several recent studies indicate a mounting demand from consumers for more sustainable practices and that they're hinting at potential solutions. No one wants to lose the convenience of e-commerce, but could it be made more sustainable and eco-friendly? Consider the following data:

• 67 percent incorporate eco-friendly practices into their buying decisions;
• 72 percent of those receiving five or more packages/month regard eco-friendly practices as important or very important; and
• 82 percent are prepared to wait longer for eco-friendly shipping.

Just like retailers have acted on product manufacturing by ensuring eco-friendly processes and materials are employed, their customers are asking them to do the same for shipping and delivering these products. Here are the options that retailers can consider today:

1. Carbon offsets: Retailers can buy these (and occasionally pass the cost on to the consumer) to "balance" the carbon produced from consumer purchase and delivery. The best-case scenario for sustainability here is carbon neutrality.
2. Alternative fuel/vehicle usage for delivery: Utilizing bio-diesel or electric vehicles is an evident improvement over fossil fuels, but it calls for substantial capital investment by the parcel carrier and is challenging to scale rapidly given the pace of innovation. Also, the use of these alternative vehicles comes with its own carbon footprint, both in production and operation. The best-case scenario for sustainability here is carbon reduction.
3. Improved information coordination leading to synchronized delivery: Amazon.com has accustomed everyone in the retail industry to the notion that "fast delivery" triumphs, although it's hard to achieve and costly to offer in today's "free-for-the-customer" model. Amazon is currently encouraging its customers to opt for "eco-friendly deliveries" by offering “grouped delivery” options. This approach enables better management of its network and delivery fleet. When implemented at scale, it can lead to more efficient asset utilization, enabling eco-friendly measures such as reducing the number of trucks on the road. The best-case scenario for sustainability here is carbon avoidance.

Most retailers are either concentrating on carbon offsets independently or collaborating with their parcel carriers to shift their fleets to alternative fuels. Where they're yet to focus is the third option and where the Eighth Notch comes in, which involves slight behavioral changes to revamp their existing practices. Their main competitor, Amazon, is already doing this by leveraging its integrated retail and logistics operations to persuade customers to make "greener" delivery choices. The rest of the industry needs to follow suit or continue to be left behind.

Mike Robinson, founding team member, The Eighth Notch, a first-of-its-kind technology platform enabling shippers and carriers to eliminate unnecessary delivery truck stops by sharing data further upstream, better coordinating and ultimately synchronizing deliveries.