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Sustainable E-commerce Business Model

How can you make a Sustainable E-commerce Brand

There is no doubt that e-commerce has made shopping easier with the convenience of shopping from the comforts of home. But, with time it has also created a customer who is demanding and discreet about the shopping choices they make. This means the customer of today is much more conscious not only about his immediate surroundings but also about global issues that are shaping the world. Sustainability is one such topic that remains quite on top of the priority list of a socially and globally conscious customer.

It has been seen that if given a choice most customers are willing to opt for a brand that is environmentally conscious and incorporates practices that are sustainable in the long-term with minimal impact on the environment. Although some may call it a tall order, they are brands who are actively making the choice of switching over from environmentally degrading practices to more viable options. It not only improves efficiencies but also makes business sense. And can even be propagated as a feature to improve or resurrect a brand image.

This write-up seeks to enumerate the sustainable model for e-commerce companies and how businesses are preparing to change towards a nuanced approach that is more aligned with environmental stewardship. And it is beginning to be called sustainable eCommerce.

What does Sustainability mean?

If one needs to address the man on the street, then sustainability is about running a business or any economic activity, by being sensitive to the notion of there being finite resources on earth for our use. This, in turn, should compel us to make wise choices in fulfilling our present needs without compromising on the needs of the future generation.

It stipulates moderation in our consumption patterns while minimizing wastage and doing away with the ‘disposable’ culture. On the whole, the purpose is to bring in the much-needed balance between economics, environment and society.

Why is there a Focus on Ecommerce Companies?

We all would agree that eCommerce is growing at an unprecedented rate in many countries like the U.S, China and India. This growing pattern brings into sharp focus the impact eCommerce is having on the environment.

  • Packaging Waste: If you look at the business model of an eCommerce company, you would be intrigued by the amount of waste that gets generated from eCommerce alone. All those cardboard boxes, plastic and Styrofoam packaging, it is all adding to the flow of waste, already accumulating in the landfills and oceans.

On the last count, there were more than 2 billion tons of waste getting dumped into landfills on a yearly basis. Considering the impact, it becomes essential that eCommerce companies embrace sustainability as a business practice and adopt packaging practices that are eco-friendly.

  • Vehicular Emissions: Every product that gets delivered at the doorstep is transported by a vehicle running on non-renewable fuels. This adds to the already existing pollution in the atmosphere and to the traffic congestion in large cities.

Ecommerce companies are not restricted to ground traffic alone but also utilize aircraft for transporting goods. This also contributes to the existing atmospheric pollution by other sources of air transportation.

Sustainable Solutions for Ecommerce Companies

Packaging Alternatives: Many of us have grown hearing the term ‘reduce, reuse and recycle’ and these are applicable to eCommerce companies. One of the focus areas of eCommerce companies should be on reducing the amount of packaging.

  • Size of Packaging: Even for packaging small electronic items like a mobile phone, eCommerce companies are using large boxes with excess material (bubble wrap) for protecting shipped items. Revisiting packaging practices & logistics can be the simplest solutions to solving such excess waste generation.
  • Eco-friendly Packaging: Companies could switch over from traditional packaging to more environmental-sustainable packaging such as materials with 80% or more recyclable materials. Eco-friendly packaging along with right-sized packaging will prevent generated waste from straightaway going into landfills.

Transportation Alternatives: If we talk about eCommerce there will be a transportation component and it cannot be done away with, by any means. This calls for minimizing the environmental impact through these steps:

  • Delayed Gratification: Every online shopper expects deliveries to be made as fast as possible. But there are environmental costs associated with features like same-day delivery, coming in the form of an increased presence of delivery vehicles adding to the congestion and pollution.

Alternatively, if we can hold back and make the conscious choice of delaying our delivery to a normal pace, we will be doing our bit to reduce pollution and congestion on the roads. Interestingly, Amazon has started a program wherein they credit $1 into your account if you choose slow shipping.

  • Usage of Electric:  Developed & developing countries are slowly making the transition to pollution-free vehicles. Ecommerce companies can follow suit and replace their vehicle fleet with electric vehicles with zero emissions. Already we are witnessing the visible change in attitude starting with Amazon which has pledged to become carbon neutral by 2040.
  • Sustainable Shipping: Another trend that is catching up as an environmentally conscious practice is sustainable shipping. The only downside to this is that customers should be willing to pay more for choosing this shipping option. Already there is a small segment of customers especially in Europe who are willing to pay more for doing their bit to safeguard their environment. Some large logistics companies like DHL are offering climate-neutral shipping options to online customers.

Reasons for Companies to Become Environmentally Sustainable

Becoming environmentally conscious is not a branding exercise rather it is about honestly examining your current business operations and substituting some of them to align with the goal of environmental sustainability. It has more do with changing your business ethos and philosophy to affect an entire organization. Let’s look at more advantages for being sustainable:

  • Improved Brand Image: Ecommerce Companies known to practice sustainability are considered to be positive organizations that are seeking to create a better world. Such organizations are known to leverage this goodwill in their advertising campaigns to showcase themselves as business outfits which are ‘different’ from the rest, giving a boost to their brand image.
  • Increase in Productivity: Critics of sustainability cite that such practices heavily impact the profitability of the business. On the contrary, it improves efficiency (minimal waste generation), streamlines effort and conserves resources (reduced packaging). This, in turn, improves employee productivity and reduces cost.  There may be instances when the one-time capital investments would be on the higher side, but these can be recouped in the long-term by the benefits that follow.
  • Business Compliance: Going into the future, governments across the world are going to get stricter with issues related to the environment. Already climate change has become a burning issue world over, and every country is obligated in doing their bit. Such an emerging situation will make governments to roll-out more enforcement to safeguard the environment. Ecommerce companies aligned with sustainability will see themselves in an advantageous situation for their proactive approach.
  • Attract Investors: Investors tend to shy away from companies which have a dubious track record when it comes to social and environmental issues. Alternatively, companies that are proactive in sustainable initiatives are mostly well known in the industry and easily attract funds from investors. Even though getting initiated into sustainability is daunting but it should be done for the benefits that follow.
  • Interest the Millenials: The millennials as a consumer group are known for their purchasing power and it continues to rise to cross the $1.4 trillion by the end of 2020. This group happens to be particularly vocal about environmental issues and is known to go with brands with a proven track record for being eco-friendly. A brand that is environmentally conscious and has a solid social media presence should be able to easily connect with this young demographic to nurture a loyal following.

Steps toward Becoming an Environmentally Sustainable Brand

As a company, it is totally up to you whether you want to start small or take the plunge completely into evolving as an eco-friendly brand. Here is a look at, how to go about:

  • Update your Brand Philosophy: Your brand philosophy helps in telling the audience, who you are and what you value. This is important with the view of carving a brand story and how customers perceive the brand. The brand philosophy needs to be disseminated on the website and other online channels. Especially on the website, you can showcase your stand on environmentally conscious business practices. That said, you would have ‘walk the talk’ by backing up your statements with actual actions on the ground.
  • Standardize Recycling Policies: There are numerous advantages that can be cited for just recycling cardboard. For instance, cardboard recycling is known to save energy and prevents it from getting dumped in landfills. A sustainable e-commerce company will have policies in place for the use of recycled materials in their office space and utilization of only recycled materials for packaging.

This must be formalized as a policy initiative across the company with special emphasis in the packaging section. Once the company leadership takes a clear stand in formalizing a policy, others are likely to fall in line without counter questions and arguments.

  • Saving on Energy Costs:  A sustainable eCommerce brand has to take a holistic view of its business practices. Increased energy usage in the office environment, warehouses and other locations can also be detrimental to the environment. A sustainable eCommerce company can begin with an energy audit of all locations and implement measures (low energy lighting) that will significantly help in saving energy. These initiatives must find a space in the annual reports and other literature which the company produces both offline and online to reinforce its sustainability credentials.
  • Include Sustainable Products: One of the easiest ways, an eCommerce brand can project a sustainable brand image is by including eCommerce sustainable products into its product catalogue. If the company believes in a philosophy, it must make a concerted effort at encouraging and making it easy for its customers to adopt an environmentally conscious lifestyle. Surprisingly, there is a growing market segment that is eager for such products and the company must make it a priority to fulfil the existing demand.
  • Carbon Offset Charge: An eCommerce company that is earnest about sustainability can offset environmental downsides associated with its products and service by contributing to projects that curb greenhouse emissions. This can be a contributory effort from the company with voluntary participation from the customers. The eCommerce company can inform and request customers to pay an additional surcharge on their regular purchases as a carbon offset charge during the check-out.
  • Incorporating a Circular Approach: In the normal scenario, a product is bought, used and disposed of in a linear fashion. Instead, an eCommerce company can encourage customers to give a second life to their used products, by-passing it on to second and even a third owner. This process is termed as a circular economy and is giving rise to resale & refurbished goods market, and even eCommerce sustainable fashion. These are growing in popularity especially among the young generation given the inexpensive pricing it offers. The idea here is to encourage customers to resell products or purchase recycled products. For instance, American brand Patagonia offers a space on their website, where users can buy clothes made from recycled clothes.

Conclusion

Every eCommerce company can aspire to become an environmentally conscious company offering sustainability online shopping. But many of the aforementioned steps might really not make business sense. It is totally up to the business to embark on sustainability initiatives at their own pace because you understand the business and the consumers. The over-riding message in the write-up is that the future of the planet is an issue that impacts everyone and we have to make enough effort to safeguard ourselves and the next generation. Besides this, evolving sustainable practices in the supply chain, product and in shipping are not only about the future of the planet it is also about an eCommerce brand carving a distinct brand identity from the rest.

At Your Retail Coach(YRC), we come with the necessary expertise in helping brands to make that change into a sustainable eCommerce marketplace. We have in-house experts who can guide a company from ideation to implementation on incorporating sustainability initiatives into their core framework. We have closely seen the evolution of eCommerce in India and around the world and our observations give us the confidence that brands can remain profitable by becoming environmentally sustainable with the right strategies and tactics.

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We work only for Visionaries.

PROCESS AUTOMATION

The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.

VIDEOGRAPHY & PHOTOGRAPHY

No matter how good your product is, the customer would know only if it looks good.

Photography includes the following steps:

  • Cataloguing your products
  • Cataloguing your images
  • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
  • Choose the right camera & lens (You may also outsource the photography to a third party agency)

DIGITAL MARKETING

Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.

IT INTEGRATION

Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.

WAREHOUSE & LOGISTICS PLANNING

  • How many cities or countries you wish to sell in?
  • Where should your Warehouse be located?
  • Should you have one warehouse in each country or city?
  • Should you be having your own delivery team in your base city?
  • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
  • How should I manage the logistics if my goods are coming from different countries?
  • How should the goods be stored and barcoded?
  • How much space do I require for warehouse?
  • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.

 

At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.

UI & UX DESIGNING

This Step involves 03 distinct parts:

Part 1: Choosing the right Platform:

From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

Part 2: UX Designing:

“UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

“As per statistics, 68% of the customers abandon the carts before payment”

An interesting UX ensures the customer sticks on to the website for a longer time.

Part 3: UI Designing:

UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

If User experience is the bare bone, user interface wraps it up with an attractive cape.

At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!

SAMPLING & PRODUCTION

This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

Production Sample is made before the production which is the replica of what is going to be finally produced.

Once you are through with all this, you are good to go ahead & get your goods manufactured.

PRODUCT DESIGNING / SOURCING

Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

Product Designing / Sourcing can be done in several ways, as follows:

  • In-house Design Team
  • Freelance Designers
  • Outsourced Design Team
  • Ready Product Sourcing (From Manufacturer or Wholesaler)

At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

Sourcing includes fabric, trims, lining & all the raw material required to build the garment.

BRANDING

Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

It is an integral part to attract the target audience.

ORGANOGRAMS & SOP’s

Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.

CRITICAL PATHWAY

Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.

BUSINESS STRATEGY & BUSINESS PLAN

Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.

MARKET RESEARCH

Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.