Green shipping.docx

Strategy for Business Responsibility and

SustainabilityIn E-commerce Industry

Abstract: As online purchases increase, packaging grows. The E-commerce industry is very competitive but brand owners who meet the consumer

demands for sustainable packaging will benefit in the long term.

Strategy for Business Responsibility and Sustainability

Submitted byGroup 5

Aanchal Shukla (15020841061)Abhishek Verma (15020841062)

Karan Bakshi (15020841083)Varun Shivani (15020841118)

Varsha S (15020841119)

1 | P a g e


The Great Indian E-Commerce Industry

Recent years have seen a significant change in the mode by which India shops and trades. The size and the pace of e-commerce or online sales growth in India are staggering. PwC reports say that the industry has achieved an astounding 35% compounded growth in the sector. The two big players, Flipkart and Snapdeal alone sell Rs 600 Crore worth of products each, every day.

The essence of e-retailing is in its power to surpass physical boundaries and reach customers in a manner different from the traditional brick-and- mortar stores, to their very doorstep. E-commerce has many positive impacts on the environment by its very nature and theoretically should reduce the amount of resources consumed and the waste generated.

E-commerce has also been declared to prevent waste by immensely increasing the efficiency of the market for secondary materials through online auctioning on a global scale. Imagining that the industry can have any “negative environmental impacts” is very difficult. It does not release any pollutants and also not uses much energy or natural resources. However, the negative environmental impacts of E-commerce are not only present but also these impacts are significant. The nature and magnitude of these negative impacts are such that the ways to resolve them are by no means evident to us.

The environmental effects of e-commerce are dependent mostly on three aspects: Packaging, Logistics and Energy Efficiency. This report focuses mainly on the first aspect- Packaging. E-commerce often involves a direct delivery to customer and the packaging needs to be designed in such a way as to minimize the damage to the product as well as reinforce the company brand. And hence, we find the e-commerce companies going overboard with multiple layer packaging, plastic inks and unwanted filling material. With the huge number of products delivered every day the waste generated through packaging materials is increasing in an uncontrollable fashion. Most of the times, the “protective packaging” is made from materials that are extremely harmful to the environment. Ecommerce players invest an inordinate amount of time and money into the physical packaging of their products.

2 | P a g e

Key Statistics

E-commerce to

be worth $16 billion by the end of 2015- Deloitte

E-commerce market grown steadily from $4.4 billion in 2010 to $13.6 billion in 2014.

E-tailing contributes to about 29% of the business

Flipkart and Snapdeal sell Rs 600 Crore worth of products, each every day.


Exhibit 1: Industry analysis- Source: Academia

3 | P a g e


Snapdeal and its Eminence in the Industry

In February 2010, Kunal Bahl along with Rohit Bansal, launched Snapdeal.com – one of India's largest online marketplaces, with the widest assortment of 12 million+ products across 500+ diverse categories from thousands of regional, national, and international brands and retailers. With millions of users and 150,000 sellers, Snapdeal is the shopping destination for internet users across the country, delivering to 5000+ cities and towns in India.

Snapdeal’s mission is

“To create India's most impactful digital commerce ecosystem that creates life-changing experiences for buyers and sellers”

SWOT Analysis – From the perspective of Responsibility and SustainabilityStrength and Opportunities:

Less use of paper. Online confirmations, coupons, newsletters etc. Recycling of resources. Minimized infrastructure. Limited number of in-house employees. Office building is not

huge and is energy efficient. Snapdeal has a ‘market place’ business model; i.e. it doesn’t carry inventory unlike the

Brick and Mortar models. Therefore, the cost of operations is very less in comparison. Few resources are used in the daily activities. Resource utilization is minimal. Huge market share in a highly competitive industry- Economy of scale can be achieved

swiftly. Growing market- Implies an opportunity for sustainable growth.

Weaknesses and Threats:

The not-so-energy-efficient logistics Use of plastic based multi-layer packaging with non-biodegradable inks. Huge generation of packaging waste Wafer sized profit margin in the entire industry Heavy competition- Red ocean traps Security threats

4 | P a g e


Inventive Strategy- Green PackagingPresent Scenario

Snapdeal’s CSR policy is broadly framed taking into account the following measures;

Welfare measures for the community at large, so as to ensure the poorer section of the society derives the maximum benefits.

Contribution to the society at large by way of society development, imparting education, training, social awareness especially with regard to economically backward class for their development and distribution of necessary clothes/foods item to the poor society in rural areas of the country

The company is already concentrating on the activities pertaining to

Providing education Generating employment Adopting villages Water supply Empowerment of women Health awareness camps Plantation, Green belt development

It has extensive work done on the above aspects, but any responsible company needs to mitigate its own negative impacts on the environment.

Recommended future strategy- Sustainable PackagingLike mentioned earlier, Snapdeal generates colossal amounts of waste through its packages. The extensive packaging done by Snapdeal carries both economic costs for the company as well as ecological costs as most of its packaging is made from non-biodegradable materials that can neither be reused nor be recycled. The recommended strategy should enable Snapdeal to pursue responsible consumption and production.

Short-term Recommendations

Custom solutions that provide maximum protection with minimum materials Air- pillow Cushioning that can be inflated or deflated for multiple usages Liberate plastic from their packages Less material for packaging- eliminate multiple layers. Water-based ink 100% recyclable, re-usable material for packaging Durability for multiple uses

5 | P a g e


Long-term Recommendations:

Persuade manufacturers to follow the same Sort out worst offenders of over packaging and push them to make changes.

Sustainable Packaging

Role of packaging in Ecommerce

6 | P a g e


Packaging a product specifically for delivery is a vital part of e-commerce. Like previously mentioned it helps to build the brand image of the company and has the ability to generate either loyal or disappointed customers. The major aspect of packaging however, is its functionality. It has to be designed to endure the long distance and non-idealistic logistic conditions.

Primary packaging contains the product- for example a phone in its original cardboard box.

Cushioning is done by using bubble wraps and many companies use multiple layers to protect the product from shock.

The shipping package is the external box used in the logistics of the product which is generally plastic pouches for small items and corrugated cardboard boxes for large products.

What is sustainable E-commerce packaging?Sustainable packaging is defined as the development and use of packaging which

results in improved sustainability. This involves increased use of life cycle inventory (LCI) and life cycle assessment (LCA) to help guide the use of packaging which reduces the environmental impact and ecological footprint. Sustainable packaging doesn’t only include recycling; it brings a whole new facet to the supply chain.

Sustainable packaging is still in its nascent stage and hence doesn’t have any clear criteria defining it. However, the broad goals of sustainable packaging are

1. Cost effective2. Functionality3. Long term Ecological health

Factors of sustainable packaging include

Recyclability Reusability Minimal Packaging Logistic Efficiency Use of bio-degradable/compostable materials

Some aspects of environmentally sound packaging are required by regulators while others are decisions made by each packager. Investors, employees, management, and customers can also influence corporate decisions regarding sustainability. When investors seek to purchase stock, companies known for their positive environmental policy can be attractive. Companies that highlight their environmental status to consumers can boost sales as well as build product reputation. Going green is often a wise investment that can pay off.

Sustainable Packaging and UNSDG, National Goals and Industry Specific Aims

7 | P a g e


The United Nations have officially announced the UN Sustainable Development Goals (SDGs). There are 17 goals focused on eradicating poverty, producing clean energy, achieve food security, ensuring healthy life and gender equality, provide sustainable solutions for water and sanitation to the society, sustainable economic growth, sustainable innovation, etc. to name a few.

For a growing industry like e-commerce, it is significant to achieve these sustainable goals due to different reasons. One being that the global goals campaign represents a significant new opportunity for companies that view emerging and frontier markets as their source of long-term growth. Another one can be that with the public declarations by many companies to help with the goals, there is likely to be competitive pressure. Being slow to take action could lead to the risk of being left out of these relationships and a source of competitive disadvantage from a brand equity perspective.

Also, these goals cannot realize alone by a single or a few entities. Business participation as whole is a must. Technological progress is the foundation of efforts to achieve environmental objectives, such as increased resource and energy-efficiency. By keeping an eagle eye on the strategies built and their implementation, operations and technologies our industry can contribute towards a great extent to these goals.

It should be noted that business-to-consumer e-commerce, valued at $1.2 trillion, is currently much smaller than business-to-business (B2B), which is worth $15 trillion, but is growing at a faster rate, especially in Asia and Africa, and is expected to double in size to $2.4 trillion by 2018.

One of the goals that the country and the industry is focusing on is “Sustainable consumption and production”. This is about promoting resource and energy efficiency, sustainable infrastructure, and providing access to basic services, green and decent jobs and a better quality of life for all. Our strategy suggests that we should do better with less. This is the main aim of this ‘goal’, i.e. “doing more and better with less,” increasing net welfare gains from economic activities by reducing resource use, degradation and pollution along the whole lifecycle, while increasing quality of life. It substantially requires supply chain, operations, logistics, technology and other functional domains of the company to attain this goal and be successful. Customers’ participation and encouragement will play a major role in this journey towards sustainability

8 | P a g e


Critical Evaluation of Sustainable Packaging

Strategies that Promote SustainabilityOne of the main strategies viable for the marketers is to look for potential savings

related to minimize complexity in packaging materials for products sold through e-commerce versus traditional in-store channels. For example, e-commerce versions of products don’t need complex multi-layer packaging that is used to distinguish the

9 | P a g e


product on display-shelves; it just needs an external packaging with protective material. This provides cost effectiveness and ‘cube optimization’, which ensures that the packaging achieves maximum efficiency per cubic meter. Cube optimization also minimizes product damage and energy consumption, thus playing a major role when assessing economic and environmental sustainability

Also, the weight to volume ratio of the packaging plays a major role in the logistics and delivery. It also determines the durability of the item in most cases. The three Rs of Reduce, Reuse and Recycle should be considered too, exactly in the same order. Just Recycling doesn’t ensure sustainability.

Research confirms these conclusions. A study by the State of Oregon Department of Environmental Quality indicates that:

Upstream impacts, including protection, are more important than downstream impacts related to recovery and other post-use considerations.

While recyclability and use of recycled content are important, using less in the first place (material reduction) is a higher priority.

Reducing box size and total fiber content can produce significant economic and environmental savings.

Critical Evaluation with SASB approachThe freedom enjoyed by companies operating over the internet and disruptions to

other industries such as traditional media or telecommunications, which may be highly regulated, can create significant positive externalities. On the other hand the very nature of the internet, its openness and lack of regulation can pose sustainability risks if these are misused by companies in the ecommerce industry, either knowingly or unknowingly.The sustainability issues that affect these companies include

Managing the increasing risk of cyber-attack and phishing, threatening exposure of sensitive information from customers. The financial information from the customers’ needs to be stored and used safely or will diminish the image of the company among customers.

Managing energy and water companies in their large and fast growing data centers. The industry doesn’t utilize natural resources in its operations directly; therefore its direct effect on the environment is limited.

Balancing the need to protect intellectual property that incentivizes innovation to remain competitive. These companies face a growing number of lawsuits related to patent protections due to various complexities.

While the number of job openings in this industry is growing, companies are finding it difficult to recruit qualified employees to fill software engineering and research positions. Therefore managing the human capital is a huge problem for the developed countries. Also, a huge challenge is retaining sufficient talent and the accentuated problem of relatively low levels of gender diversity and representation of minority groups in the workforce.

Social Innovation work continues to center on making positive, lasting impact in three key areas that align with E-Commerce industry’s unique focus and resources:

10 | P a g e


Creating Economic Opportunity Enabling Greener Commerce Powering Charitable Giving

Supporting Technology-Driven Innovations

Innovative technology can make markets work better for the poor by increasing incomes and serving unmet customer needs, and by linking them with products and services that improve their lives. Through various projects, companies like eBay, amazon has provided direct support to many organizations developing novel technology solutions to improve the lives of the poor in emerging markets.

Enabling Small and Medium-Sized Businesses to Compete and WinSmall and medium-sized businesses (SMBs) contribute significantly to the vitality and resilience of any community, big or small. As they build and grow, they help propel their economies forward through job creation, product and services innovation, and local investments. And while countless studies have enumerated the economic benefits of a thriving SMB sector, individual businesses still face significant barriers to greater success. As a segment, these enterprises represent a critical mass of commercial sellers and merchants for this industry, and it is committed to providing them with the tools and technologies they need to, in turn, contribute even more to the communities of which they’re a part.The commitment is to run technological platforms, facilities and systems in ways that challenge business as usual while radically reducing our environmental impacts.

Enabling Greener CommerceE-commerce is committed to run technology platforms, facilities and systems in ways that challenge business as usual and break down conventions, continually improving the service we provide to our customers while radically reducing our environmental impacts. As business grows, the opportunity to use footprint as a laboratory for innovations that do not take more from the planet than one can give back. It works to make its operations and the tools and services provided to the customers as efficient and environmentally responsible as possible, and leverage unique assets and role in the global marketplace to have the greatest influence and Earth-positive impacts along the commerce value chain. From more than doubling its on-site generation of cleaner energy to significantly expanding the number of people engaging with our eco-minded commerce programs, the momentum was clear.

Energy and climate

Each day, eBay Inc. connects hundreds of millions of individuals and retailers around the world through our portfolio of businesses. The energy we use to power these connections (and our overall business operations) produces greenhouse gas (GHG) emissions that contribute to global climate change as well as other environmental challenges. In the mission to create the world’s greenest commerce platform, they are committed to being open about our impact, as well as reducing it through efficiency and expanded use of cleaner energy. The strategy for conserving energy and reducing carbon emissions throughout operations is threefold:1. Strive for radical efficiency in our facilities and processes2. Generate on-site clean energy when and where it makes sense

11 | P a g e


3. Procure additional clean energy from off-site sources

Shipping

Online commerce is made possible by shipping, and all of that shipping has environmental consequences. But it also presents significant opportunities to change things for the better. eBay Inc. is committed to helping our customers provide world-class shipping performance while at the same time using our scale to identify possibilities to make environmental sustainability a core principle for shipping initiatives. In 2012 we outlined our key focus areas:• Establish environmental criteria for our shipping partners• Promote the use of sustainable packaging materials and design• Optimize our shipping networks (logistics) and modes of transportation• Run efficient fulfillment centers

Impact on PeopleVarious stakeholders read sustainable development reports in order to satisfy their particular information needs. But what are they looking for?

The key groups are outlined here while the following section focus on the financial sector.

Employees: The employees and their representative groups are interested in information about sustainable development in order to judge if the company is stable employer. If Snapdeal starts green shipping, it will create a positive effect on the employees.

Customers: Customers, especially who have long term involvement with or are dependent on company have a vested interest in its continuing prosperity. Customers, these days are aware of the global issues happening across the world. So the initiative of Green shipping and plastic less packaging would create a trust in between customers about the company.

Suppliers: Some suppliers may be dependent on the company if it is a major customer. They need to determine the risk which could ultimately lead to inability of debtors to pay. Also, reusable boxes may incentivize buyers to become sellers.

Investors: Positive environmental policy is attractive to investors. Lower environmental risks lead to more capital at cheaper rates.

Public: Companies affect the members of the public in various ways. For example, they may make substantial contributions to the local economy through employment and their use of local suppliers. Is there a balance what company takes out and what it puts back

12 | P a g e


into the community? Giving more preference to the sustainability through various green initiatives, Snapdeal can definitely have edge over other companies.

Impact on FinanceInventive Strategy incurs additional costs in short term due to the cost of

purchasing new machinery but positive environmental policy is attractive to customers, thus enabling easy and cheaper capital as well as a good note for a future IPO. The value of the company might increase considerably in long-term. Also, minimalistic packaging reduces operational costs.

The process of engineering more environmentally acceptable packages can include consideration of the costs. Some companies claim that their environmental packaging program is cost effective. Some alternative materials that are recycled/recyclable and/or less damaging to the environment can lead to companies incurring increased costs. Though this is common, when any product begins to carry the true cost of its production (producer pays, producer responsibility laws, take-back laws) there may be an expensive and lengthy process before the new forms of packaging are deemed safe to the public, and approval may take up to two years.

If they get rid of plastic and instead use the cardboard, it will have effect on the financial statements of the company; the cost may increase a little. In case Snapdeal uses corrugated containers, it will save the cost on a huge scale because it can be 100% recycled and can be used to manufacture other paper products.

Impact on Operations and TechnologyThe change in the packaging from the existing multilayer plastic wrapper to a more sustainable packaging requires a change in the machinery used. Also, it might require skilled labor to employ the new machines. Due to the inventive modifications an extensive change management strategy should be employed. Optimized material and energy requirements should be the design behind the evolution of strategy. Efforts toward “greener” packaging are supported in the sustainability community; however, these are often viewed only as incremental steps and not as an end. Some picture a true sustainable steady state economy that may be very different from today's: greatly reduced energy usage, minimal ecological footprint, fewer goods, local with short food supply chains, little processed foods, etc. Less packaging would be needed in this economy; fewer packaging options would exist; simpler packaging forms may be necessary.

13 | P a g e

https://en.wikipedia.org/wiki/Processed_foods

https://en.wikipedia.org/wiki/Short_food_supply_chains

https://en.wikipedia.org/wiki/Short_food_supply_chains

https://en.wikipedia.org/wiki/Ecological_footprint

https://en.wikipedia.org/wiki/Steady_state_economy


Change Management

Controlled identification and implementation of required changes in the business is required for the realization of expected outcomes. Once a company decides that a change in the strategic direction is required, the major problem it might face is the change management. Change management needs to be carried out in methodical steps.

Snapdeal doesn’t need to undergo a difficult process for managing change as the number of employees and the number of process steps are much lower than that of conventional companies. However, there is a threat of huge impacts with the smallest mistakes as it is a part of the red ocean. With competitors like Flipkart and Myntra ready to capture market share at any time, Snapdeal needs to be extremely careful both in formulating and executing plans.

The following aspects might help in ensuring a smooth change process:

Knowing what to ask for:An online retailer needs packaging robust enough to get to the consumer without damage. Change in design should not reduce the functionality in any way. On the other

14 | P a g e


hand it needs to make the package more durable. Therefore the quality of the packaging material is vital and necessary Quality Control is required for the same.

Innovation is the key. Packaging suppliers are constantly looking for new ways to reduce the environmental impact of packaging. These include:

• Foams/cardboard made from mushrooms and other agricultural-based resources that biodegrade and can be home composted.• Air-pillow cushioning that can be inflated and deflated for multiple uses. • Custom solutions that provide maximum protection with minimum materials on a per-shipment basis

One of the most pressing complaints faced by retailers is the issue of inefficient packaging. A major office supply chain and its e-commerce customers were frustrated that orders had to fit into standard size packages. This often meant that boxes were too large and thus had to be filled with many air pillows. The solution turned out to be “on demand packaging” whereby containers are produced to handle specific orders. Instead of standard size boxes, each box is custom made for the order being shipped. The results are significant: corrugated usage declined by 15%, and air pillow usage was reduced by 60%.

Keep customers informed and involved

Before changing your packaging to be more sustainable, bringing your customers into the decision-making process and asking about their preferences is a great idea. When it comes to packaging, perception is key and brands can often do more to educate shoppers on what it means to be green. It is not viable to expect to change packaging without warning or educating your customers. It may be overlooked as a minor detail, but it represents their relationship to the brand. Approach packaging changes like you would any emotional exchange with customers – with care and frequent communication.

Whenever changes to packaging are made, brands should include information on why those changes were made. A customer may have never seen a box printed with soy-based ink before, and a little information can help them view improvements as proactive and worth sharing. When consumers feel they’re being included throughout the decision-making process, they’re more likely to develop long-term brand loyalty.

In order to include shoppers in the design process, Snapdeal can encourage customer feedback with simple calls-to-action. They can also gather information by monitoring social media, where consumers are already apt to share both positive and negative experiences. Snapdeal can also cultivate conversation around green packaging to

15 | P a g e


highlight both their efforts and the broader environmental impact of their packaging changes.

Sourcing

Packaging can either be done in-store or sourced externally, but in-store production requires more energy and kills the essence of e-commerce. Sourcing the right packages made with the right materials for a reasonable price can be difficult. Extensive market research needs to be done and the perfect supplier chosen for bringing home the experience of great ecommerce to the customer.

Getting imported containers is a great option but might cost higher than the domestic production. An optimum balance between the price and quality is required.

Also, the used boxers, received from the customers must be utilized efficiently. Sourcing it from customers should ensure at least a 40% return for profitable reusability option.

Having a Plan BWhen choosing a packaging partner, the best tactic is to contact lots of suppliers to assess their capabilities and enquire about pricing and minimum order quantities (MOQs), then ask a shortlist of suppliers to send production samples. Choosing a factory should be based on the highest quality sample, but should also build relationships with additional suppliers. You never want to be restricted to just one supplier. If something happens to them you're in a bind. Having a Backup supplier is always good for the business. If they increase the price unreasonably on you, or the relationship breaks down a little bit, other suppliers may be required.

Pointers for managing change successfully Checking for the effectiveness of the strategy by comparing it to competitors and

previous experiences Assessing the impact of the strategy on the buyers and sellers. Consulting with the internal parties involved. Asking employees for amendments in the strategy based on their experiential

knowledge Clear definition of the strategy and what it means to different people Formulation of strategy based on company’s goals and vision Methodical Implementation date planner Trial Run with market research

16 | P a g e


Analyze performance of trial run Make changes. Project future performances Setting annual performance targets Implementation

ConclusionThe E-commerce industry is very competitive but brand owners who meet the consumer demands for sustainable packaging will benefit in the long term. One of the goals that the country and the industry are focusing on in this time period is “Sustainable consumption and production”. It is all about promoting resource and energy efficiency, sustainable infrastructure, and providing access to basic services, green and decent jobs and a better quality of life for all. This inventive strategy might help Snapdeal create a positive impact on the environment to portray is responsibility to the society it is operating from. Our strategy suggests that we should do better with less. It is the main aim of this ‘goal’, i.e. “doing more and better with less,” increasing net welfare gains from economic activities by reducing resource use, degradation and pollution along the whole lifecycle, while increasing quality of life. It substantially requires supply chain, operations, logistics, technology and other functional domains of the company to attain this goal and be successful. Customers’ participation and encouragement will play a major role in this journey towards sustainability.

17 | P a g e


ReferencesTiwari, S. and Singh, P., 2011. E-Commerce: Prospect or Threat for Environment. International Journal of Environmental Science and Development, 2(3), p.211.

United Nations Environment Programme 2014, Annual report. Available from <http://www.unep.org/annualreport/2014/en/index.html>

Snapdeal 2015, Corporate Social Responsibility. Available from

< http://www.snapdeal.com/page/csr>

Reynolds, J., 2000. eCommerce: a critical review. International Journal of Retail & Distribution Management, 28(10), pp.417-444.

Huang, K.L., 2005. A conceptual model of packaging design for ecommerce(Doctoral dissertation, Sheffield Hallam University).

18 | P a g e

http://www.snapdeal.com/page/csr

http://www.unep.org/annualreport/2014/en/index.html


Plagiarism Check

19 | P a g e


Link:

https://www.thepensters.com/free-plagiarism-checker-report.html?id=ef8af2954643f59e663f466b2b5f39ea_1450227020:7835756

20 | P a g e

Documents

Green shipping.docx