How e‑commerce is changing us and our planet
All over the world, online shopping has become part of daily life, but have we thought about its impact on the planet and society as we know it?
The nerve centre of Singapore’s largest online grocer Redmart is housed in a dusty far-flung industrial zone on the western end of the island, surrounded by wide, empty roads. The large cargo trucks that rumble past are the only traffic.
But inside, the warehouse is a hive of activity where more than 700 workers in bright vests are pushing silver trolleys stacked with yellow plastic crates slapped with customer’s names. The workers rush along aisles of blue shelves, filling the crates with everything from chocolate to canned foods to fresh vegetables.
These are taken to packaging stations, where quick hands dump the goods into a sea of green-coloured biodegradeable plastic bags; the contents are inspected, put into red temperature-controlled boxes known as totes, closed and loaded in trucks for their journey into suburban Singapore homes.
Redmart’s warehouse on Fishery Port Road — its home since 2015 — is the fifth facility it has moved into in its short six-year history. Its physical expansion reflects a spectacular growth curve in which its revenues leapt from US$1.5 million in 2013 to US$27 million in 2015.
Redmart co-founder and CEO Roger Egan III expects the company to achieve 15 per cent market share in Singapore’s online grocery market - an industry that has potential to grow to US$1 billion alone. He notes that the wider grocery sector accounts for as much as 60 per cent of the US$814 billion Southeast Asian total retail market.
“With 1 per cent of online grocery penetration currently, and a tech-savvy consumer base, we believe that Southeast Asia will quickly catch up and leap to more than 15 to 20 per cent penetration in cities,” he told Food Industry Asia earlier this year.
The e-grocer was at the end of 2016 acquired by regional business-to-consumer (B2C) online retailer Lazada. The latter officially became a subsidiary of Chinese e-commerce behemoth Alibaba when it upped its stake to 83 per cent in June. It was among a rash of recent significant investments, including a stake in Indonesia’s Tokopedia, made by Alibaba in a bid to cement its foothold in the region.
With Amazon’s launch of its flagship Amazon Prime programme in Singapore in July — the Seattle-headquartered US giant’s first foray into Southeast Asia — the tiny island state has become a microcosm of the global battle between the two e-commerce titans.
In this global e-commerce race, they are among many others — China’s JD.com, India’s Flipkart, and Singapore-headquartered Qoo10, just to name a few — who jostle shoulder to shoulder for a dominant share of the market, burning through billions of dollars while promoting a new brand of shop-till-you-drop capitalism.
Asia's
e-commerce boom
There’s good reason why competition is cut throat: E-commerce will only increasingly pervade the daily life of citizens and whoever gains market share — critical for driving efficiency and reducing costs — wins the race.
According to the United Nations Conference on Trade and Development (UNCTAD), the main UN body for trade, investment, and development issues, B2C and business-to-business (B2B) e-commerce sales totalled a mind-boggling US$25.3 trillion in sales in 2015; up from US$16 trillion in 2013.
Asia Pacific, which is the world’s largest e-commerce market, accounted for 40 per cent of online retailing worldwide in the first quarter of 2017. This is largely driven by the meteoric growth of China’s retail e-commerce market, where sales are expected to almost triple from US$1 trillion in 2016 to US$2.7 trillion in 2020.
The Asian Development Bank (ADB) estimates that China single-handedly accounts for almost half of all e-commerce sales in Asia Pacific, with Japan, Australia, South Korea and India, also making up significant shares.
These latter countries will see double-digit compound annual growth rates (CAGR) for e-commerce until 2021, according to market research firm Forrester’s report, Online Retail Forecast 2016 to 2021 (Asia Pacific).
Projections are just as sunny for Southeast Asia, where a joint study by Google and Singapore government investment firm Temasek last year predicted a 32 per cent CAGR for e-commerce in Vietnam, Thailand, the Philippines, Malaysia, Singapore and Indonesia. The six markets could be worth a total of US$88 billion or more by 2025.
In Asia, the combination of a young and increasingly affluent middle class, rising Internet penetration, and low numbers of organised retail stores plus the convenience of buying almost anything at the touch of the button makes the region a fertile ground for e-commerce.
Nowhere is this more evident than on Alibaba’s Singles’ Day, the annual buying frenzy held on 11 November, which spawned US$25.6 billion in sales in one day last month — larger than the 2016 GDP of Iceland and exceeding the combined sales for Black Friday and Cyber Monday in the United States.
Lazada’s equivalent “Online Revolution”, billed as the biggest online shopping event in Southeast Asia held on ‘12/12’ or 12 December since 2012, rang in US$40.5 million in sales or gross merchandise value (GMV) in 2016.
The company — whose tagline shouts “shop the universe” — expects to beat last year’s figures with this year’s 12/12, which was just launched as this report went to print.
But even while e-commerce firms blare adverts and promotions to the millions of internet users daily — likening shopping to a “sport” or “entertainment” in the words of Alibaba’s co-founder Joseph Tsai — the conversation around the social and environmental footprint of this global phenomenon has been barely a whisper.
Beyond the numbers
Since the birth of e-commerce in the 1990s, commentators have highlighted e-commerce’s potential to address poverty by creating jobs and opening new ways for businesses around the world to trade.
And though the economic benefits of the e-commerce global boom are well documented, the other side of the story is less clear cut.
Psychologists now warn that compulsive shopping is a behavioural disorder afflicting a growing number of people; not to mention that this all-too-convenient shopping culture is facilitating the manufacture and delivery of goods of less than desired quality.
This in turn is generating a stunning amount of waste - whether in raw material, packaging waste or energy burned for transportation. The World Bank reports that global municipal solid waste generation levels are at 1.3 billion tonnes per year—and this is expected to nearly double to 2.2 billion by 2025.
Some experts have also warned that e-commerce is deepening a digital divide in which those who are not technologically or digitally literate are further pushed into obscurity.
The rise of online shopping is also concentrating huge power in the hands of e-commerce giants. Critics point to Amazon and its controversies, from accusations of millions of dollars of tax avoidance, to inhumane working conditions, as examples of how e-commerce is facilitating the most exploitative excesses of capitalism.
As it happens, e-commerce’s coming of age party is coinciding with a critical juncture in history in which climate change is accelerating, natural ecosystems are at breaking points and inequality is causing widespread social and political instability.
This should be forcing us to take a more critical look at one of the biggest phenomenons of the 21st century and how it is altering the dynamics of the global economy.
To some extent, it is already happening. A recent post by Sixth Tone’s editor titled Let’s make this Singles’ Day the last one ever described Alibaba’s Singles’ Day as an “orgy of consumption” and “a crazed carousel of buying and selling that exploits some of China’s lowest earners while casting materialism as a salve for a lack of psychological fulfillment.”
Beyond social impact, studies that have looked at e-commerce’s carbon footprint have been mixed.
Some argue that e-commerce deliveries are less carbon intensive than physical trips to brick-and-mortar shops because of the efficiencies of fulfilling multiple orders in a single trip.
Swedish furniture maker Ikea, for example, says it is seeing a positive effect on its global emissions as a result of its online shopping foray. It currently runs e-commerce operations in some of its markets and last month launched this service in Singapore.
Lars Svensson, IKEA Southeast Asia’s sustainability and communications director, tells Eco-Business that e-commerce has helped reduce customer transportation to and from the stores—which accounted for 14 per cent of its carbon footprint. To a lesser extent, it also enjoyed more efficient handling in its warehouse in the preparation of goods for delivery and payment.
According to a study by The Logistics Institute-Asia Pacific at the National University of Singapore (NUS), however, the reality is predicting demand for transport and shipping is ever more complicated because logistics providers are never sure of the amount, size or type of parcels to be delivered.
Consumers are screaming for faster, cheaper shipping and this is compelling online retailers to “think sharply at the coalface” in a sector where margins are already razor thin, says Robert de Souza, The Logistics Institute-Asia Pacific’s executive director.
But beyond transport and logistics, there are more factors that determine e-commerce’s environment impact, say experts.
Jessica Cresswell, senior consultant at UK-based sustainability consultancy Carbon Smart, explains: “There are many parameters that will impact a company’s total emissions—how customers are getting to the store, where the goods have been produced, how they are packaged, and how many failed deliveries it takes to get them to you.”
“You can’t assume that e-commerce companies are less carbon intensive,” says Cresswell, who has helped companies including major fashion e-tailer ASOS to measure and report on their carbon intensity.
While it is possible to run a low-carbon e-commerce business, and some businesses do it well, it requires active effort by the company, she adds.
Svensson acknowledges this: “Since it is early days of e-commerce this is something we will monitor and see.”
A force for good?
“E-commerce is revolutionising the tradeability of services.”
-Fahad Khan, economist, Asian Development Bank
Tilita Renata, 27, spent her childhood watching her mother weave fibres from the Doyo plant into handloom textiles using the traditional methods of Indonesia’s indigenous Dayak community.
But she didn’t pursue the craft until she was in her 20s, when she met a woman who told her of an unused loom in her village because “nobody knew how to use it”.
“I realised that if I didn’t learn how to weave, the practice would become history,” Renata says.
Today, Renata keeps the tradition alive by weaving handbags using the techniques her mother taught her. The bags are sold to urban Indonesians by retailer Borneo Chic and to a global market through Singapore-based e-commerce platform Coopita.
Mayur Singh, Coopita’s co-founder, says that the company’s mission is to preserve Asia’s handicraft traditions. “Many skilled artisans live in rural or remote areas, and often, if they cannot earn a living from their craft, they end up working in factories in the city, or take up mining jobs closer to home,” explains Singh.
Coopita, which Singh set up with business partner Naomi Jacob in 2016, works with “maker groups”—collectives of artisans which band together to produce, market, and sell crafts—in 10 Asian countries, including India, Indonesia, the Philippines, Thailand, and Malaysia.
Their social enterprise is an example of how e-commerce — when done right — can be a potent force for good.
UNCTAD’s chief of the Information and Communications Technology (ICT) Analysis, Torbjörn Fredriksson, points out that e-commerce helps sellers reach markets beyond their villages, facilitate e-payments, enable learning through online training and help people find work online.
In its latest Information Economy Report, UNCTAD outlines how e-commerce can help achieve the Sustainable Development Goals (SDGs), a set of 17 targets adopted by United Nations countries in 2015, which seek to address global challenges such as hunger, poverty, gender inequality, and sustainability.
For example, online commerce can help Goal 5 on gender equality, by providing women entrepreneurs access to the internet, digital finance, skills and training, as well as business opportunities beyond their home and community.
E-commerce also advances Goal 8 and 9 on inclusive growth and decent work, by enabling small enterprises to formalise their operations, gain access to financial services and global supply chains.
When it comes to creating jobs, Fahad Khan, an economist in the Asian Development Bank's Economic Research and Regional Cooperation Department, adds that “e-commerce is revolutionising the tradeability of services, and that’s important because the services sector is a huge source of job creation globally.”
This is something that Ken M, a 40-year old father of two in Cebu, the Philippines, can attest to. “I worked in a bank for a decade, and was only earning US$400 a month,” he tells Eco-Business in a recent interview. “I couldn’t even afford to send my children to a good school.” But since 2010, Ken, who requested a pseudonym for confidentiality, has been helping clients around the world manage their webstores on e-commerce platforms such as Amazon via global freelancing platform UpWork.
He currently rakes in US$4,500 a month on average by working out of his home, and is working on a book to share the tips, tools, and knowledge he has gained on the job to help people in the Philippines and other countries pursue similar opportunities.
To some extent, several e-commerce firms are starting to address the SDGs on climate change and responsible production. Redmart’s vice president of operations Jamil Khan, says the company is reducing carbon emissions by consolidating multiple online orders into a single truck delivery, and switched to use biodegradeable plastic bags.
Sam Too, general manager of e-retailer Qoo10, also highlights the use of data to prevent overstocking and minimising wastage as one of the ways in which the company is promoting responsible consumption and production.
The encouraging news is that e-commerce companies—giants and small players alike— seem to be waking up to the benefits of integrating sustainability practices and the SDGs into business operations.
The dark side
Singles' Day - "A crazed carousel of buying and selling that exploits some of China’s lowest earners while casting materialism as a salve for a lack of psychological fulfillment."
-Matthew Walsh, commentaries editor, Sixth Tone
Asia’s digital divide
Despite the obvious benefits of e-commerce however, UNCTAD’s Fredriksson warns that “it is not just a golden, one-sided future we are looking at here”.
“There is a risk that merchants and businesses that are not able to offer online services will become invisible in the market, since more consumers and enterprises are looking for goods and services online,” he adds.
One key risk is that e-commerce could push those who do not have access to computers, internet connections, or even digital bank accounts further down the income pyramid.
UNCTAD dubs this the “digital divide”, which can exist between the rich and poor—individuals and countries alike—urban and rural areas, and men and women.
The agency has tracked a country’s e-commerce “readiness” through its B2C E-commerce Index, which is based on the percentage of population which uses the internet, the ratio of secure servers to inhabitants, percentage of the population with bank accounts, and the country’s degree of postal reliability.
The global average score for the 2017 Index was 54 out of a possible 100. Africa lags behind the rest of the world with a score of 28, while countries in East, South, and Southeast are on par with the global average, at 54.
Asia Pacific got an “average” score but this was mainly driven by China, Japan and South Korea, notes ADB’s Khan. Southeast Asian economies such as Myanmar, Cambodia, Indonesia, and Laos bring up the bottom of the index with scores as low as 23.
“It hampers the ability of many in the region to participate in digital trade—just as they were left out in the trade boom of the 1970s and 1980s”, says Khan, who adds that governments in the region need to institute proper legislation to build trust among consumers by protecting against fraud, privacy breaches, and cyber-crime.
“In order to fully leverage e-commerce, you need to build up digital skills; in this area, Southeast Asia lags behind every other sub-region,” Khan adds. Only half of companies in the region use email to communicate with customers, and just about 30 per cent of them have their own website.
This looks set to change in the future, however, as e-commerce companies increasingly roll out new e-commerce apps and offerings. “Consumer-to-consumer” e-commerce via social media platforms such as Facebook groups, Instagram and other mobile apps is thriving in Asia, for instance. Social commerce accounted for 30 per cent of all online sales in Southeast Asia last year — a figure only set to grow.
Clicks and consumerism
For all its potential, the mission to harness e-commerce for good is not a simple one.
Cecilia Gonzales, 35, is a self-confessed online shopaholic living in Manila, Philippines. She orders everything online—a little black dress, bags, books, a suitcase, even a portable bidet.
“I’m so addicted to online shopping that there’s even a joke in our household that the reason Zalora grew so big was because of my orders,” she says.
But though many like Gonzales probably don’t think of their shopping behaviour as abnormal, the reality is that compulsive shopping is a behavioural disorder that, similar to gambling, affects as many as six per cent of people in the United States. And e-commerce feeds this hunger all too easily.
John Pabon, founder of Shanghai-based sustainability consultancy Fulcrum who describes Singles’ Day as “a shark feeding frenzy”, wonders: “People have dollar signs in their eyes when they talk about Singles’ Day. But given the average salaries in China, can people really afford what they’re buying?”
Then there is the environment impact of all that buying.
Studies have also shown that e-commerce is accelerating the pace at which fast fashion companies sell, while the high rate of home deliveries, and subsequent returns, has been blamed for increased traffic congestion in highly commercialised cities such as New York.
The heavy discounting of goods on sites such as Alibaba, JD.com and Amazon has also persuaded consumers to take a punt on items of questionable quality.
On Singles’ Day, the 1.38 billion orders flooded postal and courier services with around 331 million packages—and left an estimated 160,000 tonnes of packaging waste, an 81 per cent increase on last year, according to data from Greenpeace.
But despite its impact, e-commerce wins over new consumers every day.
Gwyneth Fries, senior sustainability adviser at non-profit Forum for the Future, explains that the fact that e-commerce firms deliver goods and return unwanted items at little or no cost is one of the reasons why people shop so freely.
In a sense, e-commerce is doing to shopping what Tinder is doing to human relationships, she says.
“People are ordering 14 different dresses, and sending all of them back except one. Consumers are bringing the store into their homes,” she says.
Stories abound of purchases gone wrong and fake pictures on rogue sites used to sell knock-off designs. But if an item doesn’t fit, it can always be returned and a new item arrives in the post three days later, says Fries.
And whether they know it or not, online shoppers might also be giving away vast quantities of information about their daily lives, because the advances of e-commerce depend on a vast amount of data to work efficiently.
“They know your postcode, they know how much rent you pay, so they know how much you’d be willing to pay for a pair of socks,” says Fries.
Nowhere is the omniscience of e-commerce as evident as in China. Domestic giants such as JD.com, Tencent and Alibaba know more about their customers than most governments, hoovering up information from other digital platforms they own to create spookily accurate consumer profiles.
JD.com not only knows how its customers buy, through its shopping portal and payment service; it also knows how they use social media, as JD.com is part owned by Tencent, the owner of messaging giant WeChat, and how they search, through a partnership with search engine giant Baidu.
“As long as e-commerce players offer value, choice and financial rewards, consumers will be ok with the value exchange,” says Grace Liau, Asia Pacific head of media, Google.
“But if there is a violation, and instead of a package delivery, your home gets broken into, that could become a huge problem,” she warns.
Beyond consumers, other players in the e-commerce chain have also raised some red flags.
Yu Xueyi, a rabbit farmer in China’s Anhui province, in March published an essay ‘ Why I quit Alibaba’s big push toward countryside commerce’, for instance, criticising Alibaba’s flagship Rural Taobao platform .
Yu joined the programme in 2015 and was given free rental space, office furniture, and electronic equipment, with the task of delivering products to hard-to-reach rural households.
But he said Rural Taobao “lost its lustre” when he realised “it has never been serious about connecting rural sellers with the cities.” He claimed that rural sellers were unable to sell online unless they forked out a US$29,000 deposit to set up an account with Alibaba subsidiary Tmall — a sum vastly out of the reach of most villagers.
“Instead of helping farmers establish themselves in the market, (Alibaba) just wants to see countryside customers buy products that were too hard to get hold of before,” he wrote.
Responding Eco-Business on these claims, Alibaba stresses that farmers who wish to sell their produce online can set up a store completely free of charge on Taobao Marketplace, and fees are not compulsory to set up on Tmall.
The company notes that the annual income of rural e-commerce families is on average 20,000 yuan higher than those not engaged in e-commerce, and that the per capita income at villages that use e-commerce to sell local specialties is 11,870 yuan compared to just 460 yuan at non-e-commerce villages.
Rural Taobao also delivers intangible benefits such as allowing people to live and work in their villages, rather than having to move to the city. This means that children see their parents everyday, and that elderly are not forced to live alone, an Alibaba spokesperson adds.
In neighbouring India, Gurudutt Nadigar, a 28-year-old entrepreneur based in Bengaluru, India, also tells Eco-Business that customer-centric policies can make it unviable for small and medium e-commerce enterprises to succeed.
Nadigar, who started selling home appliances on major e-commerce sites such as Flipkart and Snapdeal in 2014, recently closed down his business due to onerous policies around cancellations and returns.
“When a customer cancels or returns an order, sellers have to foot the logistics bill both ways,” he tells Eco-Business, adding that often in the case of cash-on-delivery orders—a common practice in developing countries—customers change their minds when the order arrives at their door, resulting in wasted transport costs.
To even the playing field, e-commerce firms should also help sellers such as banning cancellations on cash-on-delivery purchases or asking customers to pay a percentage of the return logistics fees, he suggests.
“If you have happy sellers, they will automatically look after their customers and provide a high level of service to them,” he says.
Ultimately, it is clear that companies and policymakers alike have much work to do in refining the rules on which e-commerce operates if it is to improve lives.
And we need to get it right. “The same infrastructure and regulatory frameworks that boost e-commerce will also support the expansion of financial inclusion, clean energy, and other benefits,” notes ADB’s Khan. “All these solutions go hand in hand.”
A fact of life
"E-commerce is doing to shopping what Tinder is doing to human relationships."
Gwyneth Fries, senior sustainability adviser, Forum for the Future
Love it or loathe it, e-commerce is not going away. As UNCTAD’s Fredriksson puts it, it is “becoming an important fact of life.”
“The digital revolution will happen very quickly. It is important that policymakers are as prepared as possible to see what policy solutions to apply, to make sure that countries are not just using e-commerce, but also benefiting from it,” he says.
Companies, too, are awakening to the need to address their social and environment impact - driven by growing global consensus on the need to address climate change and sustainable development, as well as growing pressure from consumers to behave responsibly.
A quick poll by Eco-Business held earlier this month for instance showed almost half, or 48 per cent of consumers, considered the social and environment impact of their online purchase.
One area companies are innovating ways to shrink the environmental footprint of their is transport and logistics.
Redmart, for instance, allows consumers to choose a “Go Green” delivery option, where they can allow a wider timeframe to receive deliveries. This flexibility allows RedMart to optimise its delivery loads and therefore, save on emissions, says company vice president of operations Jamil Khan.
Regional companies such as Singapore start-up Park N Parcel and Malaysian startup PostCo also offer ways for consumers to get their purchases delivered to convenient locations such as nearby shops, or even neighbours’ homes.
Mark Goh, professor, Department of Analytics and Operations, School of Business at the National University of Singapore and director of industry research at The Logistics Institute-Asia Pacific, adds that there is much more that e-commerce companies can do to reduce emissions from logistics.
Low-emissions delivery vehicles, ensuring that trucks are only dispatched when they are full, and synchronising delivery timings so that trucks spend less time idling are a few key strategies that companies can adopt, says Goh.
When it comes to the environmental impact of packaging, Redmart shares that it receives regular feedback from its customers about the excessive usage of plastic bags in deliveries, explaining it is a requirement from local authorities to separate different product types for food safety reasons.
Khan says the company is working on a solution that is reusable but still meets guidelines. “Another way is to offer consumers the option to return the bags, and we take care of the recycling,” he says.
And not all packaging is bad. Ken Chrisman, vice president of product care for packaging company Sealed Air, points out that packaging protects goods in transit, which reduces the amount of damaged goods, and hence emissions.
“Imagine the carbon footprint that went into making the goods,” he tells Eco-Business. “(Reducing damage) is worth a lot and is hugely sustainable.”
The challenge is in designing packaging to be as sustainable as possible right from the beginning. Liu Hua, a toxics campaigner at Greenpeace East Asia in Beijing, says e-commerce companies should minimise the use of material from the get go.
In this respect, some retailers are making headway. Amazon’s Frustration-Free Packaging, for instance, uses 100 per cent recyclable materials without redundant wire ties or plastic “clamshells”, while goods that fall under the Ships in Own Container label are dispatched without extra packaging. But the option for Frustration-Free Packaging is only available for certain items.
In Singapore, online retailer Qoo10 says it is preparing to launch a new initiative that will require merchants to accept Qoo10’s conditions and use sustainable packaging.
The company will begin inviting tenders from companies to offer environmentally friendly solutions for shipping, says its general manager Sam Too. While it is expensive for small and medium businesses to obtain sustainable packaging on their own, Qoo10 can leverage the volume of orders to get affordable packaging for sellers.
Alibaba’s logistics arm, Cainiao, has introduced an intelligent packaging algorithm, which has reduced packaging material use by 5 per cent on average. This saved 41 million cardboard boxes on Singles’ Day. It is also using biodegradable plastic bags and reusable tape-free boxes, though the initiative has come under fire from Greenpeace for being misleading since the materials will only decompose under specific conditions.
The challenge is, Sealed Air’s Chrisman explains, while most companies are concerned about sustainability, few are willing to pay for more sustainable packaging. “The biggest driver when it comes to sustainability is economics. When the day is done, people and companies still tend to operate in their own self interest, financially.”
Chrisman points out that for consumers to recycle, it has to be convenient or cost-effective for them. “It's down to the commitment that any individual company has, and frankly the economics surrounding being able to collect those items and be able to recycle them.”
Greenpeace’s Liu says the responsibility to reduce the amount of waste generated today is a shared one. “[Consumers] have to be more conscious to buy only the items that we need, reuse more, and to repair items that are broken instead of throwing them away.
“It’s up to both retailers and consumers to create a more sustainable system, so that our landfills, rivers and oceans aren’t overflowing with trash,” he says.
The future of
e-commerce
Clicking with a conscience
The global debate on e-commerce’s impact on society and the planet is one that will no doubt carry on far into the future.
But what will the future look like?
Chris Stephenson, Asia Pacific strategy director of media agency PHD, and author of Merge - The closing gap between technology and us, predicts that the online shopping experience will only get more hyper efficient and relevant.
The game changer, he says, will be artificial intelligence-powered virtual personal assistants (VPAs) that will use consumer data to learn what we need and shop on our behalf.
VPAs like Amazon’s Alexa, Google Assistant and the soon-to-launch Apple HomePod are voice-activated home automation devices that play music, make to-do lists, give weather updates, stream podcasts and, pretty soon, do the shopping.
They will replace the apps we are currently using to shop, and respond to voice commands to place orders through Amazon or Alibaba to restock the fridge or replenish our wardrobes.
Amazon already does this to some extent with its Dash Button Devices, physical gadgets that are kept in the home and place orders for frequently bought items such as cleaning supplies , toilet paper, and trash bags with the single press of a button.
But once AI gets better at predicting what we need, items will be delivered to our doorsteps automatically, says Stephenson. Robots will know what we want even before we do.
The hope is that the more accurate the predictions, the less waste in the process. Stephenson notes that currently, products are made, shipped, put on trucks, stored in warehouses and transported to stores “without any idea that they’ll actually be bought”.
This is not to say that brick-and-mortar stores will disappear anytime soon. About 90 per cent of worldwide retail spending still happen in these stores and Amazon’s foray into physical stores since 2015 reflects an understanding of this reality.
Industry observers say Amazon is betting on these offline stores to further boost its online influence as it blurs the shopping experience between these two worlds.
“Ultimately the future of shopping is a balance between anticipation of demand and distribution of products. How companies innovate to navigate that balance - from machine learning to augmented physical stores - will determine success,” says Stephenson.
And as the webs of e-commerce continue to spin across the world, connecting ever more buyers and sellers from previously unreachable places, there is so much potential for the industry to create positive economic, environment and social impact.
To aid this process, the UNCTAD in July last year launched the eTrade for all initiative to support policymakers to reap these e-commerce benefits by providing resources, sharing information and exchanging best practices.
It hosts an archive of solutions that organisations have successfully implemented to address challenges such as infrastructure development and skill building; a database of e-commerce statistics and research; and an interactive calendar that catalogues upcoming e-commerce-related events from around the world.
Fredriksson says governments need to urgently look into ICT infrastructure, logistics, legislation, data privacy, skills training, and finance among others, if they do not want their countries to be left behind.
Consumers, on their part, are a key force in influencing the behaviour of sellers and e-commerce players.
A 2015 Nielsen global online survey found that consumers are increasingly willing to pay more for socially responsible products. In fact, 66 per cent of the 30,000 consumers in 60 countries polled said they were willing to pay more for products and services that come from companies who are committed to positive social and environmental impact, up from 55 per cent in 2014 and 50 per cent in 2013.
As concerns about social and environment issues continue to rise across the world, there is an urgent need to understand — and address — that connection between values and purchasing decisions.
Here, e-commerce players can move the needle on helping consumers make better decisions by providing the right information, while simultaneously encouraging sellers to integrate sustainability practices - then rewarding these behaviours accordingly.
Sellers who are verified to practice sustainability should be given more prominence, for instance; while data and information should be used to help consumers make responsible decisions.
Businesses are the most potent force for change and they will be required to step up if we are to meaningfully address the long list of social and environmental problems we face today.
Here are how some firms are responding.
eBay
California-headquartered eBay documents its commitment to the SDGs on its corporate website, and in an annual report it publishes to report on its global impact. In addition to the goals on gender inequality and decent work, eBay has committed to increasing the total number and success rate of sellers from low-income, underserved communities—it will announce a quantitative goal in January. By facilitating the sale of pre-owned electronics and clothing on its platform, eBay aims to create US$2.5 billion in positive economic impact by 2020; aligned with SDG 12 on responsible consumption and production.
The online shopping giant also meets 54 per cent of its electricity needs using renewable energy, and aims to have a fully renewable energy-powered electricity supply in its data centres and offices by 2025.
Coopita
In addition to its mission to preserve traditional skills and livelihoods, Coopita also tracks its performance against the SDGs.
In line with the SDGs on alleviating poverty (Goal 1), gender equality (Goal 5), responsible consumption and production (Goal 12), and climate action (Goal 13), the company measures metrics such as the net income distributed to artisans, the percentage share of household income that women artisans earn, and the quantity of waste that is upcycled or recycled in its operations.
“The SDGs provide a great framework for not just incorporating sustainability into Coopita’s business model but also builds the basis of our impact measurements,” says company co-founder Mayur Singh. “Since we measure our impact, we are also able to provide a quantitative impact on the SDGs.” The company does not have any results to share yet as it is less than a year old, but plans to do so soon.
Alibaba
Meanwhile, Alibaba—whose chairman Jack Ma is an official advocate of the SDGs—runs a programme called Rural Taobao which aims to offer a larger selection of goods and services to rural consumers, help farmers sell agricultural products to city-dwellers, and create an avenue for young migrants to return to their hometowns and start their own businesses.
It does so by setting up “service centres” where villagers can access products and services, sell their wares online, pay utility bills, and top up mobile phone credit. Alibaba aims to have 101,000 service centres across the country, and has built more than 30,000 to date.
The initiative has led to the proliferation of more than 1,311 “Taobao Villages” across China—these are villages where at least 10 per cent of households are engaged in e-commerce, and e-commerce transaction volumes are RMB 10 million (US$1.6 million) or more.
One rural entrepreneur who has benefited from Taobao’s expansion into the countryside is Yang Jing, a lotus root farmer in Honghu village, Hubei province.
In a documentary video produced by Alibaba, Yang says: ““Before I started selling on Taobao, I was in heavy debt. I didn’t have any capital or connections.”
Lotus roots Yang grew would often stay unsold and rot, but this changed thanks to Taobao, Yang shares. Sales are higher, and he has been able to hire more than 20 people.
In addition to Rural Taobao, Alibaba in early December also set up a US$1.5 billion Alibaba Poverty Relief Fund which the company says will “promote positive social changes and improve the lives of people in China”.
The fund will support efforts to train teachers in rural areas, help disadvantaged students by providing interest-free student loans, support environmental restoration efforts, and empower women.
Dharavi Market
In neighbouring India, entrepreneur Megha Gupta has created an online marketplace to sell goods such as leather bags and wallets, shoes, pottery items, accessories, and corporate gifts made by residents of Dharavi, the country’s largest slum.
Driven by the observation that a lot of people in the Mumbai slum don’t have computers but most of them have good smartphones, Gupta built a mobile application for craftsmen to upload pictures of their wares in August 2014. Artisans submit photos, which Gupta then approves so that they become available for sale on the website.
Gupta observes that many workers in Dharavi work in cramped and poor conditions; but they are still extremely skilled at their craft. They are rarely able to profit significantly from their skills, because they lack access to a large domestic and international clientele.
“Dharavimarket.com aims at bridging this gap by using the power of e-commerce,” Gupta says in a recent interview with Your Story.
Kudo
In Indonesia, where only a quarter of the country’s 250 million people have bank accounts, start-up Kudo has taken an “online to offline” approach to e-commerce which aims to connect online merchants with offline customers who may not have bank accounts, credit cards, or even internet connections.
Through the platform, individuals or proprietors of small provision stores can sign up to become “agents” to sell products such as electronics, household appliances, mobile credit, and cosmetics. With a small investment, agents can gain access to the Kudo platform, which lists a wide range of products available for sale.
People can then visit these agents, view the products available for online purchase, and select what they want to buy—and pay in cash for the purchase. Kudo then delivers the products to agents, who then pass it on to customers.
Albert Lucius, chief executive officer and co-founder of Kudo, says: “For more than three years, Kudo has given Indonesians opportunities to improve their business.” “Hundreds of thousands of our agents can gain access to millions of additional products and services without the need to stock up, can earn substantial commissions, and also get access to working capital, all while helping underserved customers with limited access to financial services,” Lucius adds.
Carousell
For Singapore-based peer-to-peer selling platform Carousell, a founding objective was to address and solve a global problem of overconsumption and excess; these are the same aims enshrined in SDG 12, Responsible Consumption and Production. The platform, which is primarily accessed via a mobile application, allows users to sell pre-owned items, and transact via both bank transfers and cash payments. A Carousell spokesperson explains: “The way we consume the world’s resources is not sustainable. At the same time, many of us have things we no longer need that can bring meaning to someone else’s life.”
Selling off unused items to someone who will value them gives products a longer lease of life, and also helps reduce waste generated, the spokesperson adds. More than 100 million items have been listed on Carousell to date, and about 38 million have been sold.
An open letter to Jack Ma and Jeff Bezos
"The important conversation on the industry’s impact on society and the planet is just not happening."
Dear Jack Ma and Jeff Bezos,
E-commerce has transformed life as we know it.
In every aspect of life – from the food we eat, to the things we buy, to stuff we sell or videos we watch – our lives are touched in one way or another by an Alibaba or Amazon service.
This means that there is huge potential for your companies – and other e-commerce players - to be a force for good. But in this global obsession about the fourth industrial revolution and the growing dominance of e-commerce, the important conversation on the industry’s impact on society and the planet is just not happening.
To be fair, your companies are headed in the right direction. Amazon, known for lagging behind tech giants on corporate sustainability, finally put in place a sustainability team last year. It has promised to use 100 percent renewable energy in its Amazon Web Services data centres, and is on track to use 50 per cent by the end of this year.
Alibaba last week announced a US$1.5 billion Alibaba Poverty Relief Fund which will “promote positive social changes and improve the lives of people in China” while its flagship Rural Taobao programme seeks to help alleviate poverty and enable rural communities through technology and innovation. Alibaba’s logistics arm Cainiao is upping efforts to green its logistics from cutting emissions to reducing packaging and mobilising electric vehicles.
But we’re sorry – this is not nearly enough.
The global economic transformation in recent decades has been unprecedented in pace and scale. In Asia in particular, China’s economy has grown 10 times as fast as that of the United Kingdom during its industrial revolution and affected 100 times as many people.
But these headline economic success stories mask major fault lines in the current development model. Around the world, rapid urbanisation, increased energy demand and a rising middle class is putting a strain on natural resources, our ecosystems and our climate.
Worsening climate change, loss of biodiversity, growing healthcare needs and inequality are combining to create a perfect storm that threaten our planet, the fabric of our society, and future growth.
Technology - and the wider fourth industrial revolution - has been touted as the enabler for humanity to respond to these challenges, but everywhere we look, businesses just aren’t moving fast enough.
Take our Eco-Business survey of the e-commerce giants for instance. It shows starkly that the majority of e-commerce firms operating in Asia do not even have a basic sustainability policy – one that guides their approach on wide-ranging business practices from raw material consumption to energy use, and carbon emissions to labour rights.
Alibaba-owned Southeast Asian e-commerce site Lazada, Asian online fashion giant Zalora, India’s Flipkart and China’s JD.com are among those that did not score a single tick on our scorecard.
It is obvious that if we are to confront the challenges of the 21st century, we need businesses such as yours to move the needle on this.
Jack, you are an advocate for the Sustainable Development Goals – a set of global targets set by the United Nations and adopted by the global community to address sustainability challenges. And you are among the Business for Sustainable Development Commissioners. Yet, Alibaba’s portfolio of companies are not showing enough leadership on achieving these targets.
Jeff, Amazon is the biggest online retailer in the world, and the fact that it was also the largest corporate buyer of renewable energy shows that it is capable of using its clout for good. But the reports of Amazon dodging millions of dollars of its tax obligations and subjecting workers to inhumane working conditions are worrying—and Amazon does not even have a labour rights policy. You cannot claim to be a responsible corporate citizen if these issues are not addressed.
Having a sustainability policy is just the first step. Are companies demonstrating – and more importantly, reporting – the progress it is making on these metrics? Are businesses even measuring its performance on social and environment outcomes?
E-commerce companies need to do much more to change the nature of the marketplace. Instead of encouraging mindless buying and consumption, you urgently need to change the relationship between buyers and sellers to reward responsible behaviour.
How about promoting brands and sellers who have positive environment and social impact? How about integrating sustainable living into the buyer’s experience? How can your platforms provide information and use the vast data you have to create an efficient and sustainable marketplace? Are you investing your cash in initiatives that advance the SDGs? Are you conducting your own businesses in socially and environmentally responsible ways?
We need people to think quality, not quantity. We need society to think about how every single purchase they make has an impact on the future.
Your mission statements are well-known. Amazon’s vision to “be the earth’s most customer centric company”, and Alibaba’s mantra “customers are first, employees second, and shareholders are third” promise to put people at the heart of your business.
It’s time for you to show it.
Signed,
The Eco-Business team