Yesterday, we wrote an article that talked about how convenience is king. The company that can offer the best convenience is often going to win the sale. The article discussed how Walmart is moving to in-home grocery delivery, even to the point of putting your groceries away for you. This is a major convenience that most people could use in their busy lives.
There are other conveniences that we often take a lot of advantage of. One of those options is free two-day shipping when we make a purchase on Amazon or Walmart. We love that free two-day shipping because it means we get our package sooner. If it’s one thing we don’t like to do, it’s waiting for something we bought to arrive.
This is an advancement that continues to grow. Other companies are trying their best to catch up with Amazon by also offering free two-day shipping. Of course, with Amazon you are required to have a Prime subscription. As these other companies catch up, Amazon is forced to make some major decisions of their own. They need to stay ahead of the game any way they can.
That’s why in May, Amazon announced that they would soon be offering one-day and same-day delivery. It’s a race to see who can offer the most convenience to their customers by building the better network and getting packages to them the soonest. Walmart is following suit by also offering one-day free shipping. Target is also starting to do the same.
The Major Cost of Fast Shipping
While we certainly enjoy having this convenience at her disposal, and companies fighting for our attention makes life easier for us, there’s a major disadvantage to the environment that happens when we try to rush our purchases to our homes. This is a major cause that most people don’t even realize when I order something online. This is leaving companies to walk a fine line between giving customers what they want and being careful.
“The time in transit has a direct relationship to the environmental impact,” says Patrick Browne, director of global sustainability at UPS. “I don’t think the average consumer understands the environmental impact of having something tomorrow vs. two days from now. The more time you give me, the more efficient I can be.”
It was in 2017 when UPS found out that the e-commerce boom was forcing them to decrease the number of packages it will drop off per mile. Making deliveries is certainly more efficient we can pack more stuff into a single truck. But our demand for fast shipping forces more trucks on the road to better coordinate the different things that we buy.
Insufficient Routes
If you can imagine for a second how much it costs for you to order to products. Both of those products are completely different places. One may be much closer to you and the other clear across the country. It is in Amazon’s job to coordinate getting both of those products at the same time and within shipping parameter you chose.
This is very expensive for the shipper to do. We don’t often understand these costs because those costs aren’t being transferred to us. They’re offering free shipping as a means of keeping our business, which means we don’t have a true understanding of the full financial and environmental impact it truly has.
“There are some companies that can absorb the cost,” Jaller says. “One of them — it’s one of the largest ones — has been absorbing the logistic cost for a while. And it’s in the billions of dollars per year.” Of course, the company mentioned here is Amazon. They can eat the costs, still offer free shipping, but improving on that is going to require that they improve their infrastructure.
That’s exactly what Amazon is doing. At the same time that they’ve announced their free one-day shipping, they’ve also announced an $800 million investment into improving their logistics infrastructure. That means more trucks on the road, more fulfillment centers closer to population centers across the country, and even improving their drone delivery service.
Amazon’s Statement
When asked whether Amazon was harming the environment by offering free one-day shipping, they said no. In fact, they believe by improving their logistics and revamping their shipping process, they can give their customers what they want while at the same time protecting the environment. They made a statement about this.
“Prime Free One-Day is possible because we’ve been building our network for over 20 years,” a spokesperson said in a statement. “This allows Amazon to work smarter based on decades of process improvement and innovation, and to deliver orders faster and more efficiently.” And that is the ultimate goal. Fixing the problem so it doesn’t harm the environment.
There are a few other proposed solutions, including letting customers feel the full impact of their decision. If you want the fast shipping, having to brunt the cost of it will make more people choose differently. One option, as one of the largest retailers in Mexico tried, was revealing the environmental impact of their two-day shipping.
They had a green option available and the two-day, but the two-day showed how many trees would need to be cut down to fulfill their order. They found that 52% of people chose the green option when confronted with the impact of their decision. While it might work to some degree, convenience will continue to be king. But should we pass on the cost of this burden to customers? Would we be willing to give up convenience if it helped the environment?
“If they paid the true price of that delivery, they would ask themselves if they really needed it sooner,” says Goodchild. “I think that the fundamental idea of really paying for what it cost in terms of traffic congestion and emissions is something we don’t do right now. The more we did, the more balance there would be in what people are asking for and what people are willing to buy.”
