There aren’t many trends in the last fifty years which have had such a negative effect on the environment, economy and societies in general than has the proliferation of e-commerce. This article makes the case that every online shopper has a moral and ethical imperative, to at the very least, consider the negative web of impacts e-commerce has in the world.
Degrades the Environment
The devastating effects e-commerce has on the environment are substantial, and are only just now coming to the forefront in the minds of a growing minority of self-aware shoppers. The environmental impacts have escalated due to the boom in e-commerce caused in part by the global lockdowns of 2020, and further escalated by the popularity of same- and next-day delivery which is now available in most countries.
In 2021, industry groups representing 65 million transport workers wrote an open letter warning that if the trend of same- and next-day delivery continues to increase at current rates, that the global transport system would collapse. The logistical acrobatics required to facilitate same- and next-day deliveries and returns, given the global nature of the supply chain, are underappreciated by most online shoppers. The people on the front lines have sounded the alarm, but it doesn’t appear that their warnings have been heeded.
A World Economic Forum study found that traffic congestion will spike by more than 30% in the world’s top 100 cities because of e-commerce deliveries, particularly those activities associated with the last-mile. By 2030, it is estimated that congestions caused by e-commerce deliveries will increase commute times for the average person by 21%, thus decreasing the quality of life for millions of people in the world.
Figure 1: E-Commerce Induced Traffic Congestion
Excess packaging associated with e-commerce deliveries contributes substantially to environmental degradation, and adds enormously to the amounts of waste in landfills. 3 billion trees are pulped yearly to produce 241 million tons of shipping cartons. 86 million tons of plastic packaging is produced globally with not even 14% being recycled. Amazon alone produced 465 million pounds of waste from packaging in 2019.
E-commerce deliveries are a material cause of global green house gas emissions, with the shipping and returns of online purchased products accounting for 37% of the total. It is estimated that by 2030, delivery vehicles will increase in number by 36% to 7.2 million, increasing emissions by an additional 6 million tons. Amazon’s overall emissions spiked between 2019 and 2020, in an amount equivalent to running 15 coal plants for an entire year.
Figure 2: Emissions from E-Commerce
The return rate of items purchased online is over 30%, compared to a rate of just under 9% for items purchased at a brick-and-mortar store. The disparity is due to the increased likelihood of delivered items arriving damaged, and that the online purchased product may not meet the consumer’s expectations which were based on images and third-party consumer reviews. Traditional retail permits the customer to conduct an initial inspection prior to purchasing the item, leading to a lower return rate. Many e-commerce returns are thrown into landfills, instead of being resold, adding to the inefficiency and harm to the environment.
Figure 3: Online Purchases Are More Likely Returned
Shrinks The Local Tax Base
Most online purchases are made from large retailers with little investment in the communities where purchases originate. The local governments usually collect a sales tax from the transaction, but this revenue to fund governments pales in comparison to those which would be derived if the products were produced and sold locally. Most local governments generate less than 11% of their budgets from sales tax collections. Their bread is buttered from property taxes, and income taxes (i.e., payroll and local taxes). For years, Amazon paid zero sales tax on products it sold online creating the double whammy for local governments of collecting fewer taxes, while the community was being demanufactured (i.e., capacity shifted primarily to Asia) by the same or similar forces.
In the simplest terms, e-commerce as we’ve experienced it, sucks dollars and jobs out of communities leaving a mostly unfillable void in the wake. Property values, income, and jobs are reduced. These devastating outcomes began with Wal-Mart replacing local retailers, and now Amazon is taking it to a higher level as a sort of Wal-Mart on steroids.
Amazon has notoriously sweetheart taxpayer subsidized arrangements with the United States Postal Service (“USPS”). Estimates are that USPS has over the years undercharged Amazon by as much as $1.50 per package. These incredibly poor deals for the taxpayer allowed Amazon to invest in its own last-mile capacity, and offer delivery fees to customers which no other retailer could realistically match. Today, Amazon has built its internal delivery infrastructure to a point where it performs most of its deliveries internally in urban and suburban areas. However, It still uses the subsidized arrangements with the USPS for the more expensive rural and smaller markets deliveries which costs 1.4 to 4 times more to deliver.
Figure 4: USPS Shipping Amazon Orders
Reduces Gender Employment Equity
Most e-commerce logistics jobs are filled by men. These jobs include delivery drivers, and packaging, sorting, distribution and warehouse jobs. Women aren’t excluded from such jobs, in fact it’s quite the opposite, they are strongly encouraged and given preferential access to the available jobs. E-commerce logistics jobs are generally considered undesirable and low-status by most female job seekers.
A study in the UK by the Royal Society for the Encouragement of the Arts found that the town in its sample lost around 108,000 retail jobs from e-commerce. 75,000 of those jobs were held by women, and few of these displaced women sought jobs in the newly formed local industrial e-commerce sector. The 33,000 displaced male retail employees were for the most part happy to take the e-commerce industrial jobs.
Another study by the Institute for Women’s Policy confirms the UK study’s finding. Using Bureau of Labor Statistics data, the institute found that women held 46% of e-commerce jobs, as opposed to the 75% of retail jobs they once occupied. Confounding this situation is the reality that retail jobs lost to the e-commerce wave are not being replaced at the same rate at which they are eliminated.
Figure 5: Women Impacted Disproportionately by E-Commerce
Squeezes Out Small Businesses
Small and locally owned and managed retailers are now less likely to be able to rely on their local consumers, and are forced to digitize to survive. Google and other digital intermediaries make it very difficult for the small retailers to compete against the Amazons of the world. This results in most small retailers feeling forced to conduct their business through existing marketplace platforms such as Amazon, Facebook Marketplace and eBay.
Last-mile logistics is by far the most complicated and expensive part of the product delivery journey. Small retailers don’t receive the subsidized USPS shipping Amazon receives, and they don’t have the capital and consumer base to justify owning distribution centers and vehicle fleets. Free shipping isn’t actually free, it is a cost absorbed by the large e-commerce companies to gain market share and squeeze out competitors. Amazon invests heavily in its last-mile capacity because it knows how important it is as a strategic competitive advantage.
Ways to Mitigate E-Commerce’s Adverse Impacts
For those unable to fully break the addiction of online shopping, here are some steps which can be taken to reduce the adverse impacts.
Purchase multiple items at once. Most online shoppers purchase few items at a time and make many orders. Conversely, brick and mortar shopping generally results in fuller grocery carts and shopping bags, resulting in a more efficient transactions.
Ease off unrealistic demands for same- and next-day delivery. More than half of the adverse consequences of e-commerce can be traced back to last-mile delivery logistics associated with same- and next-day deliveries. Five-day to two-week delivery expectations will result in a healthier e-commerce ecosystem for all stakeholders.
Support local online retailers of local products. E-commerce done in this way is a positive for all parties and may actually be preferable to eliminating e-commerce transactions all together.
Make fewer returns. High return rates for e-commerce transactions are a significant cause of the negative consequences borne by societies from e-commerce activities. Research the product, try to kick the tires prior to making the purchase, and resist the urge to return the product if it doesn’t meet your every expectation.