Season 3, Post 3: Shop online, and help save the planet - Heptagon

Several times a day, it seems, the doorbell rings, the dog barks and yet another package is delivered to the Gunz household. This pattern – exacerbated under…

Season 3, Post 3: Shop online, and help save the planet

Several times a day, it seems, the doorbell rings, the dog barks and yet another package is delivered to the Gunz household. This pattern – exacerbated under lockdown – is being repeated up and down the country and across much of the world. While the speed and convenience of online ordering is certainly desirable, a question that has been exercising our mind recently relates to what is the environmental impact of a growing market in online retail? Breathe a sigh of relief: the good news is that e-commerce lowers the carbon footprint of retail.

This is the conclusion reached in a new study by the MIT Real Estate Innovation Lab. It is one of the first we have seen that highlights the tangible environmental benefits of online shopping. Carbon emissions from online shopping are 36% lower, on average, than those produced by in-store trips. There is, then, a clear sustainability advantage enjoyed by e-commerce over in-store shopping, even after factoring in higher returns (of unwanted items) and packaging. Interestingly, the report suggests that the positive carbon impact of efficient transportation routes is 2.5x the negative impact of excess packaging.

This analysis matters since the purchasing behaviour evident in the Gunz household is indicative of a broader trend at work. Initial estimates from Mastercard would suggest that online sales grew at least 50% year-on-year over the recent holiday period, an outcome consistent across most developed e-commerce markets. Looking ahead, package deliveries are forecast to grow by 80% over the next decade, per the World Economic Forum.

What should businesses do? Sun Tzu once famously said that “the line between disorder and order lies in logistics.” Efficiently built-out logistics networks – which include urban fulfilment centres sited in strategically appropriate locations – provide one solution. Other ideas might include delivery vehicle electrification (the MIT study notes that this technology can reduced average transportation-related emissions by at least 25%, while also reducing traffic noise levels), better packaging (reducing the use of cardboard would lower CO2 footprints) and increased data analytics (allowing for more efficient routing). The future can be green.

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

Alex Gunz, Fund Manager

Disclaimers

The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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