Comparative Environmental Performance of E-commerce and Traditional Retail Channels
Creators: name: Shiaeb, Adil
Publisher: name: Université d'Ottawa / University of Ottawa
Year: 2024
Subjects: E-commerce
Online shopping
E-business
Emissions
Environmental impact
Energy use
Environmental performance
Environmental sustainability
Pollution

description: Chapter One: This study investigates the comparative environmental performance of e-commerce and traditional retail channels using a systematic literature review and content analysis approach. Given the pace at which e-commerce is penetrating global markets today, it is important to understand how this digital transformation is mitigating or contributing to the current climate crisis that is threatening the liveability of our planet. We find that, from a life-cycle perspective, e-commerce generally leads to better environmental outcomes than traditional retail. However, looking at individual logistical activities (production, warehousing, transportation, packaging) separately, e-commerce fares badly environmentally at the packaging stage, likely due to the vast number of small orders shipped individually and the use of corrugated cardboard boxes. In order to balance economic and environmental performance of e-commerce, this study shows developing environmentally-friendly packaging solutions is a key area to focus on. -- Chapter Two: This study builds on Chapter One, which provided a comprehensive and up-to-date systematic review of the environmental impacts of e-commerce over traditional retail. The meta-analysis in this study estimates several successive regressions using data retrieved from the studies reviewed in Chapter One. Based on the regression results, we make two conclusions. First, on a Life-Cycle basis, switching from traditional retail to e-commerce does not seem to have any statistically significant impact on the environment. Secondly, we confirm the results of our systematic literature review that e-commerce packaging is an environmentally damaging activity. These two results taken together suggest that environmental benefits of other supply chain activities such as production, warehousing, transportation etc., offset damages from the packaging activity as the retail channel switches to e-commerce. In today's world where technological development occurs at a faster pace and a Coronavirus pandemic has reinvigorated the rate at which e-commerce is penetrating global markets, one takeaway from this study is that developing sustainable packaging solutions is a key area to focus on. -- Chapter Three: This study utilizes the nonparametric EDM approach to investigate the impacts of increased e-commerce penetration on Canadian natural gas, motor gasoline and distillate fuel oil consumption. This approach overcomes the impracticality of specifying explicit equations for the analyzed economic data, given the potentially complex and chaotic nature of the underlying systems. We show that e-commerce did not influence Canadian residential, commercial, and industrial natural gas consumption over the 2016-2021 period. On the contrary, causality test confirmed causal forcing from e-commerce to Canadian motor gasoline and distillate fuel consumption for the 2019-2021 period. On average, Canadian motor gasoline and distillate fuel consumption decreased by 1.0% and 2.3% respectively for every additional percentage point increase in retail e-commerce sales. In addition, analysis using Australian data shows marginal effects for gasoline consumption, like Canada, are largely negative. However, unlike Canada where the impacts on diesel were negative, results for Australia and Taiwan show positive state-dependent effects of e-commerce on diesel use, a plausible outcome as the activity changes from passenger travel to freight transport with increased e-commerce penetration. Given the limited application of EDM in social sciences, and particularly in e-commerce research, this study augments the existing literature. -- Chapter Four: This chapter integrates the analytical results from the first three chapters of the current study and provides targeted recommendations to consumers, firms, and governments. The analyses reveal two important conclusions: that e-commerce as a whole does not necessarily lead to negative environmental outcomes and that e-commerce packaging is environmentally damaging. Given these results, we recommend civil societies representing the public to educate consumers on environmental protection and climate change. For firms, in addition to prioritizing environmental and social responsibility, developing eco-friendly packaging solutions, and engaging in green marketing, we recommend them to invest in the development of sustainable e-commerce infrastructure to improve the long-term environmental performance of e-business platforms. For governments, the study recommends relevant state authorities to utilize the right policy levers to achieve better environmental outcomes, preferably through market-based solutions but also exploring other regulatory levers where market-based mechanisms are not suitable.