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Sustainability in E-commerce

Closing the Loop

Brands Investing In A Circular Economy

The conversation around sustainable fashion is constantly changing, as new environmental concerns are brought to the forefront and a mixture of technology and policy attempt to eliminate or mitigate the effects. If you’ve heard of the closed loop or circular economy recently, you may be a customer of one or two popular apparel brands or you may have seen companies mention it in their Earth Day social media posts. The concept, scaled globally, will change the way we produce and consume goods. What is it and what is the point? The Ellen MacArthur Foundation, largely responsible for bringing the model to notoriety in 2012, explains three essential principles that make up the system: Design out waste and pollution Keep products and materials in use Regenerate natural systems Keeping products and materials in use is particularly important within the framework of apparel production processes, but all of these elements represent a paradigm shift that can generate new economic opportunities and provide enormous ROI in the form of environmental and societal benefits as well.

Two major brands, Adidas and Everlane, recently made headlines with their circular economy initiatives. Everlane's sneaker, Tread, launched on 4/25 and Adidas announced plans for its Futurecraft Loop shoe to hit the market in 2021. Both brands are trying to solve for the massive amounts of waste generated by the fashion industry, particularly from shoes, where some sneakers contain up to 20 separate plastic components. These two recent announcements are pushing the sustainability conversation forward but there are many other DNVBs (Digitally Native Vertical Brand) poised to make an impact.

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Our commitment to working with sustainable and ethical companies has led us to bring in consultants like Adam Freedgood, Principal of ThirdPartners, to explain the circular economy and its growing importance in the context of DTC supply chains and fulfillment operations. The model focuses on recovering products from end-users and re-manufacturing them into new products that are sold, and the cycle repeats itself. This model goes beyond using recycled materials in the manufacturing process; it maximizes the supply chain by recovering by-products of manufacturing for reuse and leveraging consumers to act as the beginning and the end of the product life cycle.

There's no doubt that industry leaders must lead the charge by investing in sustainable supply chains, logistics operations, and zero-waste materials. The bigger the brand, the bigger the environmental and social impact. The fundamental changes to overall business strategy require comprehensive planning, testing, and execution. These changes won't happen overnight and it's important to acknowledge that smaller brands with limited resources can also make an impact by engaging with customers and modifying the e-commerce experience to promote sustainable consumer behavior.

So what can those brands do in the immediate future to be part of the conversation and shift the culture around sustainability?

First, it's important to recognize that sustainability should be integrated, but it has to be frictionless for the customer. For the same reason that 36% of shoppers abandon their carts as a result of "slow shipping," they will opt in or out of sustainability initiatives depending on the convenience. For example, if product take-back is important, it should be free, fast, and rewarding. The recommendations below should improve a brand's e-commerce experience regardless of its emphasis on sustainability:

Brand Storytelling

Inherent in a DNVB is its accessibility and transparency for consumers. Early adopters of supply chain transparency, like Everlane, have set the consumer's expectations for other brands to follow. Emerging DNVBs used supply chain transparency as a marketing tool early on in their growth stages. They would show straightforward graphics of the supply chain to show the true cost of production and the difference in price markups between traditional retail and DTC models.

Supply chain transparency has evolved in the past few years; brands have leveraged blockchain technology and source mapping software to authenticate supply chains and give consumers a look at the entire production process. Kim Matsoukas, senior manager of sustainability at Vans says, "We're so hyperconnected that people can find out information almost immediately…They're able to be more aware of some of the issues that we're facing as a society…and they care deeply about those issues." These strategies are no longer just marketing tools. Sustainability is affecting the bottom line of business; 66% of global consumers are willing to pay more for sustainable goods, and 73% of Millennials are willing to.

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Brands that are not quite living up to sustainability standards should not hesitate to admit this to customers. For example, Instagram Stories on Earth Day were filled with brands acknowledging that there is work to be done in their sustainability efforts, but also detailing the steps they are taking to reach their goals. Customers are looking for authentic connections to brands and there's nothing more authentic than owning shortcomings and aspiring to improve.

Product Accessibility

Opposite of fast fashion brands are DTC brands like Taylor Stitch that are "designed to wear in, not out." Creating high quality items built to last and creating them responsibly does come at a high price, literally. In order to allow more consumers to access these products and take part in the slow fashion movement, brands may consider using payment plan software, like Affirm or QuadPay, to give customers purchasing flexibility. With payment options, consumers can more thoughtfully invest not only in a built-to-last product, but also in the mission of a brand that they support.

Patagonia's famous "Don't Buy This Jacket" ad in the NYTimes was one way it addressed the problem of consumerism and waste, proposing: "Businesses need to make fewer things but of higher quality. Customers need to think twice before they buy." Companies need to provide more avenues for customers to access those high quality products, enabling them to change their buying habits.

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Returns & Logistics

Each year, 5 billion pounds of waste is generated through returns. Many returned products end up in landfills without anyone actually using them, In many cases, this is a result of companies not having the technology to identify the nuances in returns; a worn-once pair of shoes with the laces untied vs a sweater with a hole in it. It is often more cost effective to ship those items to a discounter (increasing the carbon footprint) or simply throw them away.

Companies like ReturnLogic are working to fix these issues through AI-powered return logistics software that can not only help to identify and sort through returned products but also identify customers who display risky or unprofitable behavior. Return analytics can improve the customer experience by flagging products that may not be defective, but for one reason or another, are not meeting customer expectations. For example, if customers are consistently returning a shirt because it's too small, the product detail page should be updated to recommend buying a size up. According to a TrueShip study, 22% of returns are because there was a difference in the product appearance when compared to what the website displayed. Fit guides, customer reviews, and accurate product content can all help to tackle returns problems before they happen, by properly informing a potential customer and setting realistic expectations.

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In Conclusion

In one study, 88% of consumers declared that they would like brands to help them become more environmentally friendly and ethical in their daily lives. The key takeaway here is that consumers not only want brands to improve internal sustainability efforts, but they also want brands to enable them to do the same. It's part of what makes the circular economy so appealing to brands and consumers alike; everyone is a stakeholder and is responsible for guiding a product through its life cycle. However, this fact also indicates the challenges for sustainability efforts moving forward. It's on the companies to start these initiatives and make it easy for customers to participate. The investment required is significant but ultimately, brands are positioning thmeselves for future success by meeting consumer demands and cutting costs with circular production processes.

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