Previously, I mentioned in my article “ASIA Retail and Consumer Trends 2023”, a study from McKinsey & Co shows that supply chain operations contribute up-to 80% of greenhouse gas emissions within the consumer sector. As consumers become more aware of the environmental impact of their purchases, e-commerce companies are under increasing pressure to adopt sustainable practices.

However, e-commerce businesses also have a unique opportunity to lead the way in sustainable practices, reducing their carbon footprint and improving customer satisfaction. Let’s dive in to explore a few areas that AI (Artificial Intelligence) can play a significant role in helping e-commerce companies meet these expectations and put sustainability into their business practice.

1. Supply Chain Optimization

One of the key areas where AI can make a difference is in supply chain optimization. AI can analyze supply chain data and identify areas for improvement, such as optimising inventory level by location, quantity, and frequency to replenish. For example, AI can be used to predict demand and optimise inventory, reducing overstocking situation and reducing waste. This can help e-commerce companies to become more sustainable by reducing their carbon footprint and reducing waste while restocking and replenishing their stock.

2. Product Sustainability

Another important area where AI can help e-commerce companies to become more sustainable is in product sustainability. AI can be used to analyze product data and identify the environmental impact of products, including the use of resources, carbon emissions, and waste. This information can be used to inform product R&D or sourcing, ensuring that products are more sustainable and environmentally friendly. For example, AI can be used to identify products with a high environmental impact and suggest alternative, more sustainable products. By offering sustainable products, e-commerce companies can differentiate themselves from competitors and tap into the growing demand for eco-friendly products.

3. Carbon Footprint Reduction

Logistics and shipping are a significant source of emissions and energy usage for e-commerce companies. AI can analyze data on energy usage and carbon emissions, identifying opportunities to reduce the carbon footprint of the e-commerce business. This can include optimizing logistics and shipping, reducing energy usage in warehouses, and reducing paper usage. For example, AI can be used to predict shipping routes and schedules, reducing emissions and energy usage. This not only improves the environment, but also reduces costs and increases customer satisfaction with more predictable estimated time of arrival of their parcels.

4. Sustainable Marketing

Sustainable marketing is an important aspect of e-commerce, as it helps to engage customers and improve marketing strategies that align with customer values and interests. AI can analyze customer data and identify customer preferences and behaviour related to sustainability. This information can be used to inform marketing strategies and ensure that marketing messages are aligned with customer values and interests. For example, AI can be used to analyze customer reviews and feedback, providing insights into what customers want and how e-commerce companies can meet their needs. By using AI, e-commerce companies can increase customer engagement and loyalty, differentiating themselves from competitors and improving sustainability.

5. Implement Energy-Efficient Practices

An e-commerce company could use AI to identify and implement energy-efficient practices, reducing their carbon footprint and improving sustainability. E-commerce companies use a lot of automations, tools, and robots in their warehouses with the deployment of Micro-Fulfilment Centers and having a large fleet of vehicles delivering products to consumers country-wide. In this process they use a lot of energy as well as emit carbon footprint into the environment. For example, they could analyze energy usage and identify areas for improvement, such as using renewable energy sources, reducing lighting usage, increasing energy efficiency, and converting their vehicles to EV (Electric Vehicle). By taking these steps, e-commerce companies can demonstrate their commitment to sustainability and increase customer satisfaction.

These are just a few examples, but there are many other ways e-commerce companies can use AI to put sustainability into their business practices. The key is to be creative and proactive, using technology to identify and implement sustainable solutions that improve the environment and customer satisfaction.

In conclusion, AI has the potential to play a significant role in helping e-commerce companies to become more sustainable. By using AI to optimize supply chains, improve product sustainability, reduce their carbon footprint, market their sustainability initiatives, and implement energy efficiency practices, e-commerce companies can build a stronger brand and increase customer loyalty. By adopting sustainable practices, e-commerce companies can not only meet the expectations of consumers but also make a positive impact on the environment.

Source: McKinsey & Co - Sustainability