What is free will? This may seem like a philosophical question but when we speak of this in the context of eCommerce, it is really about incentives. Why do you do what you do and how does that influence your decision? Incentives have existed in commerce ever since the first textile merchant offered an extra yard of woven cloth to entice a customer to purchase his wares.
Incentives fall into two main categories: Extrinsic and Intrinsic. The extrinsic motivations are the economic incentives that might influence your thinking. These might be as simple as “Two for the Price of One!’ or as complicated as reward points for certain types of purchases. Today, these extrinsic incentives may include “likes” or mentions by your favorite KOL or brand.
Intrinsic incentives are those that are your own internal values. Making a difference in the world by picking up trash on a beach is one example of an intrinsic motivator. At some point in their lives, most people would want to fulfill that ‘feel good’ factor they get from intrinsic motivators. However, extrinsic and intrinsic motivators are not mutually exclusive. You may direct your pension money to invest only in ethically sound companies, but you would expect to earn a return on your pension investments.
Since COVID-19 started, eCommerce has been the one economic bright spot…but that also comes at a cost. According to the World Economic Forum (WEF), the eCommerce boom will likely increase the total final-mile delivery vehicles on the road by 36% and increase greenhouse gas emissions by 30% overall by 2030.
With such alarming research and news about the state of the world, most people have a desire to make active choices that will make our planet clean and liveable for all species of life and generally a nicer place to live. But the methods on how to do this is a difficult question to answer when we also want to live reasonably comfortable lives with the modern conveniences.
A study by Harvard Business Review points out that there is a cognitive dissonance amongst eCommerce shoppers. Their study found that 65% of shoppers want to support more sustainable businesses, but…only 25% actually act on their words. Some companies take advantage of this and at the worst end, they engage in greenwashing, the act of pretending to be sustainable. Companies may say they are taking steps to use sustainable material but still utilize packaging materials that are damaging to the environment. This is visible in many brands around us, in fact, it was found that nearly 60% of sustainable fashion claims are greenwashing.
There are optimal solutions that are available, and they are usually guided choices, and these choices are distributed throughout the supply chain. Manufacturers need to improve efficiency in operations to avoid waste. Machine Learning plays a role here. For example, by optimizing cutting patterns on fabric, garment manufacturers can help reduce landfill. But manufacturers already have a strong economic incentive to otpimize processes.
In the delivery stage, the incentives become more mixed. These are driven more and more by the demand from consumers for immediately delivery. Companies help make a more sustainable final-mile delivery option but using skills like Distributed Inventory (by forward-stocking inventory as close as possible to the end customer, reducing carbon polluting air shipments).
The customer facing part of the business are where the biggest impacts can be made. These extrinsic motivating factors present in the first two steps of the supply chain are usually skewed towards driving revenue. When your sales targets are entirely revenue driven, then the logical outcome is to design web experiences that encourage purchases. However, this creates a dissonance amongst the shoppers and sellers, and both want to save our planet.
One way is through incentivized selling. By creating internal benchmarks, sellers can be motivated to encourage consumption of more sustainable choices. The discouragement of consumption is a hot topic, but this is not a choice that many businesses would make. So, we need to focus on working to encourage better behavior instead. We don’t have to be perfect, we just need to be better in a meaningful way. Through using Delvify’s dashboards, we can help businesses track and monitor the carbon footprint of their products and through setting explicit goals, teams can be encouraged to meet both sustainable and hard revenue targets.