Let us ask you an urgent question. If you had to mention the single most crucial factor that you think drives today’s consumer choices, what would you say? In all likelihood, you thought about sustainability.
Creating, selling, and delivering eco-friendly products in a sustainable way across the entire production and supply chain is, in fact, one of the best ways for a company to be popular and successful in today’s market.
A recent article that appeared in Dagens Logistik – Sweden’s largest logistic newspaper – confirmed this drive for green products and solutions. The same article, however, also highlighted the fact that most consumers are not willing to pay extra in order to fulfill their wishes for less harmful packaging and shipping choices.
If this leaves you feeling puzzled, you are not alone. Our blog article right here aims to shed some light on this controversial topic, as well as provide you with some actionable ideas to encourage your customers to choose – and pay for – eco-friendly shipping solutions.
Analyzing Consumer’s Preferences
Let’s first try and dig a bit deeper into the findings of the article that we mentioned in our introduction. This piece was published as part of a research project launched by two Swedish universities and known as “Sustainable Logistics in E-Commerce”.
In the study, participants were queried on a range of topics, including:
- Speed of delivery
- Precision of delivery
- Choice of point of delivery
- Climate choice
Unexpectedly, the majority of the people surveyed responded that they were not willing to pay any extra money to receive items that had been shipped using greener and more sustainable methods. This seemed to contradict the rest of the responses, which in fact, all showed a significant concern around eco-friendliness and carbon neutrality.
Interestingly, though, while close to no-one seem to want to pay extra for this type of delivery, no-one is happy to pay for so-called “bad shipping”, either. Customers are not willing to wait at the door for their delivery, or not to be notified of when a delivery will take place – and rightly so.
How, then, should an e-commerce business handle all these seemingly contradictory needs and expectations? Let’s find out together in the next section.
One of the suggestions that the study has advanced is about bridging the knowledge gap between e-commerce businesses and their customers. For example, customers have come to expect that eco-friendly deliveries will cost more, but are they educated enough on why this happens?
The research suggests illustrating the reasons behind higher prices by using fun, captivating, and easy-to-understand visuals, such as infographics, video clips, and images. Based on some initial attempts at doing so, the study has already found that the willingness of consumers to pay extra has increased.
E-commerce brands that are able to engage with their customers on such a level, keep them informed and educated, and follow a clear and transparent process are much more likely to see their price requests for eco-friendly shipping met with a much more welcoming attitude.
More Than an Eco Icon
At OGOship, we strongly believe that eco-friendly shipping should not only be a possibility that only savvy e-commerce businesses can offer – we want it to be the default shipping method for all of our customers.
But what does this look like, in practice? Multi-warehousing is a key component of the whole process. With multi-warehousing, you can store your items in multiple order fulfillment hubs, scattered across the different geographies where you operate and sell.
All these hubs are connected to the same order system, which means that when your e-commerce store receives an order, the hub that’s closest to that customer is the one that takes charge of handling the order.
As you might imagine, the benefits of this approach are several:
- Faster shipping
- Lower-cost shipping
- Lower C02 shipping
- Fewer miles traveled
To better understand how all this can happen, let’s consider a semi-fictitious example. In this example, we have a fictional company and product, but are using real-life costs and numbers.
Let’s imagine that you run an e-commerce business specializing in pet care supplies, including organic and anti-allergenic dog food. Your customers are spread all over the world, but your main markets of reference are Sweden and Germany, and your company’s headquarters and main warehouse are in Gothenburg, a beautiful Swedish town.
One day, one of your parcels travels from Gothenburg to Berlin, in Germany. Inside the parcel is some of your organic dog food. The parcel itself measures 31x31x31 and weighs 7kg. Now, let’s consider your two different shipping options:
Your main warehouse ships globally. In this case, you will be shipping from Gothenburg, Sweden to Berlin, Germany. The parcel will travel by road, taking approximately three to seven days, emitting a total of around 0,35 kg of CO2, and costing you €13.79.
A secondary warehouse that’s much closer to your customer will be in charge of fulfilling the order. The warehouse is in Dorsten, Germany, and the parcel will only need to travel from that city to Berlin, in the same country. The road trip will take only a few hours, which qualifies the shipment for next-day delivery. The C02 emissions will be just 0,19kg, and the total shipping cost will be in the region of € 3.89.
Just by looking at these numbers, it’s immediately apparent that choosing to ship from a secondary location – multi-warehousing – is an absolute no-brainer, both in terms of sustainability and in terms of delivery times and costs.
Get Started with Multi-Warehousing
If you are now itching to get started with multi-warehousing, we totally understand your excitement – however, you need to be extra smart and knowledgeable if you want this method to truly work for you.
To begin with, for example, consider your entire product offering. Run some in-depth data analysis and, based on the findings, work out which of your products are best-selling in which specific area or country.
Then, move on by storing a few SKUs in a secondary warehouse abroad. Here, you will need to keep running analysis and gathering sales data in order to make educated decisions on whether or not it makes sense for your business to expand the product selection in that area.
At this point, armed with tangible insights, you will be able to optimize your e-commerce logistics and set up your multi-warehousing system. Remember, though, that you should not go about this alone: you need an expert, reliable, and committed partner to support you throughout.
A third-party logistics (3PL) provider is the best way to turn your multi-warehousing dreams into a solid and successful reality. Teaming up with a 3PL has a huge range of benefits, including increased personalization of shipping options and higher customer satisfaction.
And when customer satisfaction rates soar, you can easily expect your customers to be more willing to choose eco-friendly shipping options from you, regardless of whether or not they might cost them a bit more.
Never Compromise Anymore: Help the Planet, Help Your Business
Multi-warehousing is the answer to your eco-friendly shipping woes. By choosing this approach to supply chain management, you will no longer need to compromise between selling more products or doing your best to help the planet.
In a way, we can say that multi-warehousing enables you to have your cake and eat it – benefitting both you and the environment. By keeping your customers always informed and educated, and by choosing to ship your products from secondary warehouses that are much closer to your customers you will soon realize that greener, more sustainable shipments can truly become second nature to your business.
Would you like to get started with multi-warehousing? Speak with a friendly and professional member of the OGOship team today, and find out what we can do for your e-commerce business.