June 2009 – Channel Crossing: Green Marketing

A Greener Path to Profitability

By Rebecca Ward

While layoffs and closures hit brick-and-mortar stores, consumer dollars are shifting online. As a result, businesses are bolstering their e-commerce strategies. This fundamental shift in human behavior–when people stop hitting the streets and instead start browsing virtual storefronts–creates a silver lining in today’s cloudy economic sky that is sometimes easy to overlook: a positive side effect on the environment.

According to a recent report by Forrester Research, e-commerce sales are forecast to grow 11 percent to $156 billion in 2009. This is a slowdown from 13-percent growth last year, but shows that e-commerce growth far outpaces overall retail sales, forecast to drop 0.5 percent this year by the National Retail Federation.

Further, demographics of web shoppers keep the online channel popular. Those with disposable income and still willing to spend may find solace in the online shopping experience, being shielded from scrutiny and judgment for their purchasing power despite economic conditions. Conversely, shoppers feeling the pinch are also drawn online by the web’s easy-to-maneuver wide selection and bargain prices.

MULTIPLE ENVIRONMENTAL BENEFITS
How does this shift from in-store to online benefit the environment? On multiple levels. First, there is the energy savings from shutting down the stores themselves. In fact, the nearly 5 million retail buildings in the United States account for the largest energy bills within the commercial real estate sector and are responsible for the second-largest percentage of greenhouse gas emissions among commercial buildings, according to the EPA. In addition, BuyGreen.com says e-commerce warehouses use 1/16th of the energy of that used to operate a traditional retail store.

Beyond the energy savings in the stores, online shopping reduces the transportation energy consumed by shoppers. BuyGreen.com also revealed that even overnight air shipping uses 40 percent less fuel than the average car trip to the mall.

And finally, virtual storefronts provide businesses with the opportunity to understand and analyze their customer base more effectively. This enables businesses to create a closely monitored inventory management system at centralized warehouses that reduces the inefficiencies of distributed storefronts and mis-managed inventory, in addition to the palpable reduction in travel costs and carbon emissions associated with shopping in brick-and-mortar stores.

While the current U.S. recession is partially to blame for the negative emphasis being placed on brick-and-mortar store closings, if you look a little closer and with some optimism, there is a significant opportunity sitting idle, and it’s called e-commerce. Companies that embrace the online channel and adjust their sales models to accommodate the acceleration of e-commerce are not only more likely to get a portion of the profits still available for the taking, they are also investing in a business strategy that has a dramatic upside for our environment. During a time when both the economy and the environment are top of mind for many, investing in e-commerce–the green path to profitability–is truly a win-win.

Rebecca Ward is the chairman and CEO of Tealeaf, a leading provider of customer experience management solutions. She can be reached at info@tealeaf.com.