Jan 18, 2021
The Future of E-commerce - Is a bilateral experience an answer to circular shopping?
Exploring the untapped potential of a closed loop shopping system for companies and local administrations
Have you ever pictured yourself receiving a package from a drone outside your window? Since the e-commerce landscape changed so drastically in 2020, we wondered what it could mean for the future of online deliveries. Walk with us for a moment in 2028 and back eight years to see how we got there.
Eight years after 2020 — the most dreadful year of the decade — on a rainy evening, Mustafa came home from an exceptionally challenging day at work. Managing traffic on the most populated drone highway with particularly tricky weather conditions, was cakewalk for a now experienced drone pilot like him. He had been working as one for the last year and a half now, ever since he moved on from his job as delivery person. Everyday he would go to the control tower, where he’d take care of last mile deliveries for his locality along with 5 other pilots. Decentralised delivery systems needed to have a deep understanding of local logistics, public transport and other regulations. And so, to maintain high standards, every control tower hired pilots that were local residents of their designated area (just like how taxi drivers can provide better service when local). The youth looking for part time jobs were more than happy to have more opportunities laid out for them.
Ever since its boom in 2020, during the pandemic, traction for E-commerce had been rocketing, making it THE medium of shopping in 2028. But it wasn’t the same as it was in 2020. Consumers could return their packaging empties and used products as easily as they could buy them and thus, bilateral cycles were born. Groceries and food items could be purchased in reusable containers that consumers ‘borrowed’ by paying a deposit, like a leasing model. Back in 2020 — the pre bi-lateral delivery days, people took their trash out at least twice a week, but now it was as little as once a month! Trash can manufacturers as a result pivoted to find new revenue streams like home composters, aquaponics and vertical farming.
Local delivery services had by then understood the importance of amping up their operations and nurturing decentralised bilateral delivery systems. Multinationals could not keep abreast with local habits and systems which is why they outsourced their delivery tasks to the local postal services who made good business with their drone infrastructure that they’d spent good time and money testing and improving over the years. 2028 witnessed a cross industrial collaboration between commercial vehicle, courier express parcel and shared mobility companies who envisioned a need for redistribution in their value chain and therefore diverted their core business towards optimised last-mile delivery logistics. For instance, Uber launched a special B2B wing for courier express parcel companies like DHL and FedEx for sharing drones and automated vehicles.
Airborne mobility solutions had a positive impact on not just businesses but also cities. It freed up valuable real estate that was once occupied by parking space and waste storage facilities. Municipalities repurposed this space and turned parking lots into parks and reused concrete from roads to maintain its suburbs. Government bodies realised the value of this new system and contributed by investing in supportive infrastructure for automated transport. For example, in densely populated cities like Shanghai and Mumbai, building rooftops were converted into solar powered verti ports that also charged the drones. Safe drone highways were the latest addition to urban mobility that became an integral part of city skylines, much like the early morning skies of Cappadocia, full of hot air balloons.
But what could drive humans to embrace such drastic changes in their lifestyle and systems?
Let’s come back to the present, the Anthropocene: as of 2020 human-made products or anthropogenic mass has outweighed all life on earth. Buildings and infrastructure weigh more than the plants and shrubs on our planet. Human made objects that constituted only 3 percent of biomass on earth in the 1900s now weigh approximately 1.1 trillion metric tons — equivalent to the dry mass of all living beings on Earth. If we continue this way, anthropogenic mass will grow to three times the world’s biomass by 2040 which will be eventually converted to waste.
In 2020, Friedolin Kausmann affirmed that —
“In the next 20 years, we will get as much waste as from the last 110 years together. Most of what we have now has been built in the last couple of decades, since the 1960s. Now this is becoming end-of-life, so we are really facing huge, huge waste flows.”
So how does E-commerce play a role in this?
With the pandemic boosting E-commerce, 20 million packages were delivered in the second quarter of 2020 alone. According to statistics from Pitney Bowes, 2,760 packages are shipped every second and parcel volume is expected to reach 200 billion by 2025.
This mega trend has seen a behavioural shift in traditional shoppers, building a new kind of confidence in consumers who are now open to experiment different methods and technologies of online shopping. Convenience is a basic expectation for users that e-commerce provides in abundance and the delivery experience is a major decision driver for users.
Since the quality of delivery experience has become a key brand differentiator, companies are investing significant time and money in bettering it. Choosing the right e-commerce platform has replaced choosing the optimal spot on supermarket shelves for brands.
But in 2021 while e-commerce is booming, the balance on Earth is topsy-turvy. With a growing affinity towards convenience and instant gratification, mindless purchases are on the rise. Houses stacked with packaging boxes and mailers leaving consumers frustrated with all the trash they need to handle. So why not extend the role of customer experience towards waste management and make returning used products and packaging waste as second nature as purchasing it?
According to Statista, e-commerce sales are projected to grow to 6.54 trillion USD in 2022. Imagine the kind of competitive advantage companies can have if they invest in a bilateral delivery system. This circular way of doing e-commerce not only will help save costs by reusing packaging and optimising logistics but also generate revenue with an improved customer experience and brand value.
Catalysing the Circular Economy transition of the FMCG sector
Digital media becoming the primary touchpoint for the shopping experience, brands find it necessary to find ways to make it more humane and personalised to compensate for the physical in-store experience. E-commerce and product packaging will play a vital role in fulfilling this gap, being the only physical medium of interaction for brands with their customers. There is far more potential to this medium than personalised notes, name tags and colourful wrapping. With the help of the right technology, e-commerce and product packaging can provide valuable data about consumer habits and patterns. It can also be a powerful source of forming strong feedback loops with users.
For example, a consistent cycle of purchasing, returning and refilling body lotion can help the brand know how many times a user orders that lotion, how long does every user need to finish one product, do they prefer to order in bulk or try out smaller products of variety at a time.
This data is valuable to create user pools that optimise distribution and understand value chains which in turn means better logistics cycles with lesser returns and product and resource wastage. This recurrent brand interaction can also help strengthen consumer loyalty.
The systemic impact of Bilateral Delivery
A contributor to better urban planning :
Achieving a 15 min city plan is not possible for all localities in which case connectivity becomes an issue. Airborne mobility solutions can improve this in remote areas and make basic necessities like groceries and medical aid more accessible, for which people otherwise depend on private vehicles and drive long distances. It will therefore also cut down emissions and traffic congestion. According to a report by the Ellen McArthur Foundation,
50% of urban land in Europe is allotted to parking spaces and roads. But only 10% of roads are occupied by cars even during rush hour.
Use of airborne mobility solutions like drones for last mile delivery can help free up urban land which can be used for more useful things.
Changing the role of human labour :
With the ratio of mail to parcels evening out day by day, decentralising delivery systems will save local postal services the risk of losing revenue. Taking advantage of knowing the city better than standardised global delivery services, they can involve the local workforce like students and youngsters looking for part time jobs. Bottegas and tobacco shops can pitch in to improve operations and help the local economy whilst streamlining supply chain logistics and customer experience. The role of delivery persons needs to be reconsidered as there is no real human interaction with them and they are often underpaid (think of the rise of Uber eats, Deliveroo and the F&B gig economy). Drones go back and forward without a salary, they only need maintenance. Local services can therefore assign drones to take care of the deliveries and let humans contribute to other more meaningful tasks. In this process,
the role of human labour will change from providing service to the customer to a backend role consisting of data analytics and keeping track of the inventory along with maintenance services.
The role of every player towards making bilateral delivery a reality
- Businesses can go beyond market research and deploy feedback loop systems directly with consumers to get the necessary data required to improve themselves. On the employee side, they can set up education programmes and online schools that train potential and current employees to be ready for the future roles of labour for eg. backend software management and maintenance.
- City administrators, architects and engineers can collaborate to develop and test technology and infrastructure that supports automatically driven vehicles and rethink the purpose of city spaces coherent with the changing living and mobility trends.
- Delivery services can double down on their services with reverse shipping and get that first-mover advantage in the market.
All said, there isn’t a shortcut to making this vision a reality. There are a bunch of hurdles that need to be tackled to make the transformation scalable which could take at least another decade. As of today, returns are viewed as an economic incentive for consumers to buy. This low commitment, safety net has encouraged negative consumer behaviour. According to Zalando, returned items make up 50% of their total sales. High volume of returns and hygiene concerns due to the pandemic have proven to be a burden for businesses. Especially the ones that are too small or too busy to bear the transport costs of shipping the items back. As a result, consumers are left with unwanted purchases that are fully refunded, which in turn are a loss of money and items for the company. Businesses need to rethink how their distribution is organised today to solve the problem of reckless returns.
As we can see, this transformation is not only about making the most tech savvy drone or automated vehicle. Investigating and testing possibilities for supportive infrastructure is equally important along with other factors like managing usability, safety, privacy and climate change. Bringing about a positive behavioural change and awareness among consumers is another mammoth task for brands.
But that doesn’t mean we cannot work towards it from the get go. Having an overarching vision as a constant guide and reminder is a good thing. Brands are already experimenting refillable systems both in store and as online subscription models. Big players like Unilever, Burger King, Nestle are partnering with companies like Loop and Terracycle to develop solutions that ease the burden of disposing waste for the end user. Amazon is designing packaging to reduce material use, size and weight.
If brands view this as an opportunity and positive trigger for innovation rather than a setback, there is ample space to grow. What brands need to keep asking themselves is, what is one thing they can do better than yesterday, and perhaps we shall see Mustafa in 2028, with a drone hovering at a window with a package delivery.
This article was written for Future Urban Living a circular strategy company helping decision makers transition towards regenerative business by design.
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