Mar 20, 2021
No Free Lunch
“Invisible” Costs Behind Our Free Shipping Purchases
no free lunch• /nō/ /frē/ /lən(t)SH/• idiom
: said to emphasize that you can’t get something for nothing
Did that midnight purchase you made because of the free shipping voucher arrive on time? How about that new mobile phone purchase you want to be delivered to your place instantly? While e-commerce platform excessively distributing free shipping vouchers to incentivize their customers, attention is rarely placed on who actually take the brunt of this impulse-driven behavior, the environment.
As Long As It’s Free
In the early period of the “e-commerce boom”, one of the biggest hurdles for people to shop online was the shipping cost which was still considered as an unexpected cost for the buyer. According to the 2016 VWO eCommerce Cart Abandonment Report, 25 percent of shoppers abandon their shopping carts when they encounter unexpected shipping costs. Since then, e-commerce platform has strived to improve the efficiency of their logistics services and experimented with a various incentive mechanism to lower customer’s barrier to purchase.
Little did we know, within 3 years, free shipping service has become the norm for most e-commerce in Indonesia. Free shipping service has proven effective in influencing the purchasing decisions of the Indonesian market and also attracting more and more people to shop online. But even it sounds like a win-win solution, it comes with consequences.
The elimination of shipping costs obscures many intangible costs associated with our online purchase, especially the environmental cost. This incentive mechanism provides shoppers with asymmetric options every time they need to buy something online. Shoppers don’t need to buy things from the same merchant to optimize the shipping cost. As long as the shipping cost is free, all they need to care about is the price of the item.
The Iceberg
This simplification of consideration makes shoppers even less aware of the ecological footprint of their online shopping. People no longer think about the extra plastic waste that will be generated from their simple price-optimum choices online or the additional carbon emissions from the daily rumble of thousands of delivery trucks fanning out across the country. This condition paired with the COVID-19 situation that keeping everyone at home and become more dependent on online shopping has rippling effects on the environment as plastic waste and carbon-based combustion grow in concert.
A survey from LIPI during the pandemic shows that a person’s online shopping frequency increase from 1–5 to 1–10 times per month and 96% of online shopping packages are wrapped in plastic. This survey coupled with the dataset from the Ministry of Environment and Forestry confirms that the composition of plastic waste in Indonesia continues to increase YoY from 14% in 2017 to 16.55% in 2020 despite all the “bring-your-own-shopping-bags” movements. This should be a reality check for all our efforts to reduce plastic waste. This may indicate that actually, the amount of plastic waste is not decreasing but only change form to bubble wrap and masking tape from our online shopping packages.
Plastic waste is not the only case, Indonesia CO2 emissions per capita also continue to increase at an alarming rate. In 2019, CO2 emissions per capita in Indonesia increased 23.4% from 1.88 tons in 2016 to 2.32 tons in 2019.
Although this online shopping behavior shift is not arguably the only cause of this increase in CO2 emissions, it still contributes positively. Emissions from transport account for 27,3% of Indonesia’s energy-related CO2 emissions (2019). The majority of trucks that transport goods from door to door are still mainly powered by fossil fuels. This means the process of getting goods from warehouses to our doorstep involves pumping large quantities of greenhouse gases into the atmosphere. And moreover, this condition actually going to get worse for climate change as merchants now started to offer instant delivery and free returns.
Paying The Price
Achieving SDG 12: Responsible Consumption and Production is about decoupling economic growth from environmental degradation by involving all parties along the supply chain, including the end consumer. Although it is certainly nice to get goods with free shipping, we should also be mindful of the environmental cost of our purchase decision.
The application of carbon tax and carbon offsetting in Indonesia can be one of the solutions to pay the price. Even though a tax policy is never politically popular, it is proven to be a powerful and effective policy to reduce emissions. Given our current status quo, data can play an important role in educating and promoting carbon tax for the public.
With the availability of data — e-commerce platform, software developer, data scientist, and pro-environment organization can collaborate to create tools (browser extension/ in-app features) that can monitor items in our shopping basket and estimates their carbon footprint based on the method, weight, and distance traveled. Data play an important role to “unlock” previously unavailable information and “enlighten” customer about the environmental impact of their every purchase decision. Shoppers then can choose to donate/pay a certain amount of money to capture or prevent emissions for that amount of CO2. This money then will be used to maintain existing forests and/or plant more trees to offset the carbon emission by the certified organizations.
Carbon offsets alone won’t solve the problem but it’s a necessary step to take. So how do we get back on track to achieve SDG 12?
By incorporating this carbon tax and offsetting scheme into the online shopping routine, it is hoped that the environmental footprint of online orders will soon become essential criteria in consumer decision-making. And if enough people started to reduce their overall carbon emission because of this informed data-driven consideration, it definitely would make our climate goals a whole lot easier to achieve.
“I would just recognize that free shipping, free one-day delivery, it’s not free. It comes at the expense of the health of communities that live near warehouses and freight hubs.”
— Sasan Saadat, Research and Policy Analyst at Earthjustice.
