Consumers’ commitment to sustainability has been undermined by financial concerns. According to Descartes’ third annual 2024 Home Delivery Sustainability Report, nearly 90% of consumers’ sustainable home delivery choices are impacted by economic pressure. Yet sustainable business models are increasingly key to successful long-term performance.
Retailers and delivery companies face regulatory Net Zero targets, as well as expectations from stakeholders to reduce carbon emissions. Consumers, especially the younger generation, increasingly make purchasing decisions based on a company’s environmental reputation. So why are customers being asked to choose between low cost and sustainable options?
There is no longer any need for cost versus sustainable compromise. An efficient, effective delivery operation minimises miles, saving fuel and cutting emissions whilst also reducing costs and delivering a better customer experience. What’s good for the business is also great for the environment, insists Andrew Tavener, Head of Marketing, Descartes…
Customer Compromise
Sustainability matters to consumers, with 99% either doing or open to doing more to reduce their environmental footprint. However, the vast majority still perceive the cost of sustainability is too high and believe they cannot afford to take the sustainable route due to on-going economic pressures. In the 2024 Home Delivery Sustainability survey, while 57% of respondents were quite/very interested in sustainable home delivery services, 89% felt their willingness to pay more for sustainable delivery was impacted by the current economic environment. Moreover, 34% indicated economic pressures had significantly/drastically impacted this motivation.
Retailers and delivery companies cannot afford to let customers’ economic woes derail environmental strategies. Aside from Net Zero targets and stakeholder expectations, organisations are also experiencing growing consumer scrutiny. Individuals may not be wiling to pay for a green delivery but that doesn’t stop them calling out companies with a bad environmental reputation on social media, especially the younger generation.
The speed with which retailers can entice consumers towards ‘green’ delivery slots will play a key role in achieving environmental goals. But that can only be achieved with a different approach and a shift away from cost versus green thinking. Efficient fleet operations leveraging intelligence route optimisation to improve delivery density will reduce the number of miles driven. As a CO2 and fuel savings calculator reveals this not only significantly cuts fuel costs but also minimises Scope 1 CO2 emissions, allowing companies to offer customers delivery slots that are both green and lower cost.
Changing Mindset
The opportunities to transform customer behaviour are clear: 99% of consumers are open to doing more to reduce their environmental impact. Furthermore, retailers can embrace the fact that customers’ delivery expectations have changed in recent years. As the Home Delivery Consumer Sentiment Study 2024 revealed, speed of delivery is no longer the biggest incentive for online purchasers, with customers opting for low-cost delivery over speed. Furthermore, growing numbers of customers also prioritise certainty, opting for a precise delivery window rather than next day options.
Retailers now have a compelling chance to boost environmental performance, accelerating the drive to Net Zero whilst also gaining financial benefits and enabling customers to support their environmental goals. An intelligence-driven route optimisation model enables the entire last mile process to be transformed – the challenge is now to present delivery options to customers in a way that meets their needs whilst also enticing behavioural change.
Offering low-cost delivery slots many weeks ahead will flatten out demand and avoid expensive, carbon intensive management of peaks. Consolidating deliveries to a specific area to reduce miles travelled or offering free ‘green’ deliveries when a delivery is already booked to a neighbouring address will improve delivery density, reducing costs and emissions. Money off vouchers for customers that consistently opt for green deliveries will influence buyer behaviour and embed new attitudes to online purchasing.
Tailored Approach
A core component of this change will require an understanding of diverse attitudes across delivery personas. While over a third (38%) of consumers insist they regularly/always make purchase decisions based on the environmental impact of the product or company, there are very clear differences between age groups. More than four fifths (83%) of consumers aged 18-24 and 71% of 25-34-year-olds consider the environment when making a purchase, in contrast to only 43% of consumers aged over 65. Furthermore, over half (56%) of respondents aged 18-34 have reduced online shopping due to environmental concerns, compared to only 26% of those aged over 55.
Tailoring the messaging towards difference delivery personas will be key to encouraging consumers towards greener delivery models. For the older generation less concerned about the environment, ensuring the green delivery options are also low cost or free will be essential. In contrast, younger generations will be looking for clear proof that last mile practices are sustainable, requiring more in-depth information about the delivery options.
In addition to using free green delivery to achieve behavioural change within older generations almost by default, those organisations able to demonstrate the efficiency and effectiveness of delivery models will build loyal eco-friendly businesses amongst a younger generation increasingly basing purchasing decisions on environmental performance.
Conclusion
Consumers want to do their bit for the environment, they just don’t want to pay for it. And while the last mile is increasingly being delivered by Electric Vehicles, if customers still perceive green deliveries as the expensive choice, the pace of change will remain slow. Plus, of course, customers are cynical. They are wary of ‘greenwash’ and information about why a particular delivery slot is green will be an importance aspect of behavioural change.
It’s time to be proactive. It’s time to stop making the customer choose between cost and the environment. Efficient delivery reduces both the cost of fuel and CO2 emissions, giving retailers a compelling opportunity to entice customers to choose delivery slots that are both green and low cost.
