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Amazon Nixed ‘Green’ Shipping Proposal to Avoid Alienating Shoppers

Bloomberg logoBloomberg 3/5/2020 Matt Day

(Bloomberg) -- A few years ago, Amazon.com Inc.’s quick delivery team debated doing something radical for the e-commerce giant: asking shoppers to consider the environment.

The team building Amazon’s Prime Now same-day delivery service knew that the quickest delivery options tended to be the worst for the planet. A guaranteed one-hour delivery window sometimes meant sending couriers in mostly empty vehicles darting to far-flung neighborhoods, all the while emitting roughly the same greenhouse gas emissions as a fully loaded truck or van. Someone on the team proposed showing customers a “Green” shopping delivery option, a slightly slower delivery speed designed to give Amazon more time to cluster orders together and send out densely packed vehicles, saving on fuel, driver salaries and carbon emissions.

The idea was one of at least two instances in recent years when Amazon teams debated telling customers more about the environmental impact of their shipping choices, according to two people familiar with the episodes. Neither was implemented, in part, because of the risk that shoppers would think twice before clicking “Buy Now,” the people say.

“It was all efficiency and bottom-line focused,” says one of the people, who requested anonymity to discuss an internal matter. “If you don’t have top-down goals around sustainability, there are always going to be tradeoffs.”

Amazon in the last year has made some big climate commitments, following calls from shareholders, activists and employees to do more to offset the company’s contribution to the greenhouse gas emissions blamed for warming the planet. In September, Chief Executive Officer Jeff Bezos pledged to erase Amazon’s contribution—some 44.4 million metric tons of carbon dioxide equivalent in 2018—and make Amazon’s business carbon neutral by 2040. Last month, Bezos raised the stakes, saying he would spend $10 billion of his personal fortune on projects to combat climate change.

But Amazon’s push to make its operations more climate friendly is at odds with elements of the company’s core business practices, some current and former employees and outside observers say. Bezos’s company is, in many ways, designed to promote consumption. From one-click shopping to one-day shipping, many employees are encouraged to focus on a set of goals geared toward removing barriers to shopping and inventing new ways of pleasing customers before they think to ask. That obsessive focus has helped make Amazon the largest online retailer in the world. It also makes climate activists and sustainability experts—many of whom cheer the company’s bold new goals—skeptical of Amazon’s odds of success.

“What they’re trying to do is create a climate and a culture of consumption,” says Raz Godelnik, a professor at the New School’s Parsons School of Design who focuses on sustainability. “That means more products will be manufactured, more products will be shipped, more products will be returned. If you just look at the numbers, it means overall, a zero carbon contribution is not possible.”

Amazon says its commitments represent “a very aggressive and important goal.” 

a large passenger jet sitting on top of a runway: amazon air prime air © Photographer: Luke Sharrett/Bloomberg amazon air prime air

“Not only are we committed to the Climate Pledge to be net-zero carbon by 2040 . . . we are actively working to recruit others to join us,” a spokesman said in an emailed statement. “We are making significant investments in renewable energy, carbon neutral transportation, sustainable materials, closed-loop systems and resource efficiency improvements to achieve our sustainability goals.”

Amazon’s first efforts to address its environmental impact more than a decade ago were designed to cut costs by weeding out waste. Programs to reduce the size of boxes Amazon ships to customers, and eliminate hard-to-open plastic packaging, continue today.  The company also deputized employees to seek out inefficiencies in their day jobs, removing light bulbs from vending machines and, in the case of a Scottish warehouse, shutting off a hot water heater during the summer months.

At the same time, the company asserted that online shopping was better for the planet than what came before. “We believe that e-commerce is inherently more environmentally friendly than traditional retailing, and we believe that we will continue to innovate in this area over time,” the company said in a 2011 filing, language Bezos and other top executives have echoed with little change in the years since.

The logic makes some intuitive sense: 100 people driving cars to the store to pick up an item is hugely wasteful compared with a single truck that makes rounds to each person’s doorstep.

The trouble is, the world is messier than the talking point, people who study logistics and shopping habits say. One shopper might grab the week’s groceries on the way home from work, likely a more efficient trip than arranging for a refrigerated truck to stop by the house. Some online deal hunters wipe out any environmental benefit of online shopping by making a trip to a store to try out a product in person. And others, freed from the need to go to the store, might jump in the car for a trip to do something fun. 

“The complexity is tremendous,” says Anne Goodchild, who leads the University of Washington’s research on supply chains and logistics.

Five months before Amazon announced plans for a zero-carbon future, the company complicated its task, announcing it would make one-day delivery standard for members of its Prime free shipping program. Since Amazon’s previous two-day unlimited shipping guarantee was introduced in 2005, Amazon has been at the forefront of raising expectations that not only should shoppers be able to buy basically anything online, but the stuff should arrive quickly.

Researchers say faster delivery speed tends to mean more emissions, either from the waste of a partially empty truck rushing to meet a delivery deadline, or a trip in the belly of a cargo plane from a distant warehouse.

“Buying online or not doesn’t account for the main variable,” Goodchild says. “The main variable is how far away did something come from. And then how quickly did you demand that it get to you.”

a street filled with lots of traffic: Amazon Fulfillment Center © Photographer: Victor J. Blue/Bloomberg Amazon Fulfillment Center

Amazon says that, for its own operations, faster shipping doesn’t necessarily mean more emissions. By staging inventory in depots closer to shoppers and leveraging the massive order volume of the largest online retailer, the company is able to deliver packages more efficiently than outside research would suggest, a spokesperson said. Embedded in that assurance is expectations for ever more growth at Amazon: a bigger slice of retail sales means more deliveries to more neighborhoods, which in turn leads to more optimized routes and, theoretically, fewer emissions.

“What they’re saying is if we reach a high enough level of demand for essentially any delivery window, then we can likely do it in a more environmentally friendly manner than anybody else could do on their own,” says Teddy Forscher, who is studying the relationship between online shopping and transportation at the Institute of Transportation Studies at the University of California, Berkeley. 

Amazon hasn’t released numbers to back up its claims about delivery efficiency, but outside data do support some elements of the company’s premise. In 2019, Amazon packages started their journey to customer doorsteps 25% closer than shipments by other e-commerce companies, according to data from Rakuten Intelligence, which tracks emailed customer receipts. Amazon packages also spend a day less in transit, on average.

That effortless shipping makes it possible for people to click “Buy Now” without thinking too hard about the cost, shoppers say. “Amazon makes it really easy to click through things,” says Katie Ferrara, a songwriter in Los Angeles, who gets about two or three Amazon deliveries a week. Most of her orders, from guitar cables to clothing she can’t find in local stores, tend to be single purchases, including the occasional impulse buy. “I know it’s probably not the best for the environment,” she says.

When shoppers do try to buy items in bulk, Amazon most often sends them packaged individually, which is partly the result of third-party sellers on Amazon’s site who often mail their own inventory. Among orders containing multiple items, more than 60% come in separate packages, according to Rakuten data covering the first half of last year. For other retailers, orders containing multiple items come in separate packages just 27% of the time. 

Amazon, which says its deliveries generally emit less carbon than physical shopping trips for the same set of items, is working behind the scenes to make its operations more efficient without customers knowing or having to change their behavior. The company says it expects to receive its first electric delivery truck from Rivian Inc. in 2021, and have 100,000 of them on the road by 2030. The company cites the purchase of electric vehicles, typically more expensive than conventional diesel- or gasoline-powered models, as a sign of its commitment to meet its zero-carbon goal, even if it adds costs. 

The order may help jumpstart production of fossil-fuel-free delivery vehicles, which has so far failed to keep up with demand. FedEx Corp. and United Parcel Service Inc., which each have thousands of electric or alternative-fuel vehicles on the road, both saw their emissions rise in 2018, the most recently reported year, as surging e-commerce orders outpaced their ability to acquire new vehicles.

“The e-commerce boom has changed buyer behavior—consumers have become accustomed to getting nearly anything they want, when and where they want it,” UPS said in its sustainability report.

UPS, which gives customers the option to offset the emissions associated with their shipments, is among the companies that have decided to enlist customers in making operations greener. In Britain, grocers Ocado and Sainsbury’s both show customers during checkout which delivery slots are better for the environment.

Amazon, which left that option on the table with the abandoned “Green” Prime Now window, has experimented with similar concepts that emphasize efficiency, but shy away from some of the environmentally friendly branding.

The company last year unveiled “Amazon Day,” an option for shoppers to cluster their deliveries on a single day of the week. The marketing of the new service touts convenience and simplifying shoppers’ busy lives, before noting that the program is “one of many sustainability initiatives” underway. A separate program aimed at efficiency offers customers store credit or discounts if they opt for slower shipping on an in-demand product. The company declined to say how many shoppers use those options.

Godelnik, the New School professor, says such behind-the-scenes nudges may not be enough. Amazon may have to involve its own customers, or use its influence to change their shopping behavior, before it will zero out its environmental impact.

“Amazon for me is a reflection of business as usual,” Godelnik. “You can talk all day about the climate crisis, but if you see packages come and go, and everything looks normal. Production, consumption. What’s the crisis?”

Still, Godelnik, who lives in Princeton, New Jersey, and does most of his shopping on Amazon, doesn’t typically use the company’s no-rush shipping options himself. “I’m very bad at it, I have to admit,” he says. “Prime, it’s just addictive.”

To contact the author of this story: Matt Day in Seattle at mday63@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net, Anne VanderMey

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