Today, shoppers are more aware of their purchases' environmental and social impact.
The 2022 E-commerce Consumer Study by Dotcom Distribution shows a significant increase in the share of consumers who value sustainable ecommerce when choosing ecommerce brands.
More specifically, 21% of customers are more inclined to buy from businesses that use fuel-efficient transportation methods, while 13% emphasize receiving products in packaging made from ethically sourced materials.
It's more important than ever to focus on building a transparent supply chain to achieve sustainable ecommerce and meet the ever-changing demands of consumers.
In this article, we'll explore why having a transparent supply chain is crucial in 2023 and how OpenCart can help ecommerce businesses achieve this goal.
Are you ready to learn more?
Let's dive in.
The Role of Transparency in Sustainable Ecommerce
Transparency is all about being open and honest with your customers.
Customers feel more confident in your brand when you're upfront about your business practices, such as sharing details and a sales playbook about your suppliers and manufacturing processes.
For example, fashion retailer Everlane shares information about the factories where they make their products, allowing customers to learn more about the working conditions and environmental impact.
When your business is transparent, it signals a strong commitment to ethical and environmental values. Plus, it holds your organization accountable when you showcase your efforts to reduce waste, use eco-friendly materials, or support fair labor practices.
Patagonia, a well-known outdoor clothing brand, is another excellent example. They share information about their commitment to responsible sourcing, fair labor practices, and reducing their environmental footprint on their website.
Not to mention that they flat-out admit that 95% of their emissions come from its supply chain and materials manufacturing.
Instead of simply calling attention to it, they share what they're actively doing to improve it.
Especially since a lot of the problem is out of their direct control, they're funding energy and carbon audits for their partners instead of writing it off. Well, done, Patagonia!
Transparency in sustainable ecommerce also promotes a sense of responsibility and cooperation among businesses. By sharing information about your supply chain, you inspire other companies to follow suit, creating a more sustainable industry.
Benefits of a Transparent Supply Chain
So are you curious about how a transparent supply chain can boost your business?
Let's dive into the advantages of a transparent supply chain and how that could revolutionize your ecommerce operations.
Improved brand reputation and customer loyalty
A transparent supply chain can work wonders for your brand's reputation.
You show you're serious about ethical and sustainable practices when you share information about your sourcing, manufacturing, and distribution processes.
This openness builds trust with your customers and turns them into loyal followers and brand advocates. Case in point, brands that have embraced transparency and sustainability, like Patagonia and Everlane, enjoy a devoted customer base.
But that's just the tip of the iceberg. When you double down on your sustainability efforts, you can stand out in a crowded marketplace. So understanding the types of competitors is a crucial piece to the puzzle.
You need to know who your competitors are and what they offer to identify opportunities to differentiate yourself and stand out in the market. For instance, direct competitors are those who offer similar sustainable products or services to yours and target the same audience.
Let's take a look at an example. TOMS has been around for over a decade (founded in 2006) and was originally known for its one-for-one model, where it donated a pair of shoes for every pair purchased.
Their growth trajectory exploded virtually overnight due to a lack of competitors offering similar social impact initiatives. However, competitors quickly caught on to the wildfire success and started similar programs. You know the saying, imitation is the sincerest form of flattery.
Enter Warby Parker (founded in 2010) with its Buy-a-Pair, Give-a-Pair program that's donated over 13 million pairs of glasses since its launch.
And Bombas (founded in 2013) donates the three most asked for items in homeless shelters — socks, T-shirts, and underwear.
And what happened to TOMS when ‌the competition started entering the scene? It fell off the radar. In fact, it no longer donates a pair of shoes but rather invests in local community-focused organizations.
Of course, they're still bettering society. But without its original business model that other competitors have latched onto (and seen great success in).
The key takeaway? By understanding who your direct competitors are, you can evaluate their sustainability practices and identify areas where you can improve or differentiate yourself.
This knowledge can help you develop targeted marketing campaigns highlighting your unique selling points and attracting more customers. Plus, you can jump ahead of the competition (like Warby Parker and Bombas did).
Enhanced risk management and reduced supply chain disruptions
Being transparent in your supply chain gives you better control over potential risks. It allows you to spot issues early on and tackle them before they turn into major problems.
This proactive approach helps avoid unexpected hiccups and keeps your supply chain running smoothly. In turn, your business becomes more reliable and resilient in facing challenges.
And there's nothing you want to avoid like the plague more than angry customers during a supply chain crisis. Do you remember the Clorox wipe shortage during the beginning of the COVID-19 pandemic?
It wasn't a pretty sight. Even dedicated Twitter accounts would alert restocks in certain ecommerce stores. And those who didn't have a quick enough reaction time were left complaining in the comments.
Many of these cleaning wipes use polyester spunlace, also found in personal protective equipment like masks and medical gowns.
With a little forward thinking (and knowledge about past events), the manufacturers of these wipes may consider choosing an alternative material for future production. This choice will also better the environment and prevent similar supply chain disruptions.
The result? Better profits and happier customers. It's a true win-win.
Better supplier relationships and performance
You're only as strong as your weakest link. This saying is especially important in the realm of supply chains. That's where transparency can help build stronger relationships with your suppliers.
Open communication paves the way for better collaboration, helping you achieve common goals and aspirations.
As a result, your suppliers are more likely to go the extra mile for you, leading to improved performance and efficiency across the supply chain.
For instance, an ecommerce store that deals with great food and more, it's even more important that all suppliers are on the same wavelengths. One supplier with poor sanitation requirements can lead to health outbreaks that tarnish your reputation for good.
Over the past decade, there have been dozens of reports of E. Coli and other harmful outbreaks in lettuce. Most of the time, the issues stem from the supplier, not the lettuce brand. But who takes the brunt of the backlash from the public? The brand.
Do the brands have a variety of other suppliers? Yes. Does that matter in the public eye? No.
In other words, one bad apple spoils the bunch. So keep the communication open and be upfront about your requirements, goals, and aspirations.
Be professional and courteous. Work together to achieve your desired outcomes. It goes a long way to building rapport with the suppliers that keeps your operations running like a well-oiled machine.
Opportunities for innovation and cost savings
A transparent supply chain can open doors to new ideas and cost-saving measures. When closely examining your processes and finances, you might discover innovative ways to save money while staying committed to sustainability.
For instance, you could find alternative eco-friendly materials or adopt more energy-efficient manufacturing processes. But the key lies in the proactive monitoring of your financial data.
That's where cloud accounting software like SoftLedger comes into play. You can make smarter financial decisions with access to real-time data on the costs of raw materials, operating expenses, and shipping expenses.
The Business of Sustainability Index report by PDI Technologies confirms that 66% of US customers are willing to pay more for eco-friendly products. That means even if the cost of producing a sustainable product is greater, you can raise its price in your online store, and consumers will still buy it.
But you need to properly showcase on your website that your product is sustainable. Why? The same study shows that 78% of those surveyed don't know how to identify environmentally friendly companies despite their desire to support companies that align with their values.
This added layer of transparency benefits your bottom line and contributes to a greener environment. What's not to love?
Here's another way to think about it.
Most companies are likely unaware of where they produce the most emissions or can implement a new eco-friendly material unless they examine the financial components and customer preferences.
A chef can't improve their recipe without knowing which ingredients are missing or feedback from customer reviews, holding the final dish back from being excellent.
Practical Steps for Implementing Transparency in Your Ecommerce Business
Now that we have your attention and you're all hyped up about the benefits of a transparent supply chain, it's time to dive into the actionable steps for adding transparency to your operational efforts.
Follow these four simple steps for adding transparency to your ecommerce store:
Step 1: Audit your current supply chain to identify areas for improvement
The first step towards a transparent supply chain is assessing your current operations.
Analyze your sourcing, manufacturing, and distribution processes to pinpoint areas lacking transparency and traceability. This audit will help you develop a roadmap for implementing changes and improvements.
If your eyes just glazed over, don't worry. Here's a simple checklist to help you when conducting a supply chain audit:
Sourcing practices: Evaluate the ethical and environmental standards of your suppliers, including material sourcing, fair labor practices, and adherence to local laws and regulations.
Manufacturing processes: Assess the environmental impact of your production methods, including energy consumption, waste generation, and emissions.
Distribution and logistics: Review transportation methods, packaging materials, and shipping routes to identify opportunities to reduce carbon emissions and waste.
Supplier relationships: Examine your communication and collaboration with suppliers, focusing on transparency, traceability, and shared sustainability goals.
Product lifecycle: Analyze the environmental impact of your products from start to finish, including material sourcing, production, usage, and disposal or recycling.
Certifications and compliance: Do your business and suppliers meet industry standards and certifications related to sustainability, such as Fair Trade, Organic, or B Corp?
Employee training and awareness: Evaluate the effectiveness of your internal sustainability training programs and employee engagement in your green initiatives.
By thoroughly auditing these aspects of your supply chain, you'll gain valuable insights into areas for improvement and lay the groundwork for a more transparent and sustainable ecommerce operation.
Step 2: Collaborate with suppliers to establish transparency and traceability standards
Work closely with your suppliers to create a set of transparency and traceability standards.
Here are some ideas to help get you started:
Develop a Supplier Code of Conduct outlining your suppliers' ethical, social, and environmental expectations.
Request that your suppliers provide regular reports on their sustainability performance, such as energy consumption, carbon emissions, and waste generation.
Arrange for independent third-party audits of your suppliers to verify their adherence to your transparency and traceability standards.
Implement a supplier scorecard system to evaluate and track the performance of your suppliers against your established standards.
Work together with your suppliers to create improvement plans that outline specific steps they can take to enhance their transparency and sustainability practices.
You'll also want to establish guidelines for sharing information and reporting on these ethical and sustainable practices (more on that in step three). You can consider using a shared Google calendar to document crucial supply chain dates and events, such as raw material ordering deadlines, production schedules, and delivery dates. It will help you to monitor the supply chain's progress and make any adjustments in real time
But remember, it's a two-way street. This collaboration will help keep everyone in your supply chain on the same page, making achieving your long-term sustainability goals easier.
Step 3: Communicate your sustainability efforts and achievements to customers
As discussed earlier, consumers often find it challenging to identify a brand that's invested time and money into sustainable practices. You must shout about it from the rooftops as much as possible.
So once you've made progress in implementing transparency, share your accomplishments with your customers.
Use your website, social media channels, and marketing materials to inform them about your efforts and their positive impact. This communication will help build trust and demonstrate your commitment to sustainable practices.
If you need inspiration, use Cotopaxi as a role model. They've created a dedicated page on its website where visitors can download a yearly impact report and read more about its sustainability efforts.
They also carry the same messaging over on its Instagram page:
Step 4: Continuously monitor and improve your supply chain management practices
Transparency in your supply chain isn't a one-time effort. The best sustainable ecommerce brands constantly adapt and innovate to stay at the top of the pack.
So it's your job to continuously monitor your operations and look for new ways to enhance transparency and sustainability. You never know what you can uncover.
It's also important to stay informed about industry best practices, and don't hesitate to adjust your processes as needed. This ongoing commitment will help you maintain a strong reputation and keep up with evolving customer expectations.
Wrapping up
In today's eco-conscious market, a transparent supply chain is more important than ever for sustainable ecommerce.
Embracing transparency improves your brand reputation and customer loyalty, fosters better supplier relationships, and opens doors for innovation and cost savings.
By prioritizing this transparency, you can effectively address the growing demand for ethically sourced and environmentally friendly products. So as we move toward a more sustainable future, help your ecommerce business rise to the top by taking the necessary steps to increase supply chain transparency.
And remember that every little step counts in our collective journey toward a greener, more responsible ecommerce industry. Cheers to a brighter future for our planet!
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