AI can help e-commerce customers make sustainable choices

E-commerce has become a powerful driver of global economic growth. In the wake of the pandemic, global online sales surged to an estimated $5.8 trillion USD in 2023—more than one-fifth of the total value of global financial services in 2023.

This growth has been fueled by intense competition, pushing companies to race to meet rising customer expectations for variety and speed. Customers expect broad product selection and immediate convenience. As Queen frontman Freddie Mercury put it, “I want it all, and I want it now”—a sentiment that perfectly captures today’s consumer mindset.

However, demand for immediacy and abundance carries an environmental cost: Expanded product offering and accelerated delivery windows drive up carbon emissions and packaging waste. One way to solve this problem is to enlist the help of artificial intelligence.

AI enables businesses to collect data, optimize operations, streamline packaging, and consolidate delivery routes allowing e-commerce companies such as Amazon and Walmart to offer more responsible retail activity that is aligned with saving our planet.

The wider the product assortment, the more complex operations and fulfilment become. Categories such as perishable food or hazardous products require tailored shipping strategies. Weight and fragility differences add countless shipping variables.

Conveniences like one-day shipping come at a cost to our planet. Consumer pressure has tightened delivery windows from 48 to 24 hours, down to same day and even within the hour. While this offers consumers instant gratification and speed, it also leads to inefficient routing and oversized packaging bloated with excess materials and rising carbon emissions.

AI offers a better path to produce fulfillment

The use of AI in combination with data repositories, analytics, and reasoning tools provides an unparalleled technology for managing the multi-disciplinary complexity of daily operations in the warehouse. AI is able to analyze and react to the challenges across critical activities, including sustainable food production, material innovation, waste reduction, warehouse automation, smart-grid management, and transportation optimization. Solutions like computer vision that can identify the ripeness of a berry or measure the void in a package prove that this technology can dramatically change what is possible in e-commerce fulfillment, as they open up a world of new applications for automation because they can sense and react to the physical world.

AI is poised to become a powerful driver of sustainability in e-commerce by showing consumers the environmental impact of fulfillment. It can engage consumers directly by offering them informed choices and helping them understand the consequences of their decisions. Just as consumers can discover new products through personalized recommendations, they will grow comfortable making informed decisions about the environmental impact of e-commerce fulfillment.

Most e-commerce companies already have the needed data to understand fulfillment’s environmental toll. What is missing is how to take action on that data. With AI, concrete steps can be taken such as tracking carbon footprints, optimizing delivery routes, and using eco-friendly packaging. Chatbots can guide consumers toward options like “wait-and-save” which bundles multiple shipments to reduce emissions. Smart packaging can reduce materials waste and freight costs. However, even when offered these choices, consumers might not prioritize sustainability over convenience.

Consumers tend to pick convenience over sustainability

According to psychologists Daniel Kahneman and Amos Tversky, we are wired for instant gratification and we tend to focus on the good parts of buying “eco-friendly” products while often ignoring the environmental damage caused by having them delivered quickly.

We also fall for the “sunk cost” fallacy. We believe if we paid for a premium subscription, we must take advantage of fast delivery to “get our money’s worth.” While consumers have consistently shown they prefer sustainability and a desire to support brands that they view as ecologically responsible, a recent McKinsey study shows that other factors may be more important. The challenge for e-commerce is to align sustainability with shopping convenience and cost savings because people won’t pay more or be inconvenienced just to buy green. Remember what Freddie Mercury said.

AI solutions are already impacting the complex sciences behind e-commerce fulfilment by identifying packing boxes that are too big for the item being shipped and by assisting packers to identity the optimal packing material to use to ship a product.  

By incorporating AI, e-commerce can give consumers greater opportunities to act in favor of sustainability without giving up convenience or cost savings. AI can educate and engage consumers, giving them the chance to optimize, engage and conserve when buying online.

Omar Asali is chairman and CEO of Ranpak.