Page 262 - E-Bussiness and E-Commerce Management Strategy, Implementation, and Practice

M04_CHAF9601_04_SE_C04.QXD:D01_CHAF7409_04_SE_C01.QXD 16/4/09 11:11 Page 229

Chapter 4 E-environment 229

2 Lower inventory requirements. The trend towards pre-selling online – i.e. taking orders for
products before they are built, as implemented by Dell – avoids the production of obso-
lete goods that have to be disposed of if they don’t sell, with associated wastage in energy
and natural resources.
3 Fewer printed materials. Online e-newsletters and brochures replace their physical equiva-
lent so saving paper and distribution costs. Data from the Direct Mail Information Service
(www.dmis.co.uk) shows that direct mail volumes have fallen slightly in the last 2 years, (at
the time of publication) reversing an upward trend in the previous 10 years. This must be
partly due to marketing e-mails which the DMA e-mail benchmarks (www.dma.org.uk)
show number in their billions in the UK alone.
4 Less packaging. Although theoretically there is less need for fancy packaging if an item is
sold online this argument is less convincing, since most items like software or electronic
items still come in packaging to help convince us we have bought the right thing – to
reduce post-purchase dissonance. At least those billions of music tracks downloaded from
iTunes and Napster don’t require any packaging or plastic.
5 Less waste. Across the whole supply chain of procurement, manufacturing and distribution
the Internet can help reduce product and distribution cycles. Some even claim that auction
services like eBay and Amazon Marketplace which enable redistribution of second-hand
items can promote recycling.
6 Dematerialization. Better known as ‘digitization’, this is the availability of products like
software, music and video in digital form.
If companies trading online, can explain these benefits to their customers effectively, as
HSBC has done, then this can benefit these online channels.
But what does the research show about how much could e-shopping reduce greenhouse
gas emissions? A study by Finnish researchers Siikavirta et al. (2003), limited to e-grocery
shopping, has suggested that, depending on the home delivery model used, it is theoretically
possible to reduce the greenhouse gas emissions generated by grocery shopping by 18% to
87% compared with the situation in which household members go to the store. Some of the
constraints that were used in the simulation model include: maximum of 60 orders per route,
maximum of 3,000 litres per route, working time maximum 11 h per van, working time
maximum 5 h per route, loading time per route 20 min, drop-off time per customer 2 min.
The researchers estimated that this would lead to a reduction of all Finland’s greenhouse gas
emissions of as much as 1%, but in reality the figure is much lower since only 10% of grocery
shopping trips are online. Cairns (2005) has completed a study for the UK which shows the
importance of grocery shopping – she estimates that car travel for food and other household

items represents about 40% of all UK shopping trips by car, and about 5% of all car use. She
considers that a direct substitution of car trips by van trips could reduce vehicle-km by 70%
or more. A broader study by Ahmed and Sharma (2006) used value chain analysis to assess
the role of the Internet in changing the amount of energy and materials consumed by busi-
nesses for each part of the supply chain. However, no estimates of savings are made.

Taxation

How to change tax laws to reflect globalization through the Internet is a problem that many
governments have grappled with. The fear is that the Internet may cause significant reduc-
tions in tax revenues to national or local governments if existing laws do not cover changes
in purchasing patterns. Basu (2007) notes that around a third of government taxation rev-
enue is from domestic consumption tax with revenue from import taxation around 17%.
Governments are clearly keen that this revenue is protected when purchases are made over-
seas outside their jurisdiction.