5 E-commerce
The explosion of the information highway has led to new dimensions in retailing. One of the
most dynamic markets is as e-commerce. In 1998, inter-businesses transaction undertaken
through e-commerce accounted for 43 billion $US while business to consumer transactions
accounted for 8 billion $US. In 1999, e-commerce boomed to reach 150 billion $US, 80% of
which was between businesses. These numbers are expected to reach 1.3 trillion and 108
billion $US respectively by 2003. In 1999, the computer manufacturer and distributor Dell
sold 15 $US million worth of computers a day strictly from orders placed on its Web Site.
This is made possible by an integrated supply chain with data interchange between suppliers,
assembly lines and freight forwarders. Even if for the online customers there is an
appearance of a movement-free transaction, the distribution online transactions create may
consume more energy than other retail activities. The distribution activities that have
benefited the most from e-commerce are parcel-shipping companies such as UPS and
Federal Express that rely solely on trucking and air transportation. Information technologies
related to e-commerce applied to logistics can obviously have positive impacts. For instance,
the National Transportation Exchange (NTE) is an example where freight distribution
resources can be pooled and where users can bid through a Web Site for using capacities that
would have otherwise been empty return travel. So once again, the situation may be seen as
paradoxical.
The consequences of e-commerce on Green Logistics are little understood, but some trends
can be identified. As e-commerce becomes more accepted and used, it is changing physical
distribution systems. The standard retailing supply chain coupled with the process of
economies of scale (larger stores; shopping malls) is being challenged by a new structure.
The new system relies on large warehouses located outside metropolitan areas from where
large numbers of small parcels are shipped by vans and trucks to separate online buyers.
This disaggregates retailing distribution, and reverses the trend towards consolidation that
had characterized retailing earlier. In the traditional system, the shopper was bearing the
costs of moving the goods from the store to home, but with e-commerce this segment of the
supply chain has to be integrated in the freight distribution process. The result potentially
involves more packaging and more tons-km of freight transported, especially in urban areas.