Marketing

“Sustainability is no longer a niche topic” – eCommerce Magazin

With the new CO2 compensation model of the online shop operator Galaxus, customers can pay a voluntary fee with every purchase in order to offset the CO2 footprint. Frank Hasselmann, Managing Director of Galaxus Germany, spoke to Christiane
Manow-Le Ruyet, editor-in-chief of e-commerce magazine, talked about
why sustainability is so important in online shopping.

Have you introduced a compensation model for your personal CO2 footprint in your online shop? How exactly does it work?

Frank Hasselmann: Quite simply: During the check-out process, we offer our customers the option of offsetting the carbon footprint of their purchase with a voluntary fee. For this purpose, we have developed an innovative and absolutely new calculation model with the air conditioning solution provider South Pole, which does not yet exist in German-speaking online retail. Because we calculate the individual CO2 footprint for our entire range based on the value chain from raw material extraction through production to sale and delivery to the doorstep.

This results in an individual compensation price that consumers may or may not voluntarily pay during the payment process. The CO2 compensation money flows entirely into climate protection initiatives developed by South Pole. Initiatives in Africa and Asia are supported, including the Protection of the rainforest or the construction of infrastructure for the extraction of renewable energies.

This is based on the value chain of raw material extraction, through production to delivery. Where do you get the data from for an accurate calculation?

Frank Hasselmann: The main factors that determine the CO2 footprint of the model are the product group, weight, price and manufacturer. If the information is available, the material composition is also included in the calculation. To be specific: Our partner South Pole assigns an intensity value to each product group in our online shop. This includes all emissions that arise from the extraction of the raw materials to their transport to our warehouse.

In addition, it is taken into account whether the manufacturers have committed to the RE100 initiative. The emission value of RE100 brands is reduced by ten percent in the calculation if a company produces its products with at least 75 percent renewable energy. In addition, other factors are included in the calculation: The delivery efficiency, i.e. the emission value of a truck, the distance between the warehouse and the delivery address and the returns factor.

This results in the following formula: footprint of the product in tons of CO2 = (CO2 intensity of the product x brand correction) x weight in tons + (600 km average distance from warehouse to delivery location x delivery efficiency x weight in tons x return factor ).
Based on this calculation formula, the amount that our customers can pay at check-out is calculated. We enrich the data from South Pole with further internal data in order to be able to calculate the CO2 emissions for each product as precisely as possible. The model is constantly being improved. The use and disposal of the products are not taken into account because we cannot reliably calculate these two factors.

How strongly will you advertise the new CO2 compensation model in your online shop? At first glance there is nothing to be seen. Why not?

Frank Hasselmann: We are not interested in promoting the model, but in educating our customers. We want to give them the opportunity for sustainable consumption and let them decide for themselves whether or not to compensate for their purchase. By the way, we are not just a pure online shop, we also offer one Online specialist magazine, which is managed by an independent editorial team. It contains in-depth information about sustainability, the new feature and the funded projects. In addition, our customers are shown the voluntary compensation amount with every check-out process.

We believe that this implementation and the provision of information is thought-provoking for our customers. We don’t want to advertise it, we want to give our customers the opportunity to shop as they see fit. We believe in responsible consumers who can make decisions for themselves.

Do you assume that your customers are more environmentally conscious and that sustainability is playing an increasingly important role for them when shopping online?

Frank Hasselmann: Environmental awareness and sustainability are no longer a niche topic, but have arrived in society at large. The fact that the topic is becoming increasingly relevant can be seen in the pressure that “Fridays for Future” exerts on politics. This alone also encourages consumers to think more about their consumption behavior. We can also see this from discussions in our community and questions that are directed to our customer service.

By the way, the current one Utopia Study has shown that since 2017 people have placed increasing importance on sustainability when shopping. Retailers have to respond with the right offer. We see this as a general trend towards environmental awareness in consumption – online and offline. And we as a company want to make a contribution to climate protection. CO2 compensation is a first step.

What can a web shop operator like you do to promote greater environmental awareness among customers?

Frank Hasselmann: We see our strength in informing, inspiring and ensuring transparency. We want to encourage our customers to rethink their consumer behavior without lecturing. The CO2 compensation is available in every purchasing process and the customers can decide for themselves whether they want to offset or not. At the same time, we provide information to deal with the topic of sustainability.

We also offer environmentally conscious consumers alternatives in our shop – for example, we work with brands that are committed to sustainability. We have anchored the reduction of the company’s own CO2 footprint in our own sustainability strategy. The greatest internal potential lies in the transport to the customer, in energy, heat and packaging. However, calculations by our partner South Pole show quite clearly that Galaxus’ in-house CO2 emissions are a maximum of two percent across the entire value chain – depending on the point of view, even less. 98 percent occurs in the rest of the value chain, i.e. in the extraction of raw materials, in production and during transport to our warehouse. We can only effectively do something for the climate together, together with consumers.

Galaxus carbon footprint
Frank Hasselmann is the managing director of Galaxus Germany. (Image: Galaxus)

Also read: Climate-neutral shopping: Germans want more sustainability in e-commerce