Photo: Olive
Can making deliveries once a week make e-commerce sustainable and more profitable?
A co-founder of Jet.com has launched a delivery platform, Olive, that consolidates retailers’ orders into weekly deliveries to bring sustainability along with some convenience to online selling.
“Olive’s journey began with the realization that today’s e-commerce delivery experience is both incredibly painful and a major growing environmental concern,” writes the platform’s founder Nate Faust on his company’s website. “One evening, after breaking down a week’s worth of delivery boxes and dragging them outside, I looked around and realized that everyone’s trash situation was identical: overflowing with cardboard. It is unbelievable that we have been shopping online for over 25 years and we receive our purchases in single-use cardboard boxes filled with plastic air bubbles.”
Consumers can create a free Olive account and use the Olive mobile app or add a Chrome extension to their web browser. They then shop at any Olive retail partner, which sends the purchased items to Olive’s consolidation facility to be bundled for the weekly drop. The consolidated deliveries arrive on a predetermined day during the week. Olive packages the orders in reusable totes made from recyclable materials.
Olive has arrangements with about a hundred retailers largely in the apparel space, including Anthropologie, Everlane, Hugo Boss and Saks.
Consumers benefit from the convenience of a free service that eliminates the chore of recycling or throwing out packaging. Returns are also simplified since they can send back unwanted items in the reusable tote.
Sustainability advocates can feel good about reducing waste. The startup notes that doubling the number of items in a delivery reduces per-item carbon footprint by 30 percent as a result of fewer trips made by the mail carrier. Olive is working closely with retail partners to reduce packaging heading to consolidation facilities to fulfill a longer-term goal of eliminating single-use packaging within e-commerce.
Retailers pay an average of a 10 percent commission on every sale as Olive helps them reach sustainability goals. Mr. Faust told TechCrunch, “If any single retailer were to try to tackle this problem right now on their own, they would run up into a huge cost increase to pay for this more expensive packaging and this two-way shipping.”
- Olive
- Jet co-founder Nate Faust is building a more sustainable e-commerce experience with Olive – TechCrunch
- This Ex-Walmart Exec Wants To Take Cardboard Boxes Out Of Online Shopping – Forbes
- ‘Waste-free delivery and easy returns’: Olive wants to solve the pain points of buying fashion online – Glossy
- Two-day shipping is terrible for the environment. This startup wants to make it a thing of the past – Fast Company
- Olive, New E-commerce Platform, Consolidates Packages Into Weekly Delivery – WWD
Discussion Questions
DISCUSSION QUESTIONS: What about Olive’s value proposition do you think consumers and retailers will find most compelling and less so? Do you think most consumers will accept the weekly schedule in exchange for cardboard-free deliveries, easy returns and the sustainability benefit?
Poll
BrainTrust
Bob Amster
Principal, Retail Technology Group
Lee Peterson
EVP Thought Leadership, Marketing, WD Partners
Olive’s value proposition is innovative and clever. The elements that consumers will value are the reduction in cardboard waste and the simplicity of returns. This will also be appealing to retailers as a means to control the cost of fulfilling online orders. The biggest potential pitfall is the the timing, as consumers have been trained to be impatient with two-day and same-day deliveries on many goods. I like the concept and hope it works.
Amazon as usual took the lead on this a while back, presumably to save on shipping costs. It offers ways to consolidate orders — you can choose a day of the week. In return Amazon typically hands out a $1 bonus in digital purchases. As a consumer, I have chosen to take that bonus zero times.
The idea is good, but I do not expect significant traction if the pitch is solely based on the environmental feel-good factor, and the cost savings are not passed to the customers. Sustainability goals are laudable, but the program itself will only be sustainable if at least 25 percent of the dollar savings are passed to the customers.
“As a consumer, I have chosen to take that bonus zero times.” This sums it up nicely, Suresh! I too have taken Amazon up on that offer zero times! Sustainability is great, but most consumers value convenience above all.
The idea is compelling, especially for those attuned to environmental concerns. I wonder if the appeal is limited though, in that it’s the retailers tied to the service. If that’s not a limitation, or if the scope of the retailers grows, I can imagine trading off next-day delivery for the environment – and I think shoppers can be trained to buy into that for most things.
I’m not convinced that the Hugo Boss or Saks shopper is willing to wait a week for delivery, even if it is sans cardboard.
Consider also that ShopRunner was providing two-day delivery for many more retailers and, according to them, already has millions of customers. And now that FedEx has purchased the company (in December), they have extended their ability to do exactly what Olive hopes to do. By using a vast distribution center network, they can also consolidate e-commerce orders across merchants, speed reverse logistics, and do it all at scale.
Near-term the value proposition will have to be for the sustainability-minded. Getting a box daily isn’t a pain point for many. So in that niche, this has some value. Less compelling would be any significant incremental costs passed on to the buyer. I would expect to pay less to wait longer, that seems to be the model Amazon is priming us for.
I do think the immediacy of non-perishable delivery will wear off. However there has to be a benefit to the consumer beyond being more sustainable for this to scale. The easy returns element might do the trick to incentivize more beyond sustainability.
I love the thinking on this and while I am not convinced it has legs in its current state, it is a glimpse into an area that will be lucrative when someone solves it effectively with stronger incentives.
An interesting and laudable approach to the final mile. Perhaps the biggest impediment is reconditioning consumers to wait for a shipment versus the instant gratification of same-day delivery. Having said this, if the economics can be made attractive to consumers and retailers, the concept has a chance for success. As someone who lives in a Florida condo in the winter with always full recycling bins, a reusable tote and easy returns would be a potential point of positive difference.
This is not a consumer driven idea in my opinion. This is a way for all the carriers to save last-mile bucks, to Olive’s gain. And in this day and age, some brand with a huge smile on their boxes will clobber you for that (remember, their mission is: “to be the most customer-centric company in the world”). The environmental issue is huge, but I believe better recycling initiatives and incentives to bundle your purchases from the retailer are better answers.
There is extra handling involved in retailers sending product to a consolidation facility. That costs money and adds to the carbon footprint. Those orders are good for those customers who can wait the extra day(s). The positive impact on the environment is to be applauded.
This is a nice thought and I am sure some folks will find this niche interesting — at least until they order something and don’t want to wait.
Convenience, convenience, convenience. Online is built on convenience. While consumers may be willing to wait a day or two for their purchases, why would they wait three, four, or seven days for that dress from Anthropologie when they can get it in two? Are they going to go on an online shopping tour and order various things from each of the participants?
We have a tendency to look at the carbon footprint of online, as we should. But we ignore the huge carbon footprint that a retail store produces, not just from operating the store, but from getting the workers to the store and getting the shoppers to the store and delivering the inventory and producing the inventory and recycling the inventory and … etc.
The lowest cost to the customer is a straight line to their homes, ideally with a delivery service that is working a route that includes stopping at their neighbors. I don’t see how a shipment hop to a consolidation site with associated handling from retailer bulk ship to Olive, and repicking and packing to get it to the consumer is going to make things more profitable. I also hate the cardboard overflow, Amazon should be capable of a “recycle” pick up while they drop off my weekly delivery.
This is interesting. My own garage has an area that has become a “staging area” for boxes to be cut down and put into recycling. That said I’m not sure I would take advantage of this, it feels like it adds friction to the process. Usually I prioritize speed of delivery over anything else. I think that’s one reason subscription services are slow to be adopted. I’m also going to be interested to see how many retailers sign up for another fee to deliver products.
At last someone is thinking logically about online shopping deliveries. Congratulations Nate Faust. This initiative really does make so much sense for retailers, consumers and, most importantly, for the environment and sustainability. We cannot continue to proliferate the number of one trip deliveries, packaging waste and cost of shipping as online retail continues to grow across the world.
Customers will get a more consistent service delivered at a time to suit them with less packaging to dispose of. No, they will not get the products same-day or next-day but how many consumers really need that? The drive for immediate delivery has come from marketing departments trying to find a competitive edge other than the product, price and customer experience. I would hope that customer pressure drives this to become a very successful initiative and it can be replicated in other countries. Then we can get back to focusing on what really matters in retail competition. It obviously will not be right for all categories, but for many product groups and online retailers it makes a lot of sense. This may offer a lifeline for many start-up online retailers, as it is becoming impossible for them to compete with fast, free delivery being offered by Amazon et al.
Consumers will love the hassle-free returns and may appreciate the variety of retailer partners. By joining Olive, retailers could stand out from rivals and lower overall delivery and return costs, which are significant for apparel. Both consumers and retailers will appreciate Olive’s sustainable materials and practices.
Speed may matter to consumers who have grown accustomed to fast e-commerce fulfillment. Yet waiting one week may not be an issue for shoppers, especially if they’re just waiting for a t-shirt.
Olive’s value proposition is differentiated and meets a market niche. It builds on Amazon’s consolidated delivery option but enhances it with a more environmentally friendly approach. Although it may not turn into a broad trend, don’t underestimate the convenience of breaking down fewer cartons that overflow the recycling bin. Partner retailers will enjoy the greatly simplified outbound leg of this supply chain with little downside in sharing data with Olive.
Most consumers love the idea of sustainability and seek out brands and retailers that do their part to help the environment. However this clashes with consumers’ desire for convenience. Once per week is likely going to meet with resistance from many consumers for most purchases. Amazon has offered this capability as “Amazon Day” and offered a bonus payment of $1 back for choosing the consolidated shipping option. Personally, I have never taken them up on this option as most items I order from them I am doing so because of the speedy delivery for same-day, next-day, or two-day. So unless those options happen to coincide with my “Amazon Day” the $1 offered is not enough value to entice me to select it.
Where Olive has an advantage is in consolidating purchases AND returns across participating retailers. For many types of purchases, certainly apparel, this could be seen as an added convenience in addition to supporting sustainability, so it becomes a double win for the consumer. For other categories, I think Olive and their participating retailers will need to offer a further incentive to consumers to encourage adoption.
I fear retailers won’t pay the extra 10% for Olive. Also, during the pandemic, consumers have become accustomed to one or two-day delivery as the norm. Branded packaging has become a key today which will deteriorate with Olives delivery platform.
Even with the large federal incentives to buy electric vehicles in North America, the majority of consumers aren’t prepared to spend the extra money for an eco-friendly vehicle. Olive is a great idea, but I fear it might take a long time for consumers and retailers to adopt.
Perhaps the best solution would be for Amazon, Target, and Walmarts of the world to invest in more micro-fulfilment centres where consumers can pick up their purchases. BOPIS has been hugely successful. Why not continue its success while reducing the carbon footprint at the same time.
After all, do we really need same-day shipping at the expense of the environment?
Olive’s value proposition is a simple yet brilliant idea. Sustainability and convenience are primary motivators. Do we really need daily deliveries? The weekly chore of breaking down the boxes, risking life and limb with a box cutter and spending my Saturdays on this foolish chore is a waist of our most valuable commodity — our time.
The waste in the set of current use cases is not sustainable across the planet. The model is broken and Olive has a fix.
This is a great idea. It addresses the last-mile delivery challenges, reducing costs and carbon footprint. However the real play moves away from apparel to cardboard packaged goods such as electronics, home goods, DIY or packaged foods. I’m not sure I would be picking up a sweater in a cardboard box from the store. The value from the apparel side is primarily in returns. Despite the focus on sustainability, retailers with tight margins will have difficulty coughing up 10 percent for sustainable delivery. They would need to see increased volume and increased basket sizes. The returns side will still need management. Consumers will be open to the concept, especially for products that are not urgently needed. If done properly, customers might even think of it as garbage pickup or newspaper delivery — possibly replacing subscription boxes.
Doesn’t this ignore the fact that shipping hasn’t been reduced, just moved? Stores still ship items individually to the consolidation point, which is likely further away from the end customer than shipping direct from local store to customer. As far as CO2 emissions go, it’s a wash. But I like the packing design in lieu of cardboard.
It’s very commendable to see what company’s such as Olive is doing to help drive sustainability initiatives and reduce the significant carbon footprint of frequent e-commerce deliveries. In addition to reducing the carbon footprint, there are operational, organizational, and cost economies of scale that will kick in with once-a-week scheduled deliveries.
However, this is not the first time companies have offered this service, and it has yet to scale. The ultimate challenge is that consumers enjoy the instant gratification of either next-day or 2nd-day delivery cycles. Convenience is the main competitive differentiation factor for digital channels, and that is one of the main drivers of not going to a physical store.
So everything makes an extra trip to the “consolidation facility”? And then the “reusable tote” gets picked up again (by another special trip, unlike it would in the regular waste pickup)? Perhaps this results in some efficiencies, but it’s not self-evident … so it doesn’t move the “Compelling” meter much.
For someone who orders “as they need it,” having orders consolidated to once or even twice a week is going to reduce overhead and is “green.” Olive is going to make a lot of people happy with this option. Note that Amazon has already done this, not necessarily for reducing the carbon footprint, but to streamline their process.
I have used order consolidation on Amazon a few times, but the reality is most people who pay for convenience want it now, and also consolidation means a potential single point of failure for multiple items on delivery. I do wonder if Olive is going to have to stock the items for the retailers, otherwise the trips between the retailer warehouse to Olive warehouse for consolidation adds up quickly in terms of costs and lead time.
The question is, how balanced is the consumer market between eco-conciousness vs. an “I want it now” mentality. I think given the drive towards sustainability and climate awareness, for instance how the plastic revolution is changing, this might work — but not for a few years…
I love this. Amazon has made many of us a little lazy. We order for delivery next-day simply because we can, rather than batching things together as we would have done were we shopping physically. Amazon offers some batching options with Amazon Delivery Day but this does not always reduce the amount of packaging. It is not clear why they did this – it could be because there are concerns that legislative actions could be appearing in the future. So I love this approach to batch things and reduce packaging. I wonder whether conscience is enough, however, to make people take this approach.