CSTIO Seminar with Dr Jiankun Sun (Imperial College London)

Green E-commerce: Environmental Impact of Fast Delivery

Abstract

Faster delivery is one of the biggest trends in e-commerce, but its environmental impact is not well-understood. In this paper, we study how delivery speed improvements influence consumer purchase behavior and the subsequent implications for the environment. We leverage a quasi-experiment involving the opening of a new local warehouse by Alibaba Group, which led to a half-day improvement in the delivery speed for local orders. Through a difference-in-differences analysis, we find that, compared to consumers in the control city, the half-day delivery speed improvement not only increased consumers’ monthly purchasing amount by 6.71%, but also increased monthly order frequency by 7.73% and reduced the average order basket size by 0.79%. These results collectively suggest that with faster delivery, consumers purchase more on the platform but do so in smaller and more frequent orders, which implies more packaging and transportation costs for each unit of product sold. Based on these results, we conduct a detailed calibration using both public and company-specific data to estimate the increase in the platform’s carbon emissions due to faster delivery. We also explore and identify two mechanisms contributing to the increase in ordering frequency and reduction in basket size as delivery speed improves: order-splitting and category expansion. We combine these insights with heterogeneous treatment effect analysis to derive managerial implications for the e-commerce platform. Our findings suggest that, to mitigate the negative effects of increased ordering frequency (and smaller basket sizes) brought by faster delivery, platforms should encourage order consolidation and synchronization of shopping (or shipping) frequencies across different categories.

About Dr Jiankun Sun

Jiankun Sun joined Imperial College Business School in 2019. She obtained her Ph.D. in Operations Management from Kellogg School of Management, Northwestern University, and her B.E. in Industrial Engineering from Tsinghua University. Jiankun’s research interest is integrating both theoretical modeling and data analytics to study practice-driven problems in supply chain management and platform operations.