Step 2. Systematic classification of identified opportunities and threats

As a second step, a systematic 4-stage classification was carried out for each of the threats and opportunities to ensure a clear differentiation between each other. The classification included the assignment of opportunities and threats to:

1. environmental effects of E-commerce (direct and indirect effects);

2. life-cycle stages within system boundaries set;

3. E-commerce features; and

4. additionality of opportunities and threats.

Environmental effects (direct and indirect) of E-commerce

In the context of this assessment, E-commerce is primarily understood as the possibility to support, change or replace certain commercial and economic processes in the domain of sales and procurement through the application of

information and communication technologies (ICT). In essence, E-commerce encompasses many of the potential and typical ICT effects, such as virtualisation of products, dematerialisation of transport, reduction of warehouse spaces, and shortening of supply chains (Börjesson Rivera et al., 2014a). Yet, it is crucial to differentiate between parallel and often not clearly separable effects arising from other applications of ICT, such as overriding digitalisation effects.

Environmental effects of ICT are commonly classified into first (direct)-, second (enabling)-, and third (systemic)-order effects (Hilty and Aebischer, 2015). This classification scheme has been evolved in academia as to facilitate holistic assessments of specific ICT applications. While this approach was adopted by several studies (Fichter, 2001, 2002;

Berkhout and Hertin, 2004; Dost and Maier, 2018) to assess environmental effects of E-commerce, it can be argued that this detailed distinction is sometimes difficult and not necessarily useful (Börjesson Rivera et al., 2014b). Moreover, environmental effects arising from E-commerce are not solely related to the application of ICT but may be the result of accompanying developments within other domains (e.g. transport, packaging, digitalisation of services).

Due to the potential of ICT applications, and E-commerce in particular, to exhibit cascading environmental effects – both negative and positive – this study seeks to differentiate between direct and indirect effects. This methodological approach allows for a holistic assessment and enables decision-making at different levels of society. Hence, opportunities and threats are classified following the distinctive attribution criteria in Table 5. It is evident that all effects are interdependent and interwoven which sometimes makes an unambiguous classification impossible (Börjesson Rivera et al., 2014b).

Nevertheless, this methodological choice is crucial in the light of subsequent in-depth assessments of those effects (see Section 4).

Table 5: Attribution criteria of direct and indirect environmental effects arising from E-commerce

Direct Opportunities/Threats Indirect Opportunities/Threats

Consequential and immediate effects:

• intended positive effects

• anticipated or existing negative effects

Hypothetical and/or long-term effects (negative or positive)

Effects can be allocated to one fulfilled unit or the purchase of a single

product Effects are rather systemic and cannot be allocated to the purchase of

one single product (rather the result of cumulated purchases)

Inherent E-commerce features with high relevance for E-commerce

business models Supplementary (secondary) developments due to E-commerce features

and evolving business models

Effects are mainly within the sphere of influence of E-commerce providers

Effects are mainly outside the sphere of influence of E-commerce providers and/or in the sphere of both E-commerce providers and other actors/stakeholders

Characteristic of current situation and further persistence in future

scenarios Emerging or ongoing effects with potentially high relevance in the future

Life-cycle stages within system boundaries

Typically, environmental impacts or Circular Economy aspects associated with the fulfilment of a purchased item are compared from the point of divergence (e.g. manufacturer´s outbound operation) to the point of consumption (Van Loon et al., 2015). Consequently, impacts related to the production and actual consumption or use of the products or services are excluded as those are generally not affected by the chosen fulfilment channel. The same argumentation generally applies to primary packaging which is considered an indistinguishable part of the products and thus not assessed in this study. However, the adoption by online platforms in collaboration with manufacturers of specific initiatives aimed at reducing the layers of packaging needed for the shipping (e.g. Amazon’s Frustration Free Packaging Program) are taken into account within the relevant opportunities and threats as factors that may influence the impacts of secondary and tertiary packaging.

and efficient assessment of numerous E-commerce effects – both opportunities and threats – on relevant Circular Economy aspects related to the various life-cycle stages attributable to E-commerce.

Inevitably, a comparative analysis of the traditional retail channel and E-commerce necessitates to draw somewhat artificial boundaries between these often-overlapping domains (e.g. flag ship stores offering shipping services to customers). While in reality E-commerce clearly intersects with established structures and processes, the proposed reference model tries to untangle dedicated processes and attribute them to one or the other channel. For this purpose, the dominating flow of products through the value chain is assumed for both channels, as visualized in Figure 2. It is evident though, that there are numerous alternative supply chain options within both scenarios (e.g. online purchase and subsequent pick-up in a nearby store, also referred to as “click & collect”) (Van Loon et al., 2015a). Such deviations to the assumed flows of products may be the subject of certain opportunities and threats.

The product life-cycle stages are included in the following description of opportunities and threats in order to highlight where certain threats and opportunities potentially exert a positive or negative impact.

Figure 2: System boundaries and value chain differences for the identification of opportunities and threats and the in-depth assessment (own depiction)

E-commerce features

The identified opportunities and threats have been assigned to one or more of the E-commerce features, as described above and identified during Step 1. The list of E-commerce features identified is provided in Table 6 below.

Table 6: E-commerce features

E-commerce features Examples

Online shops and platforms Operation of ICT infrastructure, substitution of physical shops

Automatisation of processes Market transparency, just in time (JIT) manufacturing, additional data centre capacities

Automatisation of data analytics Increased availability of data on purchases

Availability of information Availability of information on specific product's features, immediate price and features comparison

Availability of products Increased availability of products coming from distant countries, sustainable products etc.

Digital and mobile connectivity Simplicity of user interface and ease of use

Digital purchasing and transaction process Availability of diverse online purchasing options, preset options Easier/broader market access Low barrier to market entry, low transactions costs

Shipping of products Use of packaging, induced parcel transport, return policies, take-back programmes

Additionality of opportunities and threats arising from E-commerce

By acknowledging evident intersections between E-commerce and traditional brick-and-mortar channels as well as highly dynamic developments within both value chains, a methodological choice was deemed necessary in order to make fair comparisons and draw valid conclusions. For this purpose, the traditional value chain was assumed to be static and therefore being applicable as a point of reference for identifying, describing, and assessing opportunities and threats.

Consequently, all opportunities or threats are understood as additional. This means that any direct opportunity or threat arising from E-commerce results in either a reduction or an increase of a given Circular Economy indicator compared to the baseline which is generally determined by simultaneously occurring impacts associated with the traditional value chain (see Figure 3). Due to highly complex structures and uncertainties it is, however, often not possible to quantify this baseline. As a consequence, the absolute effect or extent of impact a certain direct opportunity or threat poses to the baseline may remain unclear or vague. Future developments are considered at least equally vague and are by definition highly speculative, in particular within E-commerce value chains. Such hypothetical and rather long-term effects are subsumed under the category of indirect opportunities or threats (see also Table 5). Moreover, these indirect opportunities and threats are expected to influence the future development of a given Circular Economy indicator within E-commerce value chains. Indirect opportunities and threats are often rather systemic, which in many cases prohibits comparisons to a static remaining baseline.

Figure 3 illustrates how direct opportunities and threats are generally positioned relative to the baseline (brick-and-mortar) as well as how indirect opportunities and threats may influence the future development of a given Circular Economy indicator.

Figure 3: Illustration of additionality of opportunities and threats and influencing factors on future development (indirect threats symbolised by red arrows, indirect opportunities by green arrows) (own depiction)

3.1.3 Step 3: Evaluation of relevance of identified opportunities and threats for selected product