Why Sustainable Sourcing Is Good For Your E-commerce Business – Your Guide for 2023

If you are relatively new to e-commerce, you might have heard about getting your products from a respectable supplier. Have you listened to some things about making sure they're responsible, ethical, and sustainable...but isn't it just getting the right products at the right price at the right time?

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Quick! Do a google search on the keyword: sustainable sourcing.

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Yup, dozens of articles about the benefits and challenges of embracing sustainable sourcing. Then also, you'll see that countless companies (multinationals, mostly) flaunt their sustainable procurement policy on an entire webpage online. The wealth of information regarding this topic can be overwhelming, I know.

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Sustainable sourcing is more than a procurement trend — it's a competitive advantage, a way to mitigate risk, and an avenue to cost savings. But what is it? And how does it, as an e-commerce business owner, benefit you from growing your market?

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In this guide, I will share with you what sustainable sourcing means for your business, how to support it, and where to start and manage the process.

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Let's start by clearing what it is and is not by comparing it with other (almost) related terminologies...

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Product Sourcing vs. Strategic Sourcing vs. Responsible Sourcing vs. Ethical sourcing vs. Sustainable Sourcing

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Let's see if you can figure out the difference if I plainly layout these words to you:

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Product sourcing is finding the products you want to sell in your store, buying them from a supplier, and then reselling them. Ok, so this is what is typically done by those in e-commerce.

These guys would usually use Google to find a supplier or use Alibaba if they want to get a Chinese manufacturer to produce the item they'll be selling online, most of the time in Amazon. Like, according to Marketplace Pulse, China-based sellers represented 75% of new sellers on Amazon in January 2021.

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Strategic sourcing is a procurement process that connects data collection, spend analysis, market research, negotiation, and contracting. Phew! Those are big words for a procurement guy. Essentially, this is more of a data-collecting activity to determine if they bought the material from the correct supplier. By evaluating the total cost of ownership, er, meaning from origin to the point of destination and other items like lead time, quality, and ease of doing business are all considered to be said at the end of the year, "Hey, we did a great job working with that supplier. Look at our savings!"

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‍Responsible Sourcing or Ethical Sourcing, according to the Committee On Sustainable Assessment (COSA), can be claimed when a company and its supply chains work to mitigate risk and avoid harm by meeting established (published and transparent) principles and specific, measurable compliance criteria. This touches on being responsible for getting your supplies wherein no or minimal impact on the environment, and no human rights are violated.

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Were you surprised that responsible and ethical meant the same? I was. So let's move on.

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Sustainable sourcing has a more holistic view as it encompasses social and environmental factors in the selection process for suppliers. The long-term goal of sustainable sourcing is to build lasting economic buyer-supplier relationships and improve the source's environmental and social condition. Companies embracing this philosophy are always finding to avoid the depletion of resources while offering environmental, social, and economic benefits throughout the product's life cycle.

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Sustainable sourcing is becoming increasingly crucial for businesses and organizations as consumers, employees, and regulators demand that companies take responsibility for their impact on the environment and communities. By implementing sustainable sourcing practices, organizations can demonstrate their commitment to sustainability, improve their reputation and brand image, reduce risk, and ensure the quality and reliability of their suppliers.

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The Benefits of Sustainable Sourcing

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Sustainable sourcing provides numerous benefits for organizations, including:

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1. Improved Reputation and Brand Image

Sustainable sourcing help organizations improve their reputation and brand image, as it demonstrates a commitment to ethical and responsible business practices. According to the Business of Sustainability Index(2022) that despite the pressures of high inflation, which has risen in the US since 2020 (from 1.4 percent to 8.5 percent), 66 percent of US consumers and 80 percent of young US adults (ages 18-34) polled are willing to pay more for sustainable products versus less sustainable competitors. Clearly, sustainable sourcing programs in your marketing can increase customer loyalty and higher sales.

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2. Compliance with Legal and Regulatory Requirements

Many countries have implemented regulations to promote sustainability and protect the environment. Organizations can comply with these regulations by adopting sustainable sourcing practices and avoid potential legal and financial penalties.

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3. Reduced Risk of Supply Chain Disruptions

Sustainably sourced products are less likely to be subject to supply chain disruptions caused by environmental, social, or political issues. This helps organizations avoid costly interruptions to their supply chain.

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4. Improved Quality and Reliability of Suppliers

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By working with suppliers who adhere to sustainability standards, organizations can benefit from improved quality and reliability of their products and services.

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5. Implementing Sustainable Sourcing

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Implementing sustainable sourcing requires a systematic and strategic approach that involves all stakeholders, including suppliers, customers, employees, and regulators.

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Here's how to implement sustainable sourcing:

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1. Assessment of Existing Procurement Practices

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The first step in implementing sustainable sourcing is to assess existing procurement practices and identify areas for improvement in terms of sustainability. This involves reviewing current procurement processes and determining which suppliers align with the organization's sustainability goals.

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2. Development of Sustainability

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Criteria Once the existing procurement practices have been assessed, the next step is to develop sustainability criteria for suppliers. This involves setting specific standards for suppliers, such as environmental and social standards, which suppliers must meet to be considered for procurement.

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3. Supplier Selection and Engagement

Once the sustainability criteria have been established, the next step is to select suppliers who meet them and engage with them to ensure their continuous improvement in sustainability practices. This may involve regular audits, evaluations, and suppliers' communication to ensure they meet the sustainability criteria.

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4. Monitoring and Evaluation

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Finally, monitoring and evaluating supplier performance regularly is vital to ensure they continue to meet the sustainability criteria. This may involve conducting regular audits, assessments, and evaluations to ensure suppliers meet the organization's sustainability goals.

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Conclusion

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Sustainable sourcing is a critical component of responsible and ethical procurement practices as it has a more holistic view it encompasses social and environmental factors in the selection process for suppliers.  

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By adopting a sustainable sourcing approach, organizations can improve their reputation, reduce risk, comply with legal and regulatory requirements, and ensure the quality and reliability of their suppliers.

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Implementing sustainable sourcing requires a systematic and strategic approach, but its benefits make it a worthwhile investment for organizations committed to sustainability.

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If you are interested in getting the most out of sourcing from different countries, my company, Imprint Genius, can help you navigate and get the best products with the best deals. Click here for more details.

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