Two Lessons from Amazon

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Amazon is now advertising on their boxes that they are “made with less material.” They actually have taken it a step further in some areas, doing away with the boxes completely. What can we learn from this?

First, the Amazon is not straightforward, to say the least. Their page goes over all of the environmental benefits (important for point two) but fails to mention their skyrocketing fulfillment costs.

Amazon’s success means incurring massive shipping costs. Their shipping costs are as much as the annual GDP of Tanzania (which itself is 75th in the world).

Clearly, Amazon can make more money — billions — by saving on packaging.

Lesson two: going green can be good for business. It isn’t always a cost-saver and I won’t pretend that it is, but reducing waste is an easy win for companies and the environment. Amazon’s website says that they’ve reduced per-shipment packaging by 41% since 2015. If if this was only a moderate cost savings, say, 10%, that would be $32,000,000,000 since 2015.

Let’s play devil’s advocate and hypothesize for a minute that Amazon was trying to do this out of the good of their heart for years and had to spend billions on R&D to make it happen. What do you think the ROI would be? Spending $10bn on waste reduction would still be a 3x ROI.

Investors would do well to consider that environmental and businesses wins can align.


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