Sustainability 13 11548 v2
Sustainability 13 11548 v2
Sustainability 13 11548 v2
Article
Competitiveness of E Commerce Firms through ESG Logistics
Jinsung Kim , Minseok Kim, Sehyeuk Im and Donghyun Choi *
School of Air Transportation and Logistics, Korea Aerospace University, Goyang, Gyeonggi 10540, Korea;
kauscm@kau.kr (J.K.); ms9804@kau.kr (M.K.); imsekr@kau.kr (S.I.)
* Correspondence: dchoi@kau.ac.kr
Abstract: Rapid growth in the e-commerce market, caused by COVID-19, has led to fierce competition.
The intense competition in e-commerce market triggers firms to strengthen their competitiveness
by providing logistics services. Furthermore, as sustainability becomes important in consumers’
choices of products or services, e-commerce companies’ environmental, social, and governance (ESG)
activities are becoming important. Therefore, our purpose of study is to examine the attributes
of e-commerce’s competitiveness in the perspective of ESG in the logistics service and to suggest
differentiation strategies. We analyzed the importance of each ESG attribute in the logistics through a
conjoint analysis. As a result, we found that e-commerce consumers value ESG activities in the order
of distribution in the social (9.866%), partnership in the governance (9.637%), operation of distribution
center in the social (8.570%), packaging in the environmental (8.320%), operation of distribution
center in the environmental (8.262%), purchasing in the social (8.200%), and distribution in the
environmental (7.153%). Accordingly, we suggested ESG strategies such as win-win cooperation,
opening information on the working environment in delivery and distribution centers, development
of a shared logistics platform, preventing COVID-19, and raising consumers’ awareness of eco-
friendly delivery.
Citation: Kim, J.; Kim, M.; Im, S.; Keywords: e-commerce; logistics; environment; social; governance; ESG; conjoint analysis
Choi, D. Competitiveness of E
Commerce Firms through ESG
Logistics. Sustainability 2021, 13,
11548. https://doi.org/10.3390/ 1. Introduction
su132011548
In line with the booming online market caused by COVID-19, e-commerce is emerging
as a promising industry [1]. Korean IT portal companies such as Daum and Naver are also
Academic Editor: Sungyong Choi
entering e-commerce in addition to large offline distributors due to low barriers to entry.
Consequently, e-commerce companies are seeking to increase product diversity and price
Received: 17 September 2021
competitiveness and strengthen their competitiveness through platform reconstruction [2–4].
Accepted: 14 October 2021
Published: 19 October 2021
Under these circumstances, e-commerce companies are evolving into firms that include
logistics service functions, as well as platform functions that link products. In addition, they
Publisher’s Note: MDPI stays neutral
are trying to secure competitiveness by introducing time concepts of existing logistics services
with regard to jurisdictional claims in
such as same-day delivery, early-morning delivery, and 4-h delivery [5]. At the same time, as
published maps and institutional affil-
the words sustainable and ethical consumption are commonly used among consumers, and e-
iations. commerce’s on the environment, social, governance (ESG) activities are becoming important,
as is providing merchantability, quickness, and convenience [6]. For example, a fire at a
Coupang Logistics Center in June 2021 was not simply recognized as damage to corporate
property but as a poor labor environment and an avoidance of responsibility to consumers,
which led to a boycott of Coupang. In other words, ESG activities in the logistics sector have
Copyright: © 2021 by the authors.
Licensee MDPI, Basel, Switzerland.
become an important factor in consumers’ choice of e-commerce platforms. However, there
This article is an open access article
is lack of research for impact of ESG on consumer’s platform choices. Previous studies have
distributed under the terms and
focused on how corporate ESG activities attract investors [7]. Therefore, the purpose of this
conditions of the Creative Commons study is to examine the key attributes of e-commerce’s competitiveness from the perspective
Attribution (CC BY) license (https:// of ESG in the logistics sector and present a differentiation strategy through ESG. To this end,
creativecommons.org/licenses/by/ this study seeks to analyze the importance of each ESG factor in the logistics sector through
4.0/). a conjoint analysis based on a survey.
The contribution of this study is that, first of all, it identified the attributes which make
an e-commerce entity gain competitive market advantage in the logistics sector among the
criteria of ESG management. Secondly, the interest of ESG-related logistics attributes of
customers using e-commerce was identified. Finally, meaningful corporate action strategies
are presented regarding the important ESG factors derived.
2. Literature Research
2.1. E-Commerce Concept and Industry Status
In the past, e-commerce meant purchasing or selling information, products, and
services through a computer network [8]. Gupta [9] extended this concept, viewing that
e-commerce is a broad online business for products and services and is related to all forms
of transactions, except physical exchange or contact. In addition, Meng [10] considered
e-commerce to mean any business process that uses a computer network to realize the
high-efficiency and low-cost trading of goods.
Traditional e-commerce companies in the past have played a role in providing plat-
forms for e-commerce, but now they are building their own logistics service networks in
addition to providing platforms. This is because, among the logistics services, especially
the Last-mile service, it is one of the key elements for a successful e-commerce business
and is needed for continuous improvement in service levels [5]. Existing e-commerce
definitions lack this logistical concept, so redefining e-commerce, including logistics, is nec-
essary. Accordingly, in this study, by combining platform elements and logistics elements,
e-commerce was defined as the entire process from online ordering made through platform
selection using PCs and mobile devices to actual consumers.
Recently, while e-commerce companies using logistics outsourcing have experienced
delays in shipping/returns, lack of follow-up services, and inability to respond immedi-
ately to problems [5], e-commerce companies that provide their own logistics services are
operating more effectively regarding these issues. This is because, through direct manage-
ment, they can increase the quality and efficiency of their logistics services and respond
flexibly to sudden changes [11]. In fact, Coupang, Korea’s leading e-commerce company,
is showing rapid growth with its own logistics services at the forefront. According to
Deloitte’s [12] analysis of the 250 top retailers worldwide, since 2014, Coupang has ranked
first in ‘the company with the highest growth rate’ at an average annual rate of about
103%. It also topped the list for three consecutive years in terms of online shopping and
delivery satisfaction by brands in Korea in 2020. In particular, it was found that there was
an overwhelming gap of 73 points compared with the company in second place in the
‘Quickness/Accuracy’ category among satisfaction evaluation factors [13]. This can be seen
as an example of gaining an upper hand in the market by taking advantage of providing
its own logistics services.
However, many e-commerce companies, which have realized the benefits of estab-
lishing their own logistics network, are scrambling to provide logistics services, making
it difficult to draw differential competitiveness in the logistics sector. For example, as
Coupang began next-day delivery, companies such as Shinsegae and Naver, which are
latecomers, have quickly introduced next-day delivery services, and now most e-commerce
companies are already providing next-day delivery services. Meanwhile, SMEs (small
and medium-sized enterprises) are seeking to secure consumers with specialized deliv-
ery services such as ‘early-morning delivery’ and ‘four-hour delivery’ to combat capital
offensives by large companies, and in this situation, zero-sum games continue to take away
limited pies. Therefore, to secure a customer base, e-commerce companies need to find
new attributes to be competitive.
One of the attributes considered by e-commerce companies is sustainability. Compa-
nies such as Amazon, Veo, and Wal-Mart are actively promoting companies that provide
sustainable goods and services [14]. The reason companies pursue sustainable brand value
is because it is a new strategy to secure and maintain a customer base [15]. In particular,
it is necessary to focus on ESG, which is in the spotlight. Accordingly, this study seeks
Sustainability 2021, 13, 11548 3 of 15
to examine the factors of consumers’ selection of e-commerce platforms in the past and
derive important factors of ESG in the logistics sector for e-commerce companies to be
competitive in the future.
2.3. ESG
In order to secure long-term competitive advantage and sustainable growth, com-
panies need to consider not only existing financial performance but also non-financial
performance. In the past, if an entity was based on its financial indicators when evaluating
the entity, the current society has grown to demand even non-financial performance, such
as ESG [7]. As ESG activities have emerged as a hot topic, they have become a core of corpo-
rate management and are also emerging as clear differentiators in the e-commerce industry.
These ESG activities or performance disclosures have been found to help companies attract
investment [7] and grow financial performance [27,28].
Meanwhile, sustainability is becoming important in consumers’ choice of goods or
services [6]. This is especially true since, as the volume of traffic and pollution in the city
increases due to the increase in freight volume by the e-commerce industry, e-commerce
customers are also interested in sustainability [29]. So, e-commerce companies are seeking
to secure new consumers and promote their value through ESG activities. However, just as
the competitiveness of e-commerce companies is determined in the logistics sector, ESG
activities of e-commerce companies are also performed in conjunction with the logistics
sector (Table 2).
Activities Examples
Use reusable packaging, use recyclable packaging, avoid using
Packaging
additional packaging [30,31]
Reduction in air pollution and carbon emissions through Green
Environment Distribution (Last-mile delivery)
Vehicle Routing [32], using electric vehicles or bicycles [33]
Green Warehousing and introducing eco-friendly
Operation of Distribution center
power generation [34,35]
Purchasing Ethical purchasing [36]
Using the Crowd logistics platform [37], improving the working
Distribution (Last-mile delivery) environment (work schedules, salaries, etc.) [38], avoidance of
Social vehicle noise and illegal parking [39]
Creating local community jobs [40], improving the working
Operation of Distribution center environment (work schedules, salaries, etc.), avoidance of
traffic congestion [41,42]
Avoiding unfair trade practices and supporting SMES
Governance Partnership
(retailers and suppliers)
2.3.1. Environment
Environmental activities in logistics can be classified as the packaging, delivery, and
operation of the distribution center, and environmental activities in packaging include using
reusable and recyclable packaging and avoiding the use of additional packaging [30,31].
Amazon, for example, is implementing a policy of reducing waste of packaging resources
by delivering products safely to consumers without additional packaging through its
frustration-free packing program [43]. Moreover, 11th Street, SK’s e-commerce platform, is
also working on environmental activities in the logistics sector by introducing recyclable
paper boxes, adhesive tapes, and vinyl buffers.
Environmental activities in the distribution sector relate to activities that reduce air
pollution and carbon emissions caused by vehicle operations. E-commerce companies
are introducing the Green Vehicle Routing Program to simultaneously optimize transport
routes and minimize carbon emissions while introducing electric vehicles and bicycles to
reduce the carbon emissions caused by delivery [32,33]. For instance, Hyundai Department
Store is trying to attract new consumers by combining electric trucks with cold-chain
systems and services that deliver premium fresh foods within 30 min.
Meanwhile, environmental activities are being emphasized in the operation of logistics
centers, and a green warehousing strategy that minimizes energy use and maximizes space
Sustainability 2021, 13, 11548 5 of 15
use of centers to reduce costs and increase efficiency while using eco-friendly energy
is being introduced to e-commerce companies [34,35]. For example, Amazon is trying
to reduce carbon emissions by installing solar panels in idle space on the roof of its
logistics center.
2.3.2. Social
Social activities in logistics can be classified as the purchasing, delivery, and operation
of the distribution center. As e-commerce companies include not only platform functions
that connect businesses and consumers but also distribution capabilities that purchase and
sell products, which products to buy or sell also becomes important. Ethical purchasing
by enterprises is particularly emphasized because it is the first step in consumers’ ethical
consumption.
Social activities in the distribution sector are related to job creation and the improve-
ment of the working and living environments. In particular, e-commerce companies have
recently provided jobs for ordinary people to deliver directly through crowd logistics such
as Coupang Flex. On the other hand, there are also negative opinions about crowd logistics,
as there are cases of increased traffic congestion and noise due to it.
Social activities in the distribution center management sector are related to job creation
and improvement of the working environment. E-commerce companies are reinforcing
their logistics networks by establishing a new logistics center and revamping their image
by creating jobs in the region. For example, according to the Ministry of SMEs and
Startups, Market Kurly established the Gimpo Logistics Center in 2020 and hired more
than 100 workers related to the logistics center, ranking first in employment growth rate
among venture companies. On the other hand, since the operation of the distribution
center can cause traffic congestion around it, the location selection of the distribution center
considering the nearby residents is an important factor in social activities [41,42].
2.3.3. Governance
Sound corporate governance is essential to corporate performance improvement and
survival [44]. Meanwhile, corporate governance relates not only to the internal structure
of an entity, such as the formation of a board of directors, but also to the relationships
between other entities. E-commerce companies receive commissions from store companies
(sellers) and are implementing open market policies to help store companies secure new
customers. However, as social problems such as e-commerce companies’ demand for the
lowest price and high commissions have emerged, e-commerce companies have recently
implemented win-win policies such as discounting fees and supporting advertising. In
fact, Market Kurly has introduced a ‘direct purchase system’ for some stores to reduce the
inventory burden.
In this equation, rt is the number of levels of different t-th attributes, Dtk is the dummy
variable that takes 1 if xit equals the kth level of xt or 0 if not, and Utk is the part-worth
function factor for the k-th level of xt [45].
3.2. Survey
The previously selected consumer e-commerce platform selection attributes (logistics
service, environment, society, governance) were established as shown in Table 3, and 16
cards were generated through SPSS 28. To avoid the unnecessary generation of cards, cards
were created using Fractional Factorial Design to prevent the predictive validity of the
survey [46].
3.3. Sample
The survey in this study was conducted on consumers who have used e-commerce.
The researchers opened the survey in August 2021. The invitation of survey was sent
via web forum and KakaoTalk, the most popular messenger application in Korea. The
survey method was a Google Form because of the familiarity to the respondents. The total
number of survey respondents was 128, and the research was based on a total of 96 surveys,
excluding 31 responses with duplicate scores and one with missing values. The respond
rate for the survey was 67.7%.
The respondents of the survey are composed of various ages. However, most of
the respondents are in the ages between their 20s and 30s, which are considered as the
dominant participants in the e-commerce market. We also tested systemic difference
between sex and age groups using an ANOVA test. We found no significant difference
between groups. The detailed characteristics of respondents are shown in Table 4.
Sustainability 2021, 13, 11548 8 of 15
Number of Ratio of
Characteristics Categories
Respondents Respondents
Male 40 41.7%
Gender
Female 56 58.3%
10~19 12 12.5%
20~29 64 66.7%
Age 30~39 15 15.6%
40~49 4 4.2%
More than 50 1 1.0%
Number of Less than 2 60 62.5%
E-commerce usage 2 or 3 times 31 32.3%
(Average per week) More than 4 5 5.2%
4. Results
The detailed attributes that consumers consider most important in choosing e-commerce
platforms are lead time and quality (21.938%) in the logistics service sector, followed by com-
modity (18.054%) in the logistics service sector. Meanwhile, with regard to ESG, consumers
recognized its importance in the order of distribution in the social sector (9.866%), partner-
ship in governance sector (9.637%), logistics center operation in the social sector (8.320%),
packaging in the environmental sector (8.262%), purchases in the social sector (8.253%), and
distribution in the environmental sector (7.153%). In this study, Pearson’s R and Kendall’s
tau values were found to be 0.998 and 0.967, respectively, showing very high explanatory
power in the model. Furthermore, the model fit for the 16 combinations of these e-commerce
platform selection attributes is less than 0.05, indicating that this model fits (This is set out in
Table 5.).
(a) (b)
(a) (b)
Figure2.2.Logistics
Figure Logistics service
service utility
utilityscore.
score.(a)
(a)Lead
Leadtime
time&&Quality;
Quality;(b)(b)
Commodity.
Commodity.
Figure 2. Logistics service utility score. (a) Lead time & Quality; (b) Commodity.
According to
According to Figure
Figure 3,3,in
inthe
theenvironment
environmentsector,
sector,respondents
respondents consider packaging
consider packaging
According
(8.320%), to
logistics Figure
center 3, in
operation the environment
(8.262%), and sector, respondents
distribution (7.153%),
(8.320%), logistics center operation (8.262%), and distribution (7.153%), which consider
which packaging
shows that
shows
respondents
(8.320%),
that consider
respondents eco-friendly
logisticsconsider
center operation packaging
(8.262%),
eco-friendly of this commercial
and distribution
packaging platform the most
(7.153%),platform
of this commercial which shows
theim- that
most
portant.
respondents
important. consider eco-friendly packaging of this commercial platform the most im-
portant.
(a) (b)
(a) (b)
Figure 3. Cont.
Sustainability 2021, 13, 11548 10 of 15
Sustainability 2021, 13, x FOR PEER REVIEW 10 of 15
(c)
Figure
Figure 3.
3. Environment
Environment utility
utility score.
score. (a)
(a) Packaging;
Packaging; (b)
(b) Distribution;
Distribution; (c)
(c) Operation
Operation of
of distribution
distribution center.
center.
In
In terms
terms of social activities, importance
importance was was derived
derived in the order of distribution
(9.866%),
(9.866%), logistics
logistics center (c)
center operation
operation (8.570%),
(8.570%), andand ethical
ethical purchasing
purchasing (8.200%)
(8.200%) (Figure
(Figure 4).
4).
The ethical purchasing of e-commerce is of lesser importance than the other
Figure 3. Environment utility score. (a) Packaging; (b) Distribution; (c) Operation of distribution center.two attributes
but
but is of sufficient significance in terms of utility.
utility.
In the
termscorporate
of socialgovernance
activities, sector, respondents
importance preferred
was derived an e-commerce
in the platform
order of distribution
that conducts
(9.866%), partner
logistics relationship
center operationmanagement.
(8.570%), andThe importance
ethical of partnerships
purchasing (9.637%)
(8.200%) (Figure 4).
was the second
The ethical highestof
purchasing among ESG-related
e-commerce attributes,
is of lesser indicating
importance thatother
than the governance is also
two attributes
important
but to customers,
is of sufficient such asinenvironmental
significance terms of utility. and social activities (Figure 5).
(a) (b)
(a) (b)
Figure 4. Cont.
Sustainability 2021, 13, x FOR PEER REVIEW 11 of 15
(c)
Figure 4. Social utility score. (a) Purchase; (b) Distribution; (c) Operation of distribution center.
Figure5.5.Governance
Figure Governanceutility
utilityscore.
score.
5.5.Discussion
Discussion
As
Asthe
the e-commerce market
marketgrows,
grows,it it
hashas become
become an environment
an environment where
where it longer
it is no is no
Figure
longer 5.possible
possible Governance
to achieve utility
to achieve score.
significant
significant performance
performance only only by strengthening
by strengthening delivery
delivery services.
services. De-
Delivery services(lead
livery services (leadtime
timeandandquality)
quality) have
have become
become an essential
essential element
elementfor fore-commerce
e-commerce
5. Discussion
companies,
companies, and customers have become accustomed to these services, makingititdifficult
and customers have become accustomed to these services, making difficult
As the
totodraw
draw e-commerce
differences
differences market
through
through onlygrows,
only it has
delivery
delivery become
services.
services. an environment
Therefore,
Therefore, this where
study
this studyaimsit to
aimsis no longera
pioneer
to pioneer
new market
possible
a new market by presenting
to achieve by presenting strategies
significant in terms
performance
strategies of ESG
only
in terms byESG
of that e-commerce
strengthening
that companies
delivery
e-commerce have have
services.
companies not
De-
previously
livery considered.
services
not previously (lead time and quality) have become an essential element for e-commerce
considered.
First,
First,when
companies, looking
lookingatat
and customers
when the
thegovernance
have become
governance structure,
accustomed
structure, toititthese
was
wasfound
foundthat
services, customers
making
that place
it difficult
customers place
significant
to draw value
differences upon the
through relationship
only deliverybetween e-commerce
services. Therefore,
significant value upon the relationship between e-commerce companies’ partners when companies’
this study partners
aims to when
pioneer
achoosing
new market
choosing aaplatform. In recent
by presenting
platform. In recent years,the
strategies
years, the publicof
in public
terms interest
ESG that
interest ininsocially
sociallyasymmetric
e-commerce asymmetric
companiesandand un-
have
unrea-
reasonable
not previously
sonable contractual
considered.
contractual relations has increased. Consumers avoid
relations has increased. Consumers avoid e-commerce companies e-commerce companies
forcing
forcingunreasonable
First, when looking
unreasonable relationships
relationships with
at the governance
withpartners withwith
structure,
partners excessive
it was advertising
found
excessive that fees and
customers
advertising com-
place
fees and
missions and
significant valuewantupone-commerce companies
the relationship to have
between win-win cooperation
e-commerce with partners.
companies’ partners when
Accordingly,
choosing in orderInfor
a platform. e-commerce
recent years, thecompanies to improve
public interest theirasymmetric
in socially relationshipand with their
unrea-
partners, the following strategies can be considered in terms
sonable contractual relations has increased. Consumers avoid e-commerce companies of governance structure.
forcing unreasonable relationships with partners with excessive advertising fees and
Sustainability 2021, 13, 11548 12 of 15
is difficult for consumers to feel, so it can be seen that such results were derived due to its
relatively low importance.
As major countries such as the U.S. and regions such as the EU accelerate eco-friendly
policies, leading logistics companies such as Amazon and FedEx also declare carbon
neutrality and are sparing no investment regarding eco-friendly delivery. As such, the
logistics industry tends to value the environment, and eco-friendly delivery is also one
of the directions that e-commerce companies should take in the future. On the other
hand, e-commerce companies need to raise consumer awareness of environment activities
first in order to have discriminatory competitiveness in the market through delivery in
the environmental sector. For example, it is important to inform e-commerce companies
and consumers that they are participating in eco-friendly delivery activities by providing
various options, such as allowing consumers to choose eco-friendly delivery directly and
improving loading rates, even if it takes a little longer than the standard delivery method.
Author Contributions: Conceptualization, J.K.; Methodology, M.K. and S.I.; Software, M.K. and
J.K.; Validation, D.C. and J.K.; Formal Analysis, J.K., M.K., and S.I.; Investigation, J.K., M.K., and
S.I.; Resource, J.K., M.K., S.I., and D.C.; Data Curation: J.K., M.K., and S.I.; Writing Original Draft
Preparation, J.K., M.K., and S.I.; Writing – Review and Editing, J.K. and D.C.; Visualization, M.K.;
Supervision, J.K., M.K., S.I., and D.C.; Project Administration, J.K.; Funding Acquisition, J.K., M.K.,
and S.I. All authors have read and agreed to the published version of the manuscript.
Funding: Foundation of Korea Logistics Industry Promotion.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Informed consent was obtained from all subjects involved in the study.
Sustainability 2021, 13, 11548 14 of 15
Data Availability Statement: The data presented in this study are available on request from the first
author.
Conflicts of Interest: The authors declare no conflict of interest.
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