US start-up Flora has raised $9 million for its technology driven online marketplace for sustainable products, reflecting the growing global trend towards sustainably focused e-commerce.
- Flora uses proprietary algorithms, data science and lifecycle assessments to identify and evaluate sustainable brands, before making their products available to consumers at affordable prices.
- More than 60% of consumers plan to shop more sustainably following the COVID-19 pandemic, but the growth of online retail suggests that convenience remains a priority.
- As the rise of conscious consumerism converges with emerging technologies, the business case for sustainable online marketplaces will continue to become stronger.
Flora aims to offer consumers greater access to low-cost sustainable products, by acquiring and supporting environmentally friendly brands and selling their products via its specialised online marketplace.
The start-up selects businesses based on their environmental impact, operational efficiency and financial performance and provides them with additional guidance on branding, marketing, advertising, supply chain sustainability and product development.
Brands on the marketplace save an average of 10k tonnes of CO2
According to the firm, the brands it works with save an average 10,000 tons of CO2 emissions per year compared to conventional alternatives, while consumers are able to access quantitative and qualitative insights on the environmental impact of their purchases.
“Despite the abundance of data, traditional CPG brands and e-commerce platforms have made little progress in calculating their environmental impact. That’s why they are unable to address the needs of eco-conscious consumers.
Flora is changing that by helping our customers to measure, own, and reduce their carbon footprint by switching to high-quality, sustainable products from a wide selection of independent mission-driven brands curated by Flora”, said co-founder and co-CEO Mithat Can Ulubay.
Flora’s fundraising reflects a growing global trend towards sustainable e-commerce. In August 2022, for example, UK start-up IGOLO launched its one-stop-shop to provide products, materials and services for sustainable home design. IGOLO claims to have a rigorous sustainability vetting process in place to assure its customers that products purchased, or services accessed, through its platform will align with their environmental values.
In Europe, meanwhile, software start-up Rentle has recently secured €3.8 million to expand its solution for helping businesses introduce e-commerce websites that follow the principles of a circular economy.
The rise of conscious consumerism
Consumers across all sectors are increasingly demanding more sustainable products, with a 2020 report from Accenture (NYSE:ACN) finding that 60% of shoppers planned to make more environmentally friendly purchasing decisions following the COVID-19 pandemic.
A 2022 survey by IBM reveals that 49% of global consumers had paid an average premium of 59% for products branded as being sustainable or socially responsible within the past year, suggesting that people are beginning to follow through on these intentions.
As the e-commerce sector continues to grow, with a projected total value of $7.4 trillion by 2025, the demands of conscious consumers are extending to include the online world.
Indeed, research commissioned by click-and-collect provider Doddle found that 43% of UK shoppers would choose a different retailer if they offered more sustainable delivery options.
The catch with e-commerce, however, is that much of its appeal is driven by the convenience and variety of choice it offers. These are two aspects that sustainable businesses often struggle to deliver, as they typically focus on small-scale, localised production of a select product-range.
Furthermore, consumers have to spend time and effort determining which brands they approve of, with an Ebay (NASDAQ:EBAY) report from 2022 finding that 50% of shoppers were spending more time researching their purchase decisions than before the pandemic. This somewhat contradicts the convenience traditionally offered by online retail.
Emerging technologies improving the convenience of sustainable shopping
Sustainable e-commerce marketplaces can help solve these issues, as they curate a variety of sustainable brands under a single platform. In doing so, they offer consumers a greater range of choice while maintaining their trust that anything purchased on the platform will have met certain criteria.
Technologies such as Flora’s data analysis, Rentle’s inventory management system, drop ship platforms and fintech solutions are increasingly improving customers’ experience of online marketplaces while also reducing the risks and barriers to entry of new businesses.
Furthermore, the sustainable brands curated on such platforms gain greater awareness which could eventually help scale their efforts to the point where they can offer lower prices.
As technological innovation converges with increasing consumer demand for sustainable choices, the emergence of sustainable online marketplaces is likely to become an ongoing trend.
