As e-commerce grows, so too does the public’s interest in ethical consumption. Customers are beginning to ask questions about where their items were made and if they were made in a way that exploits communities or negatively impacts the environment. To meet customer desires, online businesses have to consider if they source from ethical suppliers.
Ensuring that your e-commerce business operates as ethically as possible can be challenging. Even if ethical operations are your top priority, not all of the companies you work with will be as transparent about their own activities.
However, you’re only as ethical as the other businesses you work with. If a supplier regularly exploits laborers or damages the environment, that will reflect on your business. To maintain a successful e-commerce business, it’s crucial to work with suppliers and organizations who share the same values that you do.
So, how do you ensure your business works with ethical suppliers?
1. Ask tough questions
When you are trying to choose suppliers, make sure you ask them the tough questions that will help you to determine if they are truly ethical. Some examples of questions you might want to ask include:
- How do you comply with environmental regulations?
- What are the conditions like for workers in your business?
- Are your products made from sustainable or recyclable products?
- Where are your products made?
- How is your staff turnover at production sites?
- How have your relationships been with other businesses?
Pay close attention to how they respond to these questions. If a supplier’s answers don’t align with your values, they may not be the best organization to work with. If someone is vague or tries to avoid an upfront answer, that may also be a sign they aren’t committed to ethical practices.
In addition to vetting potential partners, these questions can help get a larger conversation going with suppliers who you’re interested in working with. This can help you develop a partnership that works well for both of you.
2. Ensure proper communication
First and foremost, establish direct and open communication with prospective suppliers. You may be operating in a business-to-business setting, but as a customer of this company, you should communicate accordingly. This means being upfront about what you need and want from suppliers to make your relationship work.
Explain exactly what ethical standards you expect them to meet, how to discuss issues or shortcomings, and methods of accountability. Both parties need to live up to the standards that you discuss and agree upon. If you choose to work with a supplier, put all of this information in writing, so you can reference it later if an issue arises.
If a supplier isn’t communicative during these initial conversations, that doesn’t mean they’re inherently unethical or misaligned with your values. However, that lack of communication may indicate deeper problems and make it more difficult to work through any challenges that do crop up in the future.
Communicative suppliers won’t be afraid to answer any of your questions, acknowledge areas where you disagree, and come to an agreement on best practices for your working relationship. They bring a different level of transparency to their work that can make it significantly easier to ethical challenges of running an e-commerce business.
3. Be transparent
In the era of conscious consumerism, transparency is essential. Customers want to know that their dollars are going towards businesses that are doing good for society. This means you need to inform your customers about what your company is doing to minimize negative (and maximize positive) impacts your operations may have on the world.
Keep in mind that companies that aren’t transparent, or that claim to be but aren’t, are quickly exposed, which can lead to real reputational damage. This can ultimately jeopardize relationships with governments, regulators, investors, and other key stakeholders.
Transparency is all about communication — communication with your employees, with other organizations, and with your customers. There are many ways to improve transparency in your business and supply chain, such as:
- Being upfront about challenges and areas for improvement
- Providing information about your policies to the public
- Acknowledging what your business has done well
- Doing what you say you’re going to do
It’s crucial to determine what transparency looks like for your organization, as what works for someone else won’t work for you. Use whatever channels you have available — such as your company website, social media profiles, and digital PR materials — to promote these messages and reinforce your own approach to ethics.
Being transparent yourself can make it easier to find ethical suppliers. If an organization also values supply chain transparency, they may be more motivated to seek out and work with businesses, like yours, that are open and honest about their practices, policies, and protocols.
You can also use your criteria for transparency to evaluate potential partners and suppliers. If you know what you’re looking for, it will be far easier to know which organizations meet your standards and which don’t.
Taking the extra time to evaluate potential suppliers will be well worth it in the end. You will see many benefits for your e-commerce business, such as:
- Appeal to Gen Z: Values are important to Gen Z, and they want to support businesses whose values are similar to their own. If you take the time to show that having ethical suppliers is important to you, your business will be that much more appealing to this generation. This will be particularly valuable as the members of this generation grow older and start to develop long-term loyalty to their preferred brands.
- Build customer loyalty: It’s easier to create a loyal customer base when you care about the way you treat your employees and the environment. Consumers will see and appreciate this care and may be more likely to become repeat customers. Having repeat customers is one of the keys to a successful long-term business as it does not cost any marketing or advertising money to acquire them.
- Retain good staff: If you bother to find ethical suppliers, that will only help to bring better ethics and create a more positive atmosphere in your workplace, which will mean less staff turnover. This is a great thing for your business because you can count on talented individuals to stay with the business and advance with the company.
- Competition creates more ethical businesses: Competition is beneficial for business, helping to drive innovation and change. In the current climate, businesses that engage in demonstrable ethical practices have a leg-up on businesses that do not. You can find new ways to improve operations and inspire other businesses to do the same. Further, consumers want to support e-commerce businesses that care about ethical practices. If your e-commerce business starts using ethical suppliers, the demand for ethically sourced products may increase, leading more businesses down the same path.
To enjoy these benefits, you have to build an ethical supply chain and do your best to cultivate relationships with suppliers who are committed to the same values and practices as your organization.