Introduction

While digitalization in its narrowest sense refers to the transformation of information into a digital format, it is more commonly understood as any process during which the ability to transform information into a digital format, as well as all the resulting capabilities, are applied to analog aspects of life in order to improve them in one way or another.

Digitalization is one of the defining megatrends of the twenty-first century. The mass adoption of digitalization by individuals, enterprises, and governments is increasingly driving economic development. Indeed, digitalization is often praised for its significant and positive impact on economic growth, continuing to transform life, work, and society. Over the last three decades, digitalization and Information and Communication Technologies (ICTs) have profoundly affected our everyday lives and will continue to do so.

This, of course, is also true for consumption. Digitalization has reshaped consumption in a myriad of ways, including supply chains, product design, business models, and consumer behavior. For consumption, one of the most impactful materializations of digitalization has been the Internet. In its infancy, the World Wide Web was often considered anti-commercial, free, unruly, and collaborative. It has since primarily become commercially driven and of the utmost importance to all aspects of consumption.

Due to digitalization’s fast and lasting impact on consumption, its impact on the sustainability of consumption must be considered. Despite the pressing nature of the question, the research field of sustainable consumption has only marginally addressed digitalization’s impact on sustainable consumption (cf. Andersen et al., 2021). For this book chapter, sustainable consumption is understood as the need to change global consumption levels in a way that reduces resource use and waste creation, thus allowing consumption to function within planetary boundaries.

Broadly speaking, three waves of digitalization can be distinguished in consumption; (1) the online shopping wave, (2) the participatory consumption wave, and (3) the virtual consumption wave (Lehdonvirta, 2012). This chapter is structured in line with these three waves and explores the implications of digitalization for sustainable consumption, and the prerequisites of digitalization in a sustainable consumption future. Thus, the chapter first asks what digitalization has meant for sustainable consumption and then flips the question to ask what a sustainable consumption future will entail for digitalization.

The Emergence of e-commerce: The World Is Your Oyster

Starting in the 1990s with simple webshops and clumsy logistics, e-commerce has become an increasingly important aspect of consumption, at first growing timidly and then rapidly over about three decades. Just like the transition from grocery stores to supermarkets and department stores, the transition from physical to online stores has greatly reduced transaction costs and increased the potential for economies of scale. Operating out of gigantic warehouses, the likes of Amazon can offer shopping at lower prices, whenever you want and wherever you want. The choice is almost inexhaustible in e-commerce, with the next online store only a mouse-click away. Comparing choice, price, and products across all major retailers has become easy. Online shopping has also become less time-consuming, with stores preparing orders for fast and convenient pick-up or even home delivery. While this transition has offered consumers increased convenience and choice, for traditional retailers, it has presented a challenge and fresh competition. Traditional bricks-and-mortar stores have ventured into hybrid models to lower transaction costs to consumers while competing with new start-ups. The preference for online consumption has continuously been increasing in scale, not least during the pandemic. According to investment bank Morgan Stanley (2022), e-commerce now accounts for 22% of all retail sales, up from 15% pre-pandemic. Morgan Stanley predicts continued growth, with e-commerce reaching as high as 45% of total retail sales in South Korea during the next five years, and 31% in the US by 2026.

The rise of e-commerce has also enabled new business models reliant upon online platforms to connect with consumers and lower transaction costs. Online platforms enable increased economies of scale in shared use between strangers in accommodation (e.g., Airbnb), in cars (e.g., Snappcar, Turo), and in goods (e.g., Peerby, Hygglo) among others. Online platforms also support traditional community-based sharing models, with libraries now lending e-books and expanding their inventories beyond books into libraries of things, tool libraries, toy libraries, etc.

The environmental impacts of e-commerce have primarily been studied by comparing the transportation emissions of online shopping (when the customer orders online and gets a product delivered) with bricks-and-mortar alternatives (when the customer visits a store), usually only taking into account “first-order effects” on travel patterns. Online shopping is more efficient in terms of transportation, with one study estimating 10–30% fewer emissions, depending on the mode of transport and the individual shopping habits of the consumer (Siragusa & Tumino, 2022). On the other hand, one shopping habit that can greatly influence the sustainability of online shopping is the practice of “over-ordering” products knowing that most of them will be sent back (Cullinane, 2009), or of ordering products from geographically distant locations. Both practices are more likely to happen online than offline. Consumers returning products is often the reason fully functional goods are disposed of because the cost of handling these post-consumer is higher than the production cost. Also, generous and often free return policies push consumers into ordering both multiple items and the same items in different sizes, creating dressing rooms in customers’ homes. What some studies also illustrate, however, is the insignificant role of transportation in the overall environmental impact of shopping. Instead, the bulk of the emissions and waste is generated during both the extraction of raw materials and the production process itself (Hischier, 2018).

Of greater interest, but less studied, is the question of to what degree behavioral patterns changed by digitalization can be observed, and whether these have a net positive or negative impact on the environment. Research indicates that factoring in behavioral changes paints a less favorable picture of online shopping. The above-mentioned advantages of online shopping (reduced transaction costs, increased economies of scale) appear to be resulting in increased consumption levels (Frick & Matthies, 2020). Even though detailed figures regarding the direct and indirect rebound effects of online shopping are difficult to come by, a well-known phenomenon here is that any savings made from cheaper, more convenient shopping will result, to some degree, in increased overall levels of consumption via the so-called rebound effect, as consumers reinvest the time and money saved.

Overall, online retail offers new opportunities for retailers to influence consumers in a direction that is more or less sustainable. More than is the case in physical stores, retailers can, for example, highlight different sustainable products, depending on consumer preferences. This targeting increases the chances of fine-tuning sustainable customer offerings in a way that customers care about and which increases their willingness to pay. One study found that the ability to further engage with ecolabels online improved consumers’ perceptions of product quality, and other product attributes, and also increased their willingness to buy eco-labeled products (Donato & Adıgüzel, 2022). Just as with traditional stores, consumers can also be nudged toward choices that are more or less sustainable, but in a more customized and nuanced way that fits better with the individual.

The first wave of digitalization of consumption thus meant more efficient, more convenient, and less costly shopping for consumers, but most probably less sustainable overall consumption levels. For retailers, this wave was more disruptive, with those transitioning into or emerging within the e-commerce space now having the chance to influence consumers via a different medium. However, new and powerful actors would soon emerge.

Web 2.0: Empowered or Exploited Consumers?

In the mid-2000s, a second wave of innovation in digitalization, sometimes referred to as Web 2.0, introduced further changes into consumer behavior. Web 2.0 meant empowering consumers using new and personalized tools such as blogs, RSS feeds, tags, social networking, web applications, Creative Commons licensing, and peer-to-peer networking. Of course, empowered individuals were part of the Internet from the very beginning, for example, “pirates” sharing files online, but Web 2.0 allowed these actions to be scaled up and to disrupt mainstream consumerism. Web 2.0 revolutionized the distribution of and access to information. It also provided consumers with entirely new possibilities of participating in the creation of goods and services. The production, editing, and sharing of content have become democratized, while crowdsourcing and funding have opened up new ways of enabling innovation and production. DIY repairs and “hacking” traditional products to improve personal utility have become much easier, enabled by easy access to parts and online tutorials. For producers, this meant the ability to interact directly with consumers, to customize, and to receive feedback. Web 2.0, it is argued, has turned the consumer into a prosumer (cf. Lehner, 2019), at least occasionally. An optimistic view of this development suggests that Web 2.0 has resulted in the democratization of the Internet and the empowerment of the consumer, who is increasingly in charge of market trends and empowered to make informed decisions in line with personal preferences.

Digitalization during this wave also spurred innovation in product and service development. Servitization, the trend of transforming business models that sell the services of products (e.g., selling printed pages rather than printers, or selling transport rather than cars), builds on digitalization as a tool enabling the switch to a service model. From the pirating of content emerged the streaming of music, movies, and video games, the digitalization of books and newspapers, and free over-the-air updates for computers, appliances, and even cars.

Even products that have not completely been replaced by services are increasingly becoming connected. By being part of the Internet of Things (IoT), many consumer goods have the potential to be more efficient than their offline counterparts. Furthermore, they also have the potential to keep themselves updated and to stay relevant to consumers longer. Bocken et al. (2019) illustrate how digitalization and the emergence of the IoT enabled new business models that make the use of physical goods much more efficient. They present the case of smart washing machines, which can pick the best time of day to wash clothes and use the right amount of detergent. Digitalized car-sharing services also increase the efficiency of car use by multiple users. This efficiency will probably be optimized even further with the arrival of autonomous vehicles. A lifecycle analysis of smart homes, reported by Walzberg et al. (2020), concluded that these homes (consisting of smart appliances, smart metering, and home automation), and by extension smart grids as well, can make a real contribution to sustainability by optimizing energy use. Moreover, recent studies also indicate that, increasingly, the consumption of ICTs is starting to decouple from its environmental impact, especially as electrical grids are increasingly being powered by renewable energy (Joyce et al., 2019).

However, there is also a dark side to Web 2.0. Behavior tracking and data mining by big companies, in order to understand and influence consumer behavior, have become omnipresent (Barocas, 2014). Some also argue that, despite the early promise shown by Web 2.0, the Internet has not become a more open and free space, but a collection of privately owned gated communities in which Internet users can roam but never be free. Today, a large proportion of Internet traffic ends up on the sites of Meta (Facebook), Alphabet (Google), Amazon, and other Internet giants. More and more access to the Internet is via highly controlled mobile apps on gated mobile phone operating systems such as Apple’s iOS or Alphabet’s Android. These giant Internet companies have become the gatekeepers of the marketplace. It is difficult nowadays for producers not to be on Amazon. Therefore, producers need to accept Amazon’s terms. Especially for small retailers, Internet powerhouses such as Amazon, Alphabet, or Meta can be hard to compete against.

Amazon, Alphabet, and Meta not only shape consumption by influencing what consumers see on their sites, but also by means of how they develop their sites, and thus the Internet. Amazon is the world’s largest cloud-computing operator, which runs the film database site IMDb, which powers the smart home assistant “Alexa”, and which is, through its subsidiary Ring, the biggest private home safety and surveillance service in the US. Alphabet’s search engine Google processes the vast majority of Internet searches, while Meta controls a large proportion of online social media (including Facebook, Instagram, and WhatsApp).

Rather than viewing the Web 2.0 consumer as an empowered prosumer, we can see him/her being turned into a source of free labor for large ICT corporations and as someone who is willing and easy to control at the same time. This is because it is often claimed, in Web 2.0, that the user is not the consumer but the product. For example, on social media, users are fully in control of their own content and there is a complete absence of centralized content. At the same time, they are the currency of the sales and marketing machine, as social media and Web 2.0 are primarily funded by advertising. The two Internet giants, Alphabet and Meta, have built online empires entirely on advertising revenue, which comes from “selling” their users’ data to advertisers who spend billions of USD on online advertising every year. These companies can also set online market rules that can become barriers to retailers. These rules can further impact sustainability as they shape the types of companies, products, and services being promoted online. For example, independent repair shops have complained about not being allowed to advertise their services on Google.

Another critique of the Web 2.0 wave concerns rights and ownership. As products are becoming increasingly digital, they are also becoming increasingly protected by copyrights, trademarks, patents, and end-user license agreements. Consumers may buy a product, but they can be locked out of that device’s hardware and software. This issue lies at the heart of the right to repair campaigns around the world lobbying for changing the law to allow more access to tools, spare parts, and software in order to enable owners to repair and maintain their products (Svensson-Hoglund et al., 2021).

It is initially harder to pinpoint the environmental consequences Web 2.0 is having on consumption, though there are indications that Web 2.0 is successfully being used by companies to increase their sales. There are indications, for example, that social media platforms are encouraging consumption because their audiences are the targets of continuous customized and sophisticated marketing and the sales channels that fund these platforms. An example here that has received much attention in the media lately is Shein, a Chinese fashion retailer that has come to represent “ultra-fast” fashion. It is known on social media for the trend “Shein Haul”, which consists of influencers showcasing a large number of clothes purchased on Shein exclusively in order to show them on social media. This is facilitated by very low prices and fast cycles of fashion collections. Social media also triggers consumption by providing frequently false and beautified images of highly materialistic lifestyles, in doing so increasing social competition. Some argue that social media has resulted in a constant urge to self-promote and a feeling of insufficiency caused by exaggerated, but desirable, images of peers’ lives. Self-promotion on social media creates an illusion of wants, leading to more consumption. Zhang et al. (2017) find that the greater use of social media results in increased online shopping.

Of course, the promise shown by Web 2.0, of empowered users, is not entirely an illusion. Apart from the commercialized aspects of Web 2.0, many online spaces and communities instead promote cooperative interaction, encourage their members to learn new skills, and enable people to solve their problems and live better lives. ICTs have revolutionized access to information, and it has never been easier to be a prosumer. With information on the Internet being both almost endless and frequently free, it has become easier than ever to make, repair, and maintain for those who want to. Digitalization has also made it much easier for those caring about social or environmental issues to demonstrate these preferences and find communities of like-minded people.

Web 2.0, one can conclude, has indeed brought about a much more proactive consumer; i.e. one who builds connections, seeks advice, and learns online from frequently millions of like-minded individuals. In some cases, this has put the individual consumer in a stronger position vis-à-vis traditional market actors, for example, retailers and producers. However, the newly emerged behemoths of the digital age have also used their strong Internet presence to monetize (and monopolize) many of the services they provide online, often free, and to become Internet gatekeepers.

Virtual Reality: Consumption without Physical Limits?

Among the most striking developments concerning consumption and digitalization during recent years is the rise of virtual consumption. Nowadays, billions of dollars are spent by millions of people on virtual items, characters, and currencies in online games, on social networking sites, and in other digital hangouts (Lehdonvirta, 2012). Similar to other developments online, this was initially a bottom-up community development that was later picked up by commercial actors. Around the turn of the millennium, participants in massive multiplayer online games (MMOs) started trading virtual goods from computer games on recently launched e-commerce sites like eBay. Virtual consumption was initially a peer-to-peer phenomenon. Publishers in the computer gaming industry noted the phenomenon, whereby gamers traded virtual items for real money. This seemingly worthless use of real money came as a surprise at first: However, before long, the industry had realized that it could generate revenues by selling virtual items to its users. Often, these virtual items do not have a real impact on the game: They are rather conspicuous. Some people thus argue that some kinds of consumption, focused on satisfying wants rather than needs, are much easier to satisfy virtually and will thus increasingly be moving online. This is not only important as regards unambiguously virtual goods, for example, swords in an MMO game, but also as regards more mundane and real goods, for example, cars. Of course, to satisfy the need to get to work, the car driven has to be a real one driving on real roads. On the other hand, to satisfy the want to drive a nice-looking car around town, it will not matter whether the car is moving on a physical road in the real world, or on a computer screen in a virtual world. With our lives increasingly happening online, the utility of satisfying wants in the digital world will become greater: “For a person whose hobbies and friends are online, virtual goods can be more tangible and useful than a car or a garden tool. […] as more and more aspects of life, … are played out in part through mobile phones, social networking sites, console games, and online communities, virtual goods turn from stand-ins to the real things and the actual objects of consumption” (Lehdonvirta, 2012, p. 23). This development is triggering IT juggernauts such as Meta or Apple to invest heavily in “virtual” or “augmented” reality, or what is nowadays vaguely described as the Metaverse. With increasing investment in hardware and software for Metaverse, it is likely that experiences, such as cruising around town, as well as concerts, sports events, and even holidays, can be provided virtually.

According to app-tracking firm Data.ai (2022), adults in high-income countries today spend 1/3 of their waking hours (4.8) on smartphones, while worldwide, this averages out at almost 7 hours every day watching Internet-connected screens (Moody, 2022). The Metaverse, it is believed by major tech companies, will intensify the digitalization of our lives and become an integral part of life for all of us. We will work, entertain ourselves, and socialize in the Metaverse, equipped with novel devices strapped to our bodies to make the experience as immersive as possible. The Metaverse is an entirely virtual world that integrates with the real world via ICTs, for example, virtual reality glasses: According to some, it will cover large swathes of consumption wants, from dressing your avatars to socializing and building your perfect home. Apart from Meta, the company Roblox, which primarily caters to children, has created one of the first commercially successful Metaverse businesses. The platform now represents a universe of games and simple-to-use programming tools (“Roblox Studios”) where users can play and explore a virtual world that behaves much like the real world in many ways. (An earlier version of Roblox was created as educational physics and mechanics software.) The millions of users who are active day-to-day can also turn into prosumers and create their own games or experiences, and share these with others. Roblox has also introduced its own currency (“Robux”), which can be bought with real money and exchanged on the platform. This allows the more successful creators on Roblox to make a living.

When it comes to the sustainability impact of the virtualization of consumption, very little reliable data is available. It is known that vast amounts of electronic equipment, with all the mining, manufacturing, and toxic waste associated with that, are needed to enable digitalization. Even energy demand to power all the devices and servers prerequisite to digital lifestyles is predicted to increase. Bitcoin is an often-discussed example of digitalization that requires huge amounts of energy for complex and energy-hungry processing operations (Jones, 2018). This has led to Bitcoin mining, which also requires huge amounts of energy.

However, other examples of virtual consumption suggest the potential exists for a substantial decrease in material use. New services continue to be developed and refined to avoid excessive material use and waste. Amazon, for example, has launched a virtual try-on service for shoes and sunglasses using its app, potentially reducing the need for “failed” orders and try-ons of real shoes before consumers find their desired shoes. More ambitious projects are also underway. Zeekit, a company recently purchased by Walmart, has developed a service that offers virtual dressing rooms where any outfit can be tested by consumers by means of dressing images of themselves using their real measurements. Advances in Artificial Intelligence (AI) will most likely further improve such digital services.

Virtual consumption, it appears, is completing the transition between retailers being the gatekeepers of the market and new digital companies taking on that role and exerting power over consumers and their choices. The aim of these digital players, just like that of their analog competitors, is to increase consumption and sell more. However, these new gatekeepers’ primary incentive is to increase the consumption of bits and bytes. Assuming that for every dollar spent, virtual consumption will result in less of an environmental impact than physical consumption, it is possible to imagine a world where, despite increases in consumption, the environmental impact of consumption can decrease. However, in order for any real predictions to be made, far too little is known about the consequences of increased time and money being spent virtually.

Can Digitalization Become a Tool for Sustainable Consumption?

Unsurprisingly, digitalization can in equal measures be the friend or foe of sustainable consumption. What is undisputed here is the fact that the digitalization of our lives, and of consumption, is here to stay and will continue to increase. This trend is being fueled by massive computing power, big data, cloud computing, AI, the IoT, and online platforms (Kornelakis, 2021). It is equally indisputable that consumption has to become more sustainable, and thus it will be essential to use digitalization as a tool for sustainable consumption.

Digitalization has many inherent traits that make it a strong tool for sustainable consumption. Online stores can design and promote sustainable products and consumption practices in the sense that products are made visible to consumers who are nudged toward more sustainable consumption choices. Online stores can also have a more niche-like focus, including branding as an eco-store, and catering to already eco-conscious consumers who want more convenience and a wider selection of eco products than might be available locally. However, web shops, like regular shops, also exist to facilitate consumption.

A more radical potential for sustainable consumption may lie in the ability to dematerialize consumption. Several existing trends in consumption are pointing in this direction, most notably digitally connected products, servitization, and virtualization. Digitalization can enable service-based business models, or product service systems, that are increasingly de-emphasizing the material product component of a business model. Virtualization can go even further and replace physical products with virtual ones. Even in cases where consumption is not primarily virtual, virtual consumption can play a significant role in reducing the materiality of consumption. While it was uncertain, not too long ago, whether people would want to live and spend digitally, more and more people are nowadays appearing to embrace virtual consumption. Computer games are more popular than ever, streaming has become the norm, and, increasingly, humans are socializing online.

The world envisioned here is one where wants are increasingly being created and satisfied virtually, while needs that cannot be satisfied virtually are being satisfied more efficiently with the help of digitalization. Wants, in particular, are of importance with regard to sustainability because virtual artifacts may provide many of the functions today being ascribed to physical products, for example, identity, status, belonging, and entertainment. If, indeed, consumers can be convinced that virtual reality’s value proposition is either equivalent to or better than the status quo, then the results could be profound as regards economic activity.

At the same time, digitalization is accompanied by risks regarding (un)sustainable consumption that need to be avoided. Digital and virtual consumption are not free of environmental impact. Digitalization currently requires huge amounts of energy, and material resources still need to be mined for ICT equipment and infrastructure. While ICTs continue to decouple their environmental impact (cf. Joyce et al., 2019) using energy increasingly being supplied by increasingly green grids in the future, there may still be a need to question how much digital consumption, generally, can and should be sustained in the future.

Second, digitalization saves consumers both time and money, as decreased transaction costs and increased economies-of-scale result in more efficient consumption. Policymakers must thus be wary of rebound effects. Ideally, the aforementioned trend toward virtual consumption will “swallow” the extra time and spending power and divert it toward low-carbon activity, for example, by turning consumers into prosumers (Lehner, 2019). However, this remains hypothetical. It is just as likely that additional spending power and time will be invested in carbon-intensive activities such as travel, home improvement, or shopping. There is a risk that, if price incentives are wrong, digitalization may result in the system being optimized for the wrong parameters; for example, when the occupants of a smart home decide to keep it cooler in summer even when they are not at home (Walzberg et al., 2020).

Third, to prevent the digital world from becoming a purely commercial one, it is essential to ensure that the digital space remains open and free rather than owned and run by large corporations. Over the last decade, IT giants such as Alphabet, Meta, Netflix, Apple, Amazon, and Microsoft have been capturing more and more Internet traffic on their platforms. In 2021, these six companies alone accounted for 57% of global network traffic (Taaffe, 2021). Only an open and free Internet will allow a critical and non-commercial exchange of ideas and knowledge. Only an open and free Internet will provide the space for non-commercial activity. In countries with strong states, for example, the Nordic countries, there is a longstanding tradition of making sure public spaces are not purely commercial. Next to shopping centers, coffee shops, and movie theaters, there are also public squares, libraries, playgrounds, and free works of art for citizens to enjoy. It appears important that such institutions exist, even in a virtual world, in order to counterbalance the spaces dominated by commercial interests.

Lastly, while digitalization and technological innovation generally appear to be pointing toward a future in which we can replace the fossil fuels used in transportation and heating, overall energy consumption, and in particular electricity consumption, will significantly increase. Policymakers need to ensure that these electricity requirements can be met sustainably, and that the potential of digitalization is realized.