Throwing out food before expiration and still reducing food waste: online vs. offline retail

Online retailers throw out food that has not yet expired. This gives rise to the question whether online retailers generate more food waste than offline retailers, who typically throw out food only after it has expired. We focus on the food waste at the retailer which inherently ensues from the logistical set-up. We first provide a theoretical analysis to establish whether throwing out food before expiration indeed results in an increase in food waste, putting online retailers at a disadvantage compared to offline retailers. We show the relevance of this question by providing a theoretical example, showing an inventory control policy which counter-intuitively results in a decrease in food waste. Nonetheless, we show for well-behaved inventory control policies, including the optimal policy, that food waste increases when food is thrown out before expiration. Next, we compare the food waste of the online retailer with that of an offline retailer in numerical experiments. Note that the online retailer has some advantages over offline retailers as well. Online retailers benefit from full control of order picking, which is instead often done by the consumer in offline retail. Moreover, the online retailer often benefits from the pooling effect, as offline retailers might use multiple stores to satisfy the same demand volume as an online retailer from a single warehouse. Our numerical experiments with a base-stock policy suggests that online retail actually yields less food waste for many products, despite throwing out food before expiration.