Amazon is a master at adapting. That’s why the company has been so successful in the ecommerce industry. Amazon frequently assesses its customers’ needs and then implements solutions before competitors even see a new trend, as evident with the introduction of Amazon Prime and a push for Sunday delivery. Now Amazon Prime is trying a new logistics approach that will force retailers to change the way they approach delivery to better meet customer needs.
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Situation: Amazon Strives for Same-Day and Same-Hour Delivery
Amazon CEO Jeff Bezos described his vision of delivering packages in as little as 60 minutes with the use of drones. At the time, many ridiculed his ideas for being too futuristic. However, Amazon still aims to get packages out to customers as quickly as technology allows. As a result, Amazon is challenging the logistics industry to move quickly and keep up with the demand of customers.
The reason that people still opt to go to a store to purchase a product instead of buying it online and having it shipped is because they want instant gratification. Amazon wants to make this possible with delivery that’s so fast customers won’t think twice about buying something online.
Approach: Amazon’s New Patent for Anticipatory Shipping
concept known as anticipatory shipping. The patent indicated that items would be packaged together for eventual shipment. Then they would be shipped to a geographical destination, and the final delivery destination would be determined when the package was already in transit. This would allow packages to arrive to customers the same day an order was placed, sometimes within as little as one hour. In some cases, items could arrive to customers before they placed an order. The patent was approved in December 2013.
Impact and Advantage of Anticipatory Shipping
Anticipatory shipping relies heavily on predictive analysis and big data. Amazon aims to know what customers want before they make a purchase. Amazon will go about this by analyzing search data, wish lists, the amount of time spent on a specific product page, and customers’ previous purchase history. Then Amazon will ship items to a geographic hub where the company thinks the products will sell well.
The idea of demand forecasting is not new. However, Amazon’s patent is different because it uses current customer data and algorithms to make predictions. It’s unclear whether Amazon would actually ship products to customers without an order, but that seems to be a possible direction. In that case, customers could then try out the product and decide whether to keep it or not.
Amazon has already invested heavily in warehouses and logistics capabilities. Anticipatory shipping would be a way for Amazon to better take advantage of investments. There are very few online merchants that could pull off an operation as impressive as anticipatory shipping, and Amazon believes this move will keep the company at the top. Amazon will likely test anticipatory shipping in specific markets soon.[/show_to]
