Earlier this year Amazon patented its “anticipatory shipping” solution, which basically comes down to Amazon shipping products even before customers have ordered them. Amazon will use an algorithm to pre-determine things that people want to buy, based on a mix of data including previous purchases, questionnaires, wish lists, browsing data, demographic data, etc.
Even though this “anticipatory shipping” concept is in its early stages, these are the more interesting aspects worth looking into:
- Anticipating demand – This algorithm will help Amazon to anticipate demand and, critically, the location where that demand is most likely to arise. Predicting user demand is the holy grail for most eCommerce or content businesses and Amazon is no exception. Amazon is looking to utilise its treasure chest of customer data – behavioural and demographic – to the fullest.
- Impact on distribution – It all depends on how exactly Amazon will implement its patent, but one can imagine that their whole distribution and supply chain system will alter dramatically. For example, the patent includes an outline of “speculatively shipping” packages to destinations and how to re-route items based on proximity to potential customers for those items. One of the diagrams included in the patent (see Fig.1 below) gives a clear indication of what such a scenario could look like. As a result, goods might stop being stored in huge warehouses but instead be continuously on the move in trucks.
- Improving Amazon’s recommendations even further – Similar to the point I raised about anticipating demand (see point 1. above), it will be interesting to see how Amazon will further improve its algorithms to predict customer demand accurately. Amazon is already doing a pretty good job at figuring out user profiles (Darius Kazemi’s “Random Shopper” provides a good case in point) and providing content-based recommendations, i.e. looking at similar products that you have purchased previously. In order to get anticipatory shopping right, Amazon will base its predictions on additional data such as product searches, wish lists, shopping-cart contents, returns and more random aspects such as how long a user’s cursor has hovered over a specific item.
Main learning point: Anticipatory shipping sounds a bit futuristic, but its underlying rationale and benefit is clear to see. What intrigues me most is to see how the customer will benefit from a predictive, as-and-when delivery approach. One of the key factors in this equation is the quality and accuracy of Amazon’s predictions. I guess that’s the thing I will be most interested; how will Amazon accurately predict what I need, where and when?
Fig. 1 – “Speculatively shipping” by Amazon (taken from: US Patent 24 December 2013 No. 8,615,473 B2)
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