Does Amazon know you better than you know yourself?
They seem to think so. In fact, it’s willing to bet its most important of all business concepts on that statement: Its Bottom Line
Amazon is claiming it knows its customers so well that it can start shipping something to them before they even place the order!
Back in January, Amazon made headlines by patenting a new shipping model. Specifically, this patent dealt with anticipatory shipping.
That’s right – this model actually predicts what users are likely to buy, when they’ll buy it, and where they will want it shipped too.
Once the predictions are made, Amazon will dispatch them to a nearby destination (probably a warehouse or a distribution centre), package the order, and have it ready to be shipped for when the customer actually places that order.
If all goes well, it would greatly reduce shipping times because the product would essentially already be on its way at the time the order is placed!
Keep in mind Amazon is also the company that employs robots and wants to patent same day drone shipping, all in the name of faster delivery. Out of all the things that Amazon wants to do, Anticipatory shipping is the least shocking.
Of course, how innovative or successful this shipping model will be depends completely on how well Amazon knows their customers.
Amazon filed the patent in August 2012, and it was granted on December 24 2013. Merry Christmas!
Amazon isn’t just shipping things without evidence; they are considering a myriad of factors before deciding to send something before it is purchased. These include:
- previous orders
- product searches
- wish lists
- shopping cart contents
- other online shopping practices
Together, all of these elements are part of the underlying technology of predictive analytics
Amazon is known for using its customer data effectively. It was one of the early leaders in adopting the collaborative filtering engine (CFE), which has benefited customers and Amazon alike.
Thanks to collaborative filtering, a site like Amazon can say, “People who bought books A and B also bought book C.” Amazon needs no understanding of people or books to generate this recommendation. All Amazon needs is a database of who has bought what, so that it can calculate who are “people like you.” Then any time a “person like you” buys a book that you have not bought, Amazon can “personally” recommend that book to you –Wikipedia
After Amazon showed how successful Collaborative filtering could be, many other companies quickly adopted the technique:
If anticipatory shipping takes off, other companies may consider adopting it as well. Thanks to Amazon, it may quickly become the norm.
What if anticipatory shipping gets something wrong?
Nothing is perfect, and anticipatory shipping can clearly go wrong in so many ways. What if someone changes their mind and never orders? What if they decide to order something else? What if Amazon just gets it wrong and sends something a customer has no interest in?
The algorithm used to hypothesize the demands made by customers will not be infallible, and could lead to an increase in costs by Amazon. Shipping things that people don’t actually want? That could lead to a whole world of hurt for the company.
Precisely for this reason, Amazon points out that anticipatory shipping can be effective only with the products in great demand.
To minimize the cost of unwanted returns, Amazon said it might consider giving customers discounts or even make the delivered item a gift.
As to when this shipping might actually start, who knows.
It might not be that long until you’re getting a delivery today that you won’t order until tomorrow.