Amazon recently earned a patent for its new system of “anticipatory shipping” in which the mega-retailer starts delivering packages before the customer even clicks “buy.”  Anticipatory shipping involves boxing and shipping products that it expects customers will want based on their previous purchases.  When deciding what to ship, Amazon uses information from customers’ previous orders, product searches, shopping cart contents, returns, etc. Amazon hopes that this technique will discourage customers even further from visiting physical retail locations by reducing wait time.

Amazon believes that this shipping method will be especially impactful for popular books or movies that customers want the day they are released.

In Amazon’s current process, Amazon receives an order, labels and packages it, loads it on a UPS or USPS truck and the third-party logistics provider delivers the product directly to the customer.  As efficient as this process is, Amazon is constantly working to streamline it by cutting delivery times and adding more warehouses in the hopes of offering customers more overnight or same-day delivery options.

Amazon is using Big Data to edge out its rivals by predicting demand. However, critics suggest that when Amazon’s algorithms are incorrect, the returns can be quite costly. Amazon has suggested that it might convert any unwanted deliveries into gifts in order to build goodwill with customers.

The following diagram was included in Amazon’s patent order showing a possible logistics trail:

 

Discussion Questions:

1. What is Amazon’s next step in its quick delivery strategy?

2. As an Amazon customer, would you embrace this strategy?

 

Sources: Greg Besinger, WSJ.com, January 17, 2014

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