“Anticipatory Shipping” ideas from Amazon

An article in the CBS News website (http://www.cbsnews.com/news/amazon-files-patent-for-anticipatory-shipping/) titled “Amazon files patent for anticipatory shipping” provides an outline of the idea. The key is that goods would be shipped out before the customer places the order so that the deliveries are closer to order placement. Data regarding customer searches, purchase history, shopping cart contents etc would be used to initiate shipments before orders. But details of the idea also suggest that while the product is shipped, the delivery address would be specified later, after the item is in transit, to enable lower customer lead times. Given the forecasting models of customer purchase intent, and the goal to speed up shipments, does this new idea merely mimic the goal to move goods to warehouses closer to customer locations ? Should customers be provided some products free if their actual purchase decisions do not match the forecasted intent, with the delivered items being treated as promotions ? Will such moves increase customer loyalty or have other unintended consequences e.g., worries that Amazon has access to a lot more information than the customer intends ? Will such moves enable Amazon to increase its margins because it can provide lower lead times without using premium transportation ?

About aviyer2010

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3 Responses to “Anticipatory Shipping” ideas from Amazon

  1. Job Hoevenaars says:

    Marketing already involves a lot of data mining. The use of the data for inventory in Hubs (closer to end-user) is also not new, I would say. But actually having products on the way already and later specify the address seems new and very risky to me. It will be a pretty costly operation to keep track on all “anticipated orders” shipped. What will be the positive effect? Shorter lead-times, but by how much? Will this really create more sales or are they anticipating that products / anticipated orders that have been shipped will become orders, because it will be the last push to convince the customer of actually placing the order or adding the anticipated product to the order? The changes in legislation made in Europe the last year (and coming changes) will certainly increase costs when using this structure; specially with the renewed return policies.

  2. It sounds like warehousing closer to customers. UPS and FedEx take on the handling risk while Amazon maintains the capital risk.

  3. Vijay Raisinghani says:

    I like this innovation. As this patent has a very broad application, to focus on operations and logistics part, I see following advantages using this method:
    1. predict geographic demand of products, e.g., based on zip code and manage inventory accordingly in that area
    2. optimize on shipment planning and costs, e.g., instead of overnight air shipment use ground shipment and make it arrive 5 days later.
    Predicting geographic demand will help create virtually brick and motor experience. This would greatly help the “same day delivery” or “4 hour delivery” options.
    Optimizing on shipment is a great financial goal, specially when Amazon has 2 day prime shipment for free.
    This will thrive on “people want things instantaneously”. This can be useful in trends and fashion, e.g., when launching new toys (or variations or new series of existing toys).
    In my opinion, these options are greater impacting from operational and logistics side of planning and costs than customer experience.
    Should the customer be provided a product for free – this is an interesting idea. If you have math on real-estate/warehouse cost per unit and if a balanced tradeoff can be made, it might be effective financial deal to give a product for free as a trial and free up the space.
    Privacy is an issue for sure. I remember hearing about the case where Target used purchasing habits to determine the stage of life of a person, they sent maternity related coupons to a house where the dad was unaware of his daughter’s pregnancy. So, if done smartly, it is an operational excellence without making customer feel uncomfortable.

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