Every now and then we see business tycoons coming up with bizarre and seemingly strange strategies for their businesses. Some of these are successful by large percentage whereas others, not as much.
Recently, Amazon has filed a patent for a new predictive algorithm that will be employed to ship products, based on the data which the system will collect from consumers even before they place the order. So yes, we are indeed talking about anticipatory shopping.
The patent, officially known as ‘Method and system for anticipatory package shipping’, was filed by Amazon in 2012 and it earned the patent on Christmas Eve of 2013, a Merry Christmas indeed. According to the patent summary, the method is described as one where item/items are shipped ‘to the destination geographical area without completely specifying the delivery address at time of shipment’ while the final destination is finalized when the package is enroute. Although Amazon has not given any comments on the patent as of yet, the benefits of such a system are quite apparent. If you can predict your customers’ orders, you are definitely going to increase sales and bring about a reduction in shipping, inventory and supply chain costs.
Executive Director of Supply Chain and Logistics Institute, H. Donald Ratliff, Ph.D. writes; ‘Supply chain and logistics optimization is neither easy nor cheap, but it is the biggest opportunity for most companies to significantly reduce their cost and improve their performance. For most operations, there is an opportunity to reduce cost by 10% to 40% by making better decisions’
Now the million dollar question; how can Amazon possibly predict what I’m going to order before I order it? That is where the algorithms jump in. The system will make use of a number of variables such as your prior Amazon activities, the time you have spent on the site, duration of your views, links which you clicked on and hovered over, shopping cart activity and your wish lists. At times, the algorithms will also include real world information such as your telephonic queries and how you responded to marketing material; all will be taken into consideration.
Eddie Bob, a target spokesperson told us ;’While we don’t discuss competitors, I can share that using technology to provide more fulfillment options is a key part of Target’s multi-channel strategy.’ Amazon is currently trying to improve its delivery system by reducing lag time. They are trying to remove the waiting part on customer’s end when the product’s shipment takes time. Such lags tend to make them lose online customers.
The whole system is quite practical and may very well become a model for other retailers to follow. Anyhow, let’s see how long does it take for Amazon to fully benefit from this system and boost up their sales and profits.