Amazon Patents My April Fool's Idea (Well, Sort Of)
Last April Fool’s Day, I wrote a blog post reporting that Amazon had unveiled a new service called Amazon One Step Ahead that delivers goods to customers before they even order them. Here’s an excerpt of what I wrote:
The service leverages predictive technology that analyzes the products customers have been searching for on Amazon’s website, as well as the products and other content they “Like” on Facebook, to automatically generate an order and deliver it. “We’re taking indecisiveness out of the equation,” explained an Amazon spokesperson. “A lot of our customers don’t even know they want something until it shows up on their doorstep. Our goal with Amazon One Step Ahead is to provide our customers with a thought-free shopping experience so that they can focus their time and energy on more important things.”
Well, it seems like the joke was on me.
According to a report in the Wall Street Journal, Amazon was recently issued a patent for what it calls “Anticipatory Package Shipping.” Here’s the abstract from the patent:
A method and system for anticipatory package shipping are disclosed. According to one embodiment, a method may include packaging one or more items as a package for eventual shipment to a delivery address, selecting a destination geographical area to which to ship the package, shipping the package to the destination geographical area without completely specifying the delivery address at time of shipment, and while the package is in transit, completely specifying the delivery address for the package.
Not exactly what I had in mind, but in the same spirit.
Actually, it’s more like what leading retailers are already doing with their ocean imports. Instead of allocating inventory to specific distribution centers or stores before the goods leave China or other origin point, they ship the goods and wait until the ship arrives at the destination port to determine how much product to send to each DC or store. This allows the retailer to match its in-transit inventory with current (“real time”) demand versus what demand looked like weeks earlier when the ship left the origin port -- thus minimizing the risk of sending too much inventory to where demand is low (resulting in markdowns) and not enough inventory to where demand is high (resulting in stock outs).
Amazon is proposing to do the same thing here: ship packages first, then determine where they’ll ultimately end up. The big difference, of course, is time. With ocean shipments, retailers have weeks to analyze sales and order data to make their allocation decisions. With package shipments, Amazon only has a few hours or days to determine their final destination, depending on which transportation mode and distribution model it employs (Amazon outlines several models in the patent).
How can Amazon make “anticipatory package shipping” work?
Many people will say that “predictive analytics” will be the key enabler, but I believe it’s what Amazon already knows (versus what it can predict) and its ability to actively shape demandt hat will ultimately make the difference. Put differently, success will depend on Amazon’s ability to execute highly-personalized, time-sensitive promotions.
For example, Amazon doesn’t have to predict that I love Depeche Mode. It knows that already based on my purchase history. Amazon doesn’t have to predict that I will likely buy Depeche Mode’s latest CD. It knows that already because the CD is on my Amazon Wish List. What Amazon has to do is get me to finally buy it. So, it picks and packs the CD, maybe bundles it with another item on my wish list, and ships the package to my “destination geographical area.” I then get an email -- or even better, a text -- saying, “Adrian, click here by 10 AM to get 10% off Depeche Mode’s Delta Machine CD and Donna Tartt’s The Goldfinch, and they will be delivered to your home this afternoon by 5 PM.”
Click. Done.
That’s my prediction.
Now, time to think about my next April Fool’s post.
