Wayne Gretzky once said that one should skate to where the puck is going to be. Clay Christiansen used that as a hook for an HBR article and a management cliché was born. Now it seems that Amazon wants to apply that logic to shipping retail orders (Amazon Wants to Ship Your Package Before You Buy It, Wall Street Journal, Jan 17).
Amazon.com knows you so well it wants to ship your next package before you order it.
The Seattle retailer in December gained a patent for what it calls “anticipatory shipping,” a method to start delivering packages even before customers click “buy.”
The technique could cut delivery time and discourage consumers from visiting physical stores. In the patent document, Amazon says delays between ordering and receiving purchases “may dissuade customers from buying items from online merchants.”
So Amazon says it may box and ship products it expects customers in a specific area will want – based on previous orders and other factors — but haven’t yet ordered. According to the patent, the packages could wait at the shippers’ hubs or on trucks until an order arrives.
The high production value diagram above (from the patent application) shows the various moving parts to be coordinated.
There is, of course, only one question to ask about this: Is anticipatory shipping crazier than planning to deliver packages via drones?
I should acknowledge that there is a clear reason why Amazon would think of doing this. Delivery speed has become an important competitive frontier in e-commerce. But that alone doesn’t necessarily make this idea a clear winner. Amazon has other ways of getting packages to customers quickly. For example, as the article notes, it has been building out its distribution network to enable rapid delivery. If Amazon ends up with a fulfillment center near every major city, does it really need to guess what people will want in order to be fast? Why can’t it just fulfill orders from local inventory?
There are two ways that fulfilling locally can fall apart which might let anticipatory shipping create value. It may be that what the customer is looking for is not available locally even though it is in stock somewhere in the network. Guessing that it will be demanded based on browsing behavior etc could then save time. However, that issue can be addressed with just transshipping items between fulfillment centers without having them earmarked to individual customers. It also suggests that it would apply more to back catalog items that are demanded sporadically but the article suggests that they are really thinking about faster moving items.
Amazon said the predictive shipping method might work particularly well for a popular book or other items that customers want on the day they are released. As well, Amazon might suggest items already in transit to customers using its website to ensure they are delivered, according to the patent.
If, say, a new video game in a popular franchise is being released on a specific date, does Amazon really need special patented technology to figure out that it should load up its fulfillment centers with that game?
The second reason why local fulfillment might not work is that Amazon may not have a local fulfillment center. Shipping an order out to remote address before the order is placed may then be the only way to get the item to the customer quickly.
Focusing on this possibility raises a couple of issues. First, mistakes become expensive. If Amazon guesses wrong about what I want, there is a chance to recover. There are 5.2 million other people in Cook County who might want that thing in the next week or two. But if I am up in Coos County, there are only 33,000 other folks who might want Amazon thought I needed.
Finally, if this is intended to serve relatively remote customers, what’s the rush? Almost by definition, this will primarily apply to regions in which there is not much local competition. Amazon may not be able to execute same day delivery in these locations without anticipatory shipping but no one else will be able to as well.