Amazon and the future of predictive commerce


Upselling isn't exactly a new creation of capitalism. Whether it's extended warranties at Best Buy or your credit card company offering you some type of enhanced protection when you dial the call center to investigate a charge, most of us have had the experience at one time or another.

Consider the following question for a moment:

How may of us have had a company intentionally send us physical goods with no obligation to buy it?

Digital goods don't count. Free e-books are one thing. The cost of distribution is essentially zero. And forget about mistakenly shipped items for a moment. I would suspect that nearly 100 percent of all packages mailed to customers stem from a prior transaction. That is, I agreed to buy a widget for $19.99 and the company will send it to me.

Predictive commerce

That ratio may change in the near future thanks to one of the most disruptive companies of our era: Amazon. The company recently filed a patent for “anticipatory” shipping. In other words, Amazon may be planning to start sending merchandise to customers before they have purchased it. From the patent filing, Amazon proposed:

…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 the time of shipment, and while the package is in transit, completely specifying the delivery address for the package. [Emphasis mine.]

…speculative shipping of packages may enable more sophisticated and timely management of inventory items, for example by allowing packages to begin flowing towards potential customers in advance of actual orders.

Eventual shipment? Speculative shipping? Fascinating stuff, but in a way, such bold moves aren't entirely shocking. After all, Amazon has continued to push the envelope in every market it has entered – and created new lines of business like AWS, as well.

Despite covering Amazon in many of my books, I can't say that I've every personally talked to Jeff Bezos about his company's plans. Few outsiders have. Still, it's not hard to read the tealeaves here. Amazon possesses an extraordinary amount of data about its customers. The company puts a tremendous emphasis on a creating a data-oriented culture. With such vast amounts of information, prediction becomes easier, but not easy.

Simon says: crazy idea + data = less crazy idea

There's an important lesson here for organizations of all types. Data can be used as a competitive advantage. Ideas that appear to be crazy become less so when there's solid data behind the idea.


What say you?


About Author

Phil Simon

Author, Speaker, and Professor

Phil Simon is a keynote speaker and recognized technology expert. He is the award-winning author of eight management books, most recently Analytics: The Agile Way. His ninth will be Slack For Dummies (April, 2020, Wiley) He consults organizations on matters related to strategy, data, analytics, and technology. His contributions have appeared in The Harvard Business Review, CNN, Wired, The New York Times, and many other sites. He teaches information systems and analytics at Arizona State University's W. P. Carey School of Business.

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