A patent for predictive delivery, however, has supply chain analysts doubting the chance that the innovative retailer can deliver the goods this time, conceptually-speaking.
The focus is on predicting the needs of a specific end-customer, which should always be the goal of improved order fulfillment but in this case is probably a step too far down the supply chain. Forecasting is more of an odds game, playing the likelihood of the general need for a product in one area, rather than punting on a specific order to an exact town.
The real application is likely to be in the mid-to-late stages of the delivery chain. Using predictive delivery to anticipate a customer’s needs and complete part of the delivery in advance cuts the time it takes to get products to our doorstep.
Given the obsession of major retailers with achieving same-day delivery, this patent from Amazon is likely to be aimed in that direction. The supply chain can be more flexible on standard or expedited shipping methods for the final leg of a delivery, as the plan filed with the U.S. Patent Office suggests.
Even with this adjusted use of predictive delivery techniques, the potential is clear. As we move from the mass gathering of the Big Data-era to understanding and using that data, predictive delivery applications will become more and more common. Predicting how they’re applied is another game entirely.
Amazon announced this week that it would begin making Sunday deliveries. The roll out begins this weekend in New York and LA. In 2011 it will cover much of the U.S., including Dallas, Houston, New Orleans and Phoenix. In an ironic twist of fate, the failing U.S. Postal Service will handle deliveries.
Here are the details: The service will be available to Amazon Prime members who pay $79 per year for expedited, delivery as well as video services. That means that Prime members will be able to place an order on Friday and should be able to have it in hand on Sunday. The service is also available to non-Prime purchasers who spend more than $35 on purchases (recently up from $25) for free 5-8 day delivery.
Where’s the value in all of this for Amazon? It looks like they’re giving away stuff for free. It’s likely a case of CEO and Founder Jeff Bezos looking at the long term. Right now online retail accounts for just 10 percent of all retail in the U.S. Bezos is trying to make significant inroads there, making Amazon the future retail go-to for all of America’s (and the world’s) needs. Toward that end, Amazon has been building more distribution centers and even experimenting with same day delivery. It’s all about building for the future.
When you break it down, it’s probably not even costing Amazon all that much. Amazon is presumably banking on more purchasers becoming Prime members and thus forking over that $79 annuity. Once purchasers do join, it’s quite likely that only a small number of purchasers will actually require Sunday delivery. Plus Amazon is scoring big on PR for this move. Not only are accounts stressing customer service but they’re also looking at it in the context of helping out the USPS. On the latter point, the reality is that it’s not likely to provide much in the way of sustenance to the postal service which at this point is just hemorrhaging cash.
Undoubtedly there are many out there who see this as a foolhardy exploit by Jeff Bezos. Some look at the extraordinary time horizon that they project for etailing to come to a par with retailing. Jeff Bezos, however, doesn’t go in for half-baked initiatives, at least most of the time. He usually wins and makes money in the process (apart from his founding of Amazon some may recall that he personally was an early Google investor). For more on Bezos and Amazon, I heartily recommend Brad Stone’s new book, “Jeff Bezos and the Age of Amazon.”
Everywhere you look around the East coast, vast fulfillment centers are under construction. America’s largest retailers are looking to satisfy revitalized demand, meaning new facilities and expanded operations.
Outsourcing order fulfillment is also proving a popular option for smaller retailers, who often lack the ability to scale without third-party expertise.