Last month it was drones delivering goods to customers’ doors and this month it is Amazon announcing its plan to launch ‘anticipatory shipping’ whereby it uses big data to pack customers’ orders before they have even ordered them!
The US giant certainly knows how to generate miles of column inches but scratch below the surface and the question is whether this latest scheme is anything more than simply a publicity stunt that will create little real value.
Taking it seriously, it looks to be Amazon attempting to recreate the impulse purchase online. But such transactions are very difficult to anticipate – or predict – because there are simply too many inputs. The shopper might have seen the goods on TV, been recommended them by a friend, or simply seen them in-store and liked the look of the display.
Pre-empting such purchases and replicating the mechanic online is a tough ask. But if impulse purchases account for, say, 30% of all retail sales then maybe it is worth Amazon taking on the challenge of grabbing a little bit of this vast market.
Just think how destabilising it would be for the high street if Amazon did begin to chip away at impulse purchases – arguably a major USP for physical retailers. Worryingly for high street shops the more you think about anticipatory shipping (or whatever Amazon wants to call it) the more it could potentially be workable.
When Amazon brings its full grocery home shopping service to the UK and its subscriber model for buying commodity items then it will be accruing just the required level of granularity and mass of data that would make it possible for it to begin predicting future customer purchases with increasing accuracy.
But you might argue that this ultimately lacks the rich experience of true impulse shopping done in high street stores. This might well be true but if Amazon brings social media to bear – taking into account friends’ likes and recommendations for products as well as customer reviews etc – then this adds in the experience and the personal factor.
After all we know the power of social on buying behaviour. It has been proven that Facebook’s latest tools can influence shoppers in the products they purchase. If Amazon can therefore layer social media on top of a predictive toolset then it is creates a rich and potentially powerful combination.
The reality is that this anticipatory shipping strategy is not that dissimilar to the way Tesco uses its Clubcard. Rather than sending customers discount vouchers Amazon could actually be sending them the product. For Tesco the high level of targeting of the vouchers translates into it achieving impressive redemption rates, which should give Amazon great confidence.
Even if achieving low redemption levels, it could still be a profitable exercise. Of course Amazon’s strategy could also involve it sending heavily discounted goods as a tempter for customers to then buy the items at full price in the future. It could also offer them free returns of any anticipatory products that are unwanted.
What Amazon is effectively doing with this latest announcement is signalling that it has plans afoot to continue to leverage its logistics infrastructure, which is undoubtedly its greatest asset. Against this backdrop anticipatory shipping might not be that farfetched an idea – it’s certainly a more realistic prospect at this stage than drones.
Sponsored column by Guy Chiswick, Managing Director, Webloyalty Northern Europe (@Webloyalty_Guy)