Shipping Before You Order: Why Amazon.com's Crazy Idea Could Be Great

Amazon stock, predictive shipping, anticipatory shipping

If you thought Amazon.com's (NASDAQ: AMZN  )  recent vision for 30-minute drone delivery was ambitious, this just seems downright crazy.

On December 24, Amazon was granted a patent titled "Method and System for Anticipatory Package Shipping." Yes, you read that right: Apparently Amazon wants to ship your products before you've even ordered them.

Why? As it stands, consumers absolutely cannot receive their purchased merchandise immediately as brick-and-mortar competitors allow. Moreover, Amazon readily admits expedited shipping costs online can often rival the price paid for the merchandise itself. By employing predictive shipping algorithms, Amazon could not only improve its own efficiency but also customers' online shopping experience. This, in turn, would effectively negate the single most significant weakness of online shopping. 

So what might Amazon's process look like? First, Amazon says, it would determine what you might purchase based on a variety of factors including shopping history, wish lists, the length of your product page visits, the contents of your shopping cart, and even "links hovered over and the duration of hovering." 

Next, according to the patent's summary page:

According to one embodiment, a method may include packaging one of more items as a package for eventual shipment to a delivery address, selecting a destination geographical area to which to ship the package, and shipping the package to the destination geographical area without completely specifying the delivery address at time of shipment. The method may further include completely specifying the delivery address for the package while the package is in transit.

The end goal for Amazon, of course, is that you might order an item and be stunned to realize it's already nearly arrived. 

But what happens if Amazon realizes you likely won't place an order in time for its arrival? In one case, Amazon could either redirect the package back to its warehouse or to another predetermined consumer. Alternatively, it could offer you a discount or simply consider the item a gift as a gesture of goodwill.

Of course, this will drive Amazon's skeptics absolutely nuts. After all, despite its incredible top-line growth, Amazon is barely profitable as it is, right? So how can it afford to sacrifice already-slim margins with a ridiculously ambitious shipping program like this?

First, delve into Amazon's full patent and you'll realize this predictive shipping model is much more sophisticated than it seems on the surface. Moreover, Amazon already boasts both a world class e-commerce platform and a ridiculously advanced order fulfillment system, so it seems safe to bet it also enjoys the technological means to profitably anticipate orders with at least some meaningful degree of confidence.

And let's not forget Amazon CEO Jeff Bezos, who has already proven time and again he knows exactly what he's doing; By sacrificing short-term profits to instead focus on growing his company's enterprise value, Amazon has rewarded shareholders handsomely with a more than 23,000% return since going public in 1997. In the end, while its past success certainly don't guarantee future results, I know I'm not alone in believing Amazon will continue to outperform going forward.

Amazon's not alone, either
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  • Report this Comment On January 21, 2014, at 11:17 PM, cnyap wrote:

    Reminds me of working in fast food...obviously somebody will be ordering a hamburger, so make it before they order one! Fast food joints seem to have gotten away from that theory. There's a line of people ordering the same thing that is not ready - arg! Do you think somebody might want an egg muffin at 8AM? :-)

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