Monday, February 25, 2013

Amazon same-day shipping and the future of supply chain

Some people use Amazon for everything. They buy text books, electronics, housing décor, clothing, sporting items, and games, literally everything. They voraciously read reviews, examine prices, and maybe even compare the products with competitors' websites and stores, but then usually return to Amazon for the final purchase. This makes me wonder about the future of Amazon, how you can buy practically anything on Amazon, how immediate their service is, how it is seemingly ever-expanding, and how it is contributing to the future of supply chain management.

Amazon currently gives unlimited free two-day shipping for Prime members who pay $79 per month. It turns out that Amazon will also apply this free two-day shipping for items with a weight of up to 1,500 pounds [1]. And now, they are aiming to expand their next-day delivery service as more of a standard feature, and they have even begun same-day delivery [2]. Local businesses have pressured states to pass laws aiming to force Amazon to collect sales tax by broadening the meaning of having a physical presence with the state, and while Amazon is certainly not pleased with such, they may also be able to use this to their advantage. If Amazon collects sales taxes, the company is able to build its warehouses within large metropolitan areas, instead of having products shopped to its larger warehouses in Kentucky or Nevada [2]. Even further, they have installed metal lockers in outlets and stores so that customers or employees can pick up the packages from these Amazon lockers throughout the day [3]. Could this mean Amazon gets you your product within hours of the order being placed? Possibly.

With the advent of cloud computing and big data, companies can learn your secrets and predict what you will buy. Infamously in 2012, Target was able to deduce that a woman was pregnant and could then begin targeting her home for coupons to related items [4]. Amazon could very well likely employ and expand upon similar methods, not only sending coupons and suggesting items to customers, but also by shipping items before the customer has even pressed “buy.” How? By collecting customer information, purchase history, product viewing and duration of views, Amazon can anticipate purchases and send products one step forward in the supply chain without the actual order being placed. Especially with warehouses sprouting up in New Jersey and near other metropolitan areas, Amazon customers may not need to wait as long for orders to be fulfilled and Amazon may not bear as much shipping cost if it is inaccurate in its prediction. So maybe Amazon “Yesterday Shipping” is too far of a stretch, but receiving items within the day that the item was ordered certainly seems like a rapidly-approaching reality. And supply chain management – the inventory, shipping, warehousing, and data processing – will surely (and has already begun to) develop to support it.

Questions to consider:

  1. Would you be willing to disclose more information about yourself and products you are interested in if it meant potentially receiving faster order fulfillment?
  2. I focused on just one way Amazon is changing its service and the implications it may have on the future of its supply chain. What are other ways in which you can imagine Amazon changing -- ideas you may have or actual changes you have noticed? How else could its supply chain change to accommodate changes in service?
[1] Estes, Adam Clark. “The Heaviest Thing Amazon Will Ship for Free Weighs Nearly a Ton.” The Atlantic Wire, November 28, 2012.
[3] Bensinger, Greg. “Amazon’s New Secret Weapon: Delivery Lockers.” The Wall Street Journal, August 7, 2012.
[4] Hill, Kashmir. “How Target Figured Out a Teen Girl was Pregnant Before her Father Did.” Forbes, February 16, 2012.

Related reading:

Duhigg, Charles. “How Companies Learn Your Secrets.” The New York Times, February 16, 2012.

Amazon Yesterday Shipping. July 17, 2012.

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