Business Analytics Blog

Business Analytics Blog

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Figure It Out: Amazon: Mind Reading or just Analytics?

Category : Business
Following our recent blog that shows how Amazon uses robot pricing to dynamically price its products, the #CCUKBA team now wants to make you aware that Amazon is reading your mind too.
Recent headlines reveal that “Amazon plans to ship your packages before you even buy them”... Have they achieved some level of surreal insight into my brain? They have filed a patent for “anticipatory shipping” – it all sounds very exciting... Have they sent my latest order to my house whilst I’ve been writing this blog?
However starting to read the article, I  realise that Amazon is doing the usual customer analytics, understanding customer behavior, recent buying pattern, understanding demographic segments, browsing behavior, etc. And when I read further I realise that they are shipping packages to their nearest hub to reduce shipping time to the end customer. So they are stocking their hubs based on the demography and buying patterns of the area around the hub….now, isn’t that what all brick and mortar retailers do?
From Amazon’s perspective, their aggregation of demand and insight into our behaviour means that they can perform this activity with minimal risk of redundant activity or pushing stock to a location where it won’t be consumed. It’s all about velocity and decoupling point.  The reason for picking the product and moving (as a parcel) to a later stage in the distribution process is that it is one step further along before they have to commit the order to me.  It moves the decoupling point closer to the customer thereby giving them a much more responsive service and improving the customer experience. So “a” parcel is picked and moved closer to a market which I am part of.  The parcel only becomes “mine” when I order it.
This is a growing trend as organisations are using advances in digital technologies and analytics to turn vast amounts of transactional user data into predictive insights. Organisations without these capabilities are losing their competitiveness – they simply don’t know the optimal price or the optimal location for their products. As the article notes Google’s auto complete feature on its search bar is one of the more well-known examples – in fact when I typed in “Amazon ships” to find the link to the article above, I didn’t need to type anymore:
And finally, think about how the newspapers exaggerate, would popular press have given any space to an article that said “Amazon refines its Supply Chain?
Thanks to Mamatha Upadhyaya from Capgemini’s Indian Data Science Team and Chris Webster from the Consumer Products and Retail Team for their insightful inputs

About the author

Jonathan Chadwick
Jonathan Chadwick
Jon has worked for 18 years as an analytical consultant in the UK, USA and Europe for a diverse range of sectors, most recently Financial, Oil & Gas and Government. Jon has extensive experience in benefits realisation, modelling, business analytics, portfolio management and change management. Jon devised and created Figure It Out.

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