E Is Amazon A Mind Reading Genie?

Is Amazon (NASDAQ: AMZN)  a mind-reading wish fulfillment genie or is their "anticipatory package shipping" patent merely wishful thinking? Everyone is familiar with their 'other customers who bought this then bought that' suggestion  (which Amazon didn't exactly pioneer but certainly was the first to use it widely).

Based on your order history, wish lists, and other searches Amazon may start sending you products before you order them. Their patent was granted on December 24, 2013. How it works is based on Amazon's collection of big data on you and every other Amazon customer. Already, Amazon has been pushing in this direction with its subscribe and save program for baby supplies and such. This goes further by sending out a partially pre-addressed order to a fulfillment hub based on repetitive patterns of consumption.

The Wall Street Journal used the example of a favorite bestselling author's new book. You bought every other book in the 50 Shades of Vampire Dystopia series so Amazon will send the 51st to your closest warehouse so you get it the first available day. Happy you! HappyAmazon! 

Naturally, there may be glitches, order returns being a top concern. If Amazon flubs an order it will offer it to you gratis, free or offer some sort of compensatory discount, much like the gift cards and shipping refunds it placated consumers with when orders  didn't arrive in time for the Christmas tree.  However, writing off the order as a gesture of good will is likely only for Amazon customers with valuable "past ordering histories or appealing demographics.”

Interestingly its patent application refers to the plan as a two prong model, the aforementioned bestseller book example being a"speculative package shipping." as opposed to the other "late-select shipping model" in which pre-addressed items are ready for same day delivery once the order comes in.

In its patent application Amazon notes some distinct advantages of the speculative shipping model: more timely management of inventory and "optimal utilization" of fulfillment center resources like using off-peak hours to manage speculative orders.

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Annalisa Kraft has no position in these companies.

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