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.

As "speculative" as this sounds it may be more a common sense approach than the fabled drones Amazon says it is exploring. It is not that different from the original thesis of FedEx, revolutionary at its inception, to use centralized hubs to ship items overnight.

Obviously, this works well for Amazon and some of its third party sellers but what will consumers think?

Yesterday, if not sooner

Consumers want the fastest shipping available. Yesterday, if possible.  Amazon's expedited shipping is truly remarkable as it pushes the envelope of same day shipping in some metropolises. 

Amazon, whose previous attitude to state sales taxes regulations was to take its presence and go, is now giving in and  its collection in states where it has a physical presence. Now  it's going along to get along as it spends ~$2 billion on warehouses and fulfillment centers across the country. The company has been on a hiring spree to staff those centers like it did over the holidays, totaling some 70,000 workers. Once again, Amazon holiday sales broke records, selling an astounding 426 items per second on Cyber Monday.

Finally, in 2012, Amazon bought Kiva Systems which gave them robotic efficiency in warehouse management. The robots, which resemble smiling orange Roombas, can move shelves of product over a warehouse with the abandon of a NYC cabdriver. Check out the YouTube video to see how they work.

Rivals disrupted

These Amazon shipping initiatives are going to challenge retailers, both online and bricks and mortar.  EBay (NASDAQ: EBAY) Marketplaces division has seen decelerating growth over the last few years and may see even worse performance although its GSI Commerce and PayPal divisions are on fire. EBay Power Sellers may defect to Amazon if they haven't already to the Fulfillment by Amazon program

Big box companies like Wal-Mart Stores (NYSE: WMT) and Target (NYSE: TGT)  have been working hard the last few years on their e-commerce divisions and omnichannel initiatives like in-store pickup and mobile shopping apps. These rivals are trading at exponentially lower trailing earnings multiples in the mid-teens compared to Amazon's 609.98 P/E.  Both Target and Wal-Mart offer yields, of 3.1% and 2.6%, respectively.

Wal-Mart had been the value investor pick with Target in the eye of a firestorm after millions of customers' debit and credit card info was hacked during the holiday season. Target had been trading at 52 week lows until it recently reported less impact from the security breach than expected. Now, all seems to be forgiven.

Wish fulfillment

If this new initiative works Amazon may not require its other superpower, that being its stock's ability to soar without any earnings to support it. Investors' willing suspension of disbelief is the magic that keeps it aloft, apparently. But Amazon's shipping strategies are killing bricks and mortar. Mighty Amazon continues to develop ever new superpowers and fulfill investors' fervent wish of share price appreciation.