Tag: probability

Amazon, UPS and why number crunchers might soon need psychology degrees

From GigaOm

Shipping giant UPS failed millions of customers this holiday season, missing the delivery of “a small percentage of its packages” on the Christmas Eve, according to a statement it released on Tuesday. Meanwhile on the day after the Christmas Day, e-tailing giant Amazon is crowing about signing up more than one million Amazon Prime members last week and that it registered record number of orders. Later Amazon said it would offer shipping refunds on packages affected by the UPS delays. Both events are linked, and here is why.

Amazon’s great success doesn’t have to be UPS’ failure, but in this case the culture and expectations of the web met the real world, and the real world experienced what the web kids call a “fail.”

Amazon accepted responsibility for the issue, and immediately started compensating disappointed customers. They took a risk by pushing the deliver window at the eleventh hour, and “lost” a small battle. But they’ll win the war by taking the heat (UPS not so much), as competing online retailers, both established and upstart, simply can’t absorb such costs.

It boils down to scale: mass amounts of data used to determine not only price elasticity of demand and reorder points and quantities, but also average time for delivery and the possibility of customer dissatisfaction in a myriad of circumstances, the chance that UPS might fail again notwithstanding. It was, in some respects, an investment for the company – there will likely be some valuable nuggets taken from the lesson, and chances are they’ll be worth more than those $20 gift cards. No surprise this experiment to gather data points far down the tail occurred so soon after the drone play. Next up: building an entire department whose sole purpose will be assessing the emotional needs of their customers, because the allure of instant gratification definitely gripped hard this time around.

Now ignore my hypothetical babble and go read the original article instead.

MG signing off (because he has Amazon Prime, but mostly for the streaming shows and Kindle Lending Library)

UPDATE: We have seen the Scrooge, and it is us. Uh … you maybe.