How Amazon uses Big Data to transform operations

By Sean Galea-Pace
More companies than ever before are leveraging data and using it as a tool to monitor and track the latest trends in customer behaviour. Ultimately, da...

More companies than ever before are leveraging data and using it as a tool to monitor and track the latest trends in customer behaviour.

Ultimately, data allows companies to make better decisions and increase efficiency. In February’s edition of Supply Chain Digital, we looked at three global heavyweights, Amazon, Starbucks and American Express and observed how they introduced Big Data into operations. In this article, Supply Chain Digital takes a closer look at Amazon's Big Data drive.

One of the biggest ways that Amazon utilises data is through its recommendation engine. When a customer searches for a particular item, this enables Amazon to better predict what else that customer might be interested in. Subsequently, this enables Amazon to streamline the process of persuading a customer to purchase it. Its personalised recommendation system is thought to account for 35% of the company’s annual sales.

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And it doesn’t stop there. Amazon gathers individual data on each and every one of its customers while they use the website. In addition to what a customer buys, Amazon observes the items looked at, shipping address and whether a customer leaves reviews. Big Data has helped propel Amazon to the top of the e-commerce pile. The company links with manufacturers and tracks their inventory to ensure orders are fulfilled quickly. Through Big Data, it allows the warehouse closest to the customer to be selected and shipping costs to be considerably reduced by 10-40%. With Amazon’s grip on the field showing no signs of slowing, data and the ways it’s used is more important to the long-term future of companies than ever before, or run the very real risk of falling behind to competitors.

For more information on procurement, supply chain and logistics topics - please take a look at the latest edition of Supply Chain Digital magazine.

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