My Favourite

Analytics
Application

Amazon Predictive
Analytics & Anticipatory
Shipping
Group Submission
Amit Gupta
Love Jain
Narendra Shakya
Nitesh Saraswat
Ramesh Singh
Sayak Mondal

Group 02
2015PGP004
2015PGP026
2015PGP030
2015PGP032
2015PGP038
2015PGP044

My Favourite Analytics Application

The analytics application which has chosen for analysis is Predictive
Analytics. Predictive Analytics has been extensively used these days across
various industries. However, it has been extensively used across the ecommerce sector.

The company which has been chosen, which extensively uses Predictive
Analytics is Amazon.

In this study we will primarily look at what predictive Analytics is and the
data and the techniques it uses.

Also, we will see Amazon benefits from the use of predictive analytics.

Predictive Analytics
Predictive analytics is an area of data analytics which deals in extracting
relevant informant from the data repository and predicting the trends and
consumer behavioural aspects. Although, predictive analytics is primarily
used for predicting the consumer behaviour in future, it can also be used for
predicting the past consequences which may have lead to a given result.
Predictive analytics gives results based on the correlation of various factors
of an individual. It is known for delivering results at a very high granular
level. Predictive analytics is finding significant application across various
sectors. It is being extensively in e-commerce sector. Also, significant usage
is being found in sectors which were never thought of. Predictive analytics is
also finding application in deep sea drilling for extracting crude oil. The
strength of the model lies in understand the past behaviour through
historical data and predicting the likely outcome at a high granular level. This
can useful for avoiding break downs. This techniques has even begun to find
applications in DCS modelling techniques at various industrial setups as well.

In e-commerce, predictive modelling has been extensively been used for

segmenting market and decision making process.

In the next section we will briefly look at the various usages of Predictive
Analytics

Usages of Predictive Analytics

Predictive analytics has seen an extensive use across various sectors,
however it has observed significant usage in the following areas:

Cross
Selling

Direct
marketing

Customer
Relationshi
p
Manageme
nt

Customer
Relationshi
p
Manageme
nt

We will now have a look at the Key Performance Parameters of an Ecommerce business to see which are some of the most important parameters
that need to be looked into for success in E-commerce business.

Gross
Margins

Growth Rate

Customer
Conversion
rate

Cart
Abandonme
nt Rate
Value per
visit

Value per visit

Average
Cart Size

Cart
Abandonme
nt Rate

Thus looking at these factors it is clearly evident that Customer Relationship

management, Cross selling and Direct marketing are some of the most
important activities that need to be taken care of by an e-commerce
company through Predictive Analytics.

In the previous section we looked at some of the application of predictive

analytics and key performance factors in e-commerce space.

In this section we look at the various techniques which are being used for
carrying out predictive analytics. The following is a list of data analytics tools
which have extensively been used for predictive analytics:

Regression Techniques
Linear
Regressi
on Model

Discrete
Choice Models
Pobit Regression
Logistic Regression Models
Time Series Models

Machine Learning Techniques

Neural
Networks

M ultilaye
r
Perceptr
on
K
Nearest
Neighbo
urs
4

Naive
Bayes

In the previous section we looked at the various techniques through which

we carry out predictive analytics. In this section we look at strategic
framework which needs to be followed for successful implementation of a
predictive modelling approach.

Framework for Predictive Analytics and

Modelling :

Identification of
Business
Problem

Communication
of findings to
decision makers

Identification of
metrics to solve
the business
problem

Analysis of Data

Data analytics
technique to be
followed to
solve the
problem

Collection of
historical data

Implementation
of Decisions

How Amazon Benefits from Predictive

Analytics ?
Amazon has recently been working on anticipatory shipping. This is a
practice where an order gets shipped before even consumer purchases it. It
has even filed for a patent in this area.

For Amazon, predictive analytics is not just a tool, but rather it is a source of
competitive advantage.

The differentiating factor which helped it gain the market share from the
behemoth like Wal-Mart was Predictive Analytics.

Cross Selling
It uses predictive analytics its recommendation algorith to cross sell
products. Cross selling is one of the differentiating factors for success in any
e-commerce industry.

A typical Amazon Recommendation - based on predictive modelling. Also

Amazon makes recommendations based on the purchase history and views
of the customers. Thus Amazon benefits every time a customer visits its
website.

Its ability to predict increases as the history data grows. Thus it is able to sell
product which are in the minds of the consumers.

It has integrated its data centres all across its supply chain. Thus amazon,
can offer deep discounts to initiate cross selling efforts, and it may also surge
its prices when demand outpaces supply.

Amazon Anticipatory Shipping

Amazon has been a pioneer in its field. To maintain its competitive

advantage it has begun to ship based on anticipation of orders from
customers. This phenomenon has been called as Amazon Anticipatory
Shipping. Amazon has also filed for a patent in this area and has been
awarded the patent.

The patent is under the name method and system for anticipatory package
shipping. This phenomenon has been very successful in the peak demand
periods. Through this anticipatory shipping mechanism Amazon has been
able to estimate the inventory requirements for the peak periods such as
Christmas, New Year.

This has also helped it start shipping orders beforehand thus avoiding severe
logistic issues by shipping ahead of time. This is based on the understanding
that customer will buy the product in the near future. Also, Amazon wants to
cut down the delivery time for which it has even launched drones.

How Predictive Analytics benefits

Amazon ?
Amazon has consistently been a data and algorithm driven company. It has
extensively used data to gain consumer insights. It has reached its present
position of a market leader through its close follow up with the consumers.
Thus, amazon continuously needs to work on with predictive modelling and
analytics to further continue as market leader in e-commerce on a global
scale. Amazon has its own web tools for data analytics. The section below
considers the various web tools which Amazon uses.

The following are some of the product analytics tools which amazon offers on
Amazon Web Services:

Amazon
Athena

Amazon
EMR

Amazon
Elastic
Search
Services

Amazon
Kinesis

Amazon
QuickSight

Amazon
RedShift

AWS Glue

AWS
DataPipelin
e