How Can Amazon Deliver Products to Millions Within Hours When Others Take 3-5 Days?

In 2005 Amazon launched it's Prime service, which offers members free two-day shipping. Retailers who found it hard to compete on price or variety highlighted that customers could immediately pick up products from their stores instead of waiting for days.

Then Amazon launched free same-day delivery for its Prime members in 2015. Soon it announced a new service, Prime Now, allowing its members to order products that could be delivered to their doorsteps within two hours. Question is how can Amazon deliver thousands of products to millions of households within hours when other online businesses take three to five business days?

While efficient warehousing and logistics is part of the answer, Amazon uses customers’ past purchase behavior to predict what they are likely to order in the future.

Amazon knows the products you are likely to order even before you do.

This insight helps Amazon optimally locate its warehouses and stock them with the appropriate products. Amazon knows the products you are likely to order even before you do.Better predictive ability from rich customer data has another important benefit: Amazon does not keep most of its products in inventory for very long, significantly reducing its working capital requirement.

Source : Harvard Business Review