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4 Ways Amazon Handles and Uses Big Data

Updated: Nov 22, 2019

We produce more data than ever. In fact, we create enough that standard statistical analysis isn't powerful enough to analyze all the information tech giants like Google and Amazon collect. Instead, these companies are turning to big data to know what consumers want — maybe even before they do.

Big data is the term for the collection and analysis of information that's too massive — in the range of one to 1 million gigabytes — to be analyzed without the aid of computer programs. More often, tech giants are using big data to improve business processes.

Some of the ways it's being used might surprise you. Here are four ways Amazon is handling and using big data.

1. Anticipatory Package Shipping

Amazon has been collecting and analyzing order and shipping data for years. Now, the company plans on using that information to predict when customers will need products — and start the shipping process before they order.

Amazon is currently preparing to deploy the technology sometime in the next few years. The patent for anticipatory package shipping was filed back in 2012, so Amazon has been working on the idea for at least that long.

If successful, the new tech will fit in with other Amazon ordering strategies, like weekly and "Amazon Day" deliveries. The company is adding features that should make ordering patterns more standard to make the shipping process more reliable for the end-user — and, one would guess, more reliable for Amazon as well.

2. Predictive Product Recommendations

Amazon's storefront page is populated with laser-targeted recommendations, based on your personal shopping and browsing history. Amazon uses data mining — about browsing habits, previous orders, and shopping patterns — to construct a model for each user. That helps it predict what items they need and recommend products based on this information.

Other online platforms use similar predictive models. In fact, ad personalization has become such a standard part of modern online advertising and e-commerce that it's easy to forget it wasn't always the norm. However, Amazon has access to more purchasing information than any other platform.

Today, visitors expect a web experience that's tailored to what they what — or, at least, what algorithms think they want. Research also shows that while consumers like targeted ads, they strongly dislike the collection of their data. In the future, Amazon and other web advertisers may have to navigate this tension.

3. Supply Chain Optimization

Amazon is also showing how big data can improve distribution centers and boost communication with manufacturers. The company is creating predictive models based on historical market info and changes in user preferences that can help predict sudden shifts in demand. These models can help Amazon ensure products in distribution centers will always be stocked to meet demand.

As the tech gets more sophisticated, it could lower shipping times further by reducing or eliminating the chance that items will go out of stock. That's even if demand varies from month to month or day-to-day.

4. Cloud Computing and Data Storage

It wouldn't be unreasonable to say that Amazon runs a significant portion of the web. Amazon Web Services (or AWS) is Amazon's suite of cloud-based storage and computing power, and is responsible for keeping more than 1 million cloud-based projects running.

With big data, the amount of information stored can change wildly from project to project. The cost of upkeep for the physical storage plus IT staff can be too much for even enterprise-level businesses. This means large companies prefer to rely on rented or leased storage, rather than keeping things on-site.

Thousands of big data solutions rely on AWS for storage and analytic computing power. One of the most prominent users of AWS is Netflix, which pushed the service to its limits throughout 2016. Part of the reason AWS offers the high amounts of storage and processing power it does is because of the stress Netflix was putting on their servers.

Other users of AWS include Kellogg's, General Electric's Oil & Gas division, and the national weather service of the United Kingdom.

How Amazon Is Changing the Web With Big Data

Amazon is putting the huge amounts of data we produce every day to use. The tech giant is building predictive models to better stock distribution centers and know what customers will order before they do.

Amazon's use of big data analytics is one of the reasons for the tech giant's continued dominance in e-commerce. It's likely to only ramp up in the future as software and techniques improve.

Written by:

Kayla Matthews journalist & writer


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