The Crystal Ball of Commerce: How Amazon’s Replenishment Strategy Dominates

It’s one thing to get someone to purchase your product, but how do you get them to keep buying? Most companies send out occasional email campaigns, abandoned cart reminders, or special promotions to re-peak their customers’ interest, but there’s still another approach we haven’t touched on just yet: replenishment.

Understanding Replenishment

Replenishment models allow companies to estimate when their customers are running out of their last order. You can probably guess how useful this feature would be for any company selling non-durable goods. In fact, Amazon is the perfect example of a company who makes great use of this tactic. How, you may ask? Let’s find out.

Amazon’s Smart Replenishment Strategy

If you’ve ever purchased non-durable supplies from Amazon, there’s a good chance that a few weeks or months later, you were sent a unique notification reminding you to reorder the product. And isn’t it pretty impressive that they almost always manage to remind you just in time? But how — how do they manage to so accurately predict your needs at any given time?

Let’s use an example from my personal experience with Amazon.

I have two cats back at home, so I often have cat supplies (dry food, wet food, litter boxes) ordered and delivered off amazon whenever I run out.

These are 3 items I purchase pretty consistently. And every so often, I’ll get a reminder from Amazon suggesting that I order one of the above again, almost always right before I run out of that product. And this isn’t just a random coincidence.

Amazon is exceptional at incorporating tech and data into their customer experience. So every time I order a bag of cat food, for example, Amazon takes that data into account when predicting my unique buying pattern.

If the above is my order history, Amazon might infer that I buy 1 bag of cat food every 32 days on average. And there’s a lot they can do with this knowledge. 1-2 days before Amazon believes I will need to place another order, for example, they can send me a quick reminder on my email or app. If I’m forgetful (which I am), a reminder like that might be the nudge I needed to quickly add the product to my cart and checkout. Or, as a loyal customer, I’ll simply appreciate that Amazon is going above and beyond to look out for my needs.

Near that 32 day mark, Amazon may even slip a few related products onto my home page to upsell other goods they think I might like or need. It’s a win-win for both Amazon and myself.

And, given that I keep making these purchases, Amazon’s replenishment model will get even better at predicting when I need what. I don’t know about you, but it’s these small things, from the scarily accurate product recommendations to the timely reminders, that make me appreciate Amazon all the more.

So What?

Amazon’s not the only company that uses replenishment to impress their customers. Here at Cotera, we work with all kinds of companies that sell non-durable products. And one of their favorite tools of ours has always been our precise replenishment model, which helps them to:

1. Increase repeat purchases
2. Improve customer satisfaction
3. Discover purchase patterns and behaviors by customer segment

Most importantly, our partners have found that this model is critical to developing the ultimate retention strategy catered to their companies. So, now it’s your turn to jump on the replenishment strategy train.