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March 13, 2007 | Resources and Tools | WineDirect Admin

Artificial Intelligence for Shipping Rates?

An issue that seems to plague every winery is shipping rates. Whether you’re using a multitude of shipping carriers or using a centralized fulfillment agency, it always seems like shipping rates are more of a hassle than they need to be.

We’ve been trying to find the right solution here at Inertia. Or at least the most optimal solution. Dan Chapin, our Director of Winery Business Development pulled me aside recently to talk about a unique suggestion. His suggestion was to charge customers a shipping rate that was ‘around’ the base rate that it cost the winery to ship the wine. This figure could be more or less than the actual shipping cost. Thus the winery would end up charging some customers more and others less than what the base cost was. The rationale behind this is that at the end of the month, due to the volume of shipments, the deltas would cancel each other out; ultimately resulting in a total charged amount very similar to what it cost the winery to ship.

Taking this a step further, imagine this concept induced with some intelligence of its own. Imagine the deltas decreasing over time. The algorithm would ‘learn’ and ‘correct’ itself so that it would normalize the price depending on the historical data of how inaccurate its previous calculations were. Expanding this to include a large number of orders, it could eventually learn to be correct itself with any set of rates, with an infinite number of customizations. As soon as the rates changed, it would automatically adjust itself to match the new rates and then reduce the delta as it went along.

I’d love to hear from wineries on whether this would really help with end of month accounting? Would this work in reality with ever changing rates? Are there any cases where this algorithm would not be able to normalize the rates? Its a novel idea, and I welcome all comments, suggestions and criticisms.
 

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