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AI Setting A New Battlefield For Indian E-commerce

We can expect to witness increased collaborations between e-commerce and AI companies, signaling an opportunity for homegrown AI startups, with the aim of providing the best experience to their patrons

Photo Credit : Shutterstock


E-commerce players in India are eyeing to capture a significant portion of consumer spending through a balanced mix of marketing, merchandising, and technological tactics. In this light, Artificial Intelligence has become an indispensable digital tool for etailers who seek to differentiate themselves in the marketplace.

Indian consumers have started embracing e-commerce with great zeal. According to Forrester, India is the fastest-growing online retail market in the world that will reach $64 billion by 2021, growing at a CAGR of 31.2%. The global payments leader, Worldpay, estimates that India will outshine the US to become the second largest e-commerce market globally by 2034.

The growth potential of this sector is causing Indian e-commerce players to bolster their technological investments with Artificial Intelligence (AI) and Machine Learning (ML) being the pivotal area. Experts estimate that Amazon India, Flipkart and Paytm Mall will spend nearly $2.5 billion on AI and ML in 2018.

How AI will facilitate future growth of etailers: 
Currently, we see basic applications of AI in Indian e-commerce space. However, etailers need to take it to the next level to counter the competition from Amazon, allegedly their biggest rival. They can take inspiration from the developed markets, but the key will be to give global solutions a localized flavor across various stages of the customer journey. Some key applications of AI along the e-commerce journey phases are:

* Regional Language Recognition: A major chunk of India’s population is not comfortable with English, and speak local languages. Hence, to deepen engagement with such shoppers, e-commerce companies can equip their AI platforms with regional languages and local dialects recognition capabilities to facilitate seamless transition from offline to online.

* Personalization 2.0: Today’s time pressed customers demand personalized offerings with minimum number of clicks. This pushes businesses to take personalization to the next level by transitioning from tactical segmentation to strategic individualization. AI-driven data will help businesses to structure interaction, functionality, and content around real-time needs of individual customers, leading to higher conversions.

* Facilitate Dynamic Pricing: Indian shopper are highly price sensitive which makes it important for online players to provide deals/offers that adjust to changing consumer preferences while also taking into account the internal inventory, profit requirements and competitors’ pricing influences, all enabled by AI.

* Enhancement in Customer Service & Experience: Indian has a big chunk of first time online buyers, who are skeptic about e-commerce. Thus, AI chatbots can help resolve shoppers’ basic queries and encourage them to complete the purchase with the needed assistance. According to Gartner, chatbots are going to replace 85% of customer interactions by 2020, giving e-commerce companies the impetus to integrate AI chatbots into their messaging and web platforms.

* Efficiency in Supply Chain: E-commerce players often struggle with demand prediction and inventory management, particularly during mega sales occasions when consumer demands grow exponentially. In such scenarios, AI can inform etailers about factors affecting the demand and predict buyer trends to help them manage their inventory.

* Boost Customer Loyalty and Retention: Indian online retailers are making efforts to make their customers feel valued and gain their loyalty. Flipkart recently introduced its own loyalty programme called ‘Flipkart Plus,’ offering benefits such as free delivery, early shipping, etc., to its members. Use of AI in such programs will facilitate hyper-personalized subscription services and tailored promotions, resulting in better engagement and retention.

Final Thoughts
AI-powered Indian e-commerce holds a bright future. The ever- growing consumer demand for convenience and experience will drive innovation in this space. We can expect to witness increased collaborations between e-commerce and AI companies, signaling an opportunity for homegrown AI startups, with the aim of providing the best experience to their patrons.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
e-commerce artificial intelligence

Harshita Agrawal

The author is Senior Associate, Publicis.Sapient

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