Technologies Reshaping The Future Of E-Commerce
Balasundaram has more than 35 years of experience in Finance and General Management. He is a Chartered Accountant, Cost Accountant and an alumnus of Columbia Business School, New York. Hiten holds an MBA from Alliance University, Bangalore, and has more than 3 years of Market Research and Consulting experience.E-commerce has grown in leaps and bounds since its inception in the 70s. India's online retail market is now valued at USD 18 billion and had seen a phenomenal upsurge of 50 percent in new user growth last year. This user growth has led to e-commerce platforms shipping close to 5 lakh shipments a day. Globally, a quarter of the world's population is expected to become digital buyers by 2021. Technological developments in the world of e-commerce have fundamentally changed how customers connect with brands. Online retailers are also seeking to engage more closely with shoppers and are leveraging technologies to redefine shopping experiences. Technologies, such as Artificial Intelligence (AI) and Machine Learning (ML) are ushering in a new era of e-commerce, where brands and retailers know what the customer wants to buy before the customer himself does.
Let us have a look at the top 3 technologies that are reshaping the future of ecommerce.
Artificial Intelligence/Machine Learning
AI has enabled deep learning, statistical programming, and predictive analysis of massive data sets. These methods allow companies to capture and understand consumer behaviour. AI algorithms are improving the accuracy of recommendation engines employed by retailers using the insights gathered from consumers' browsing records and social media usage trends. Recommendation engines are also enabling psychoanalytic profiling of customers, which provides accurate personalized shopping suggestions to users instead of making customers scroll through extensive catalogues.
Apart from aiding personalized user experiences, AI and ML also facilitate optimizations on the retailer side. Predictive sales techniques designed using AI have been adopted by retailers to organize and manage inventory ac-cording to seasonal demand trends. AI has also played a pivotal role in automating warehouse operations and optimizing delivery procedures.
For example, Flipkart, India's home-grown e-commerce platform, has initiated "Project Mira" that is aimed at using AI to provide an offline-like experience in online shopping. Usage of tools developed under the project is helping the platform guide its users by way of conversational filters, data-backed choices, shopping ideas, and user relevant offers and discounts.
Augmented Reality (AR)/ Virtual Reality (VR)
A major detractor of e-commerce is that online shopping portals are not interactive and users cannot interact with products like they can in a brick and mortar environment. Shopping cart abandonment rates are as high as 60-70 percent, especially on apparel purchases.
E-tailers have thus started exploring AR/VR to turn interactions into experiences. The online tourism industry has shown much interest in using VR, allowing travellers to take virtual tours of holiday destinations before choosing packages. On the other hand, AR has seen traction with retailers of home furnishings, apparel, and cosmetics; they are using it to help users evaluate how some particular products would look in their home environment or how the product would suit them. For in-stance, Amazon has opened up VR kiosks in malls in India to promote shopping festivals such as `Amazon Prime Day' on its platform. The VR experience allows customers to walk through virtual stores, offering them a first-hand experience of handling various products and allowing them to trial products using holographic models.
Hiten K. Shah, Research Analyst, TechVision, Frost & Sullivan
Natural Language Processing/ Interaction
Customers shopping online have access to a wide range of information and typically seek more information than offline customers to reinforce their buying decisions. To keep up with the growing volumes of queries from their buyers, e-tailers are now relying on chatbots for customer service. Chatbots have taken over the task of providing relevant information to customers, responding to user questions just as human representatives. This has enabled users to get faster responses to their queries and has also enabled customer service executives to devote their time to more complex issues.
The integration of National Language Processing (NLP) into e-commerce websites has also greatly boosted in-site search functionalities, providing contextual awareness of what the user is searching for. Contextual awareness abilities have enabled e-commerce sites to give relevant search results to a user even when he/she has not specified the exact keywords. NLP tools have also strengthened the capabilities of voice-based search functionalities. Highly advanced voice analysis engines are now able to take in complex voice-based queries and generate accurate results by matching the search string with the consumer's demographic and personal traits such as the user's age in addition to location and purchase history data. Such capabilities can work with vague commands such as "I want an average-sized affordable black shirt".
The Digital Future
A wide range of technologies has largely automated menial and repetitive tasks on the backend as well as at last mile delivery, freeing companies from problems, such as labour shortages and human errors. It is now virtually possible for an order to be fulfilled without any action from a user or an e-tailer employee, from ordering, processing to fulfilment.
While the highlighted technologies are at the forefront of the technological revolution in e-commerce, there are also several other digital technologies that will have a significant impact on the e-commerce of tomorrow, such as Blockchain and Data Analytics.
In time, new technologies will propel invention of newer business models and completely reinvent businesses. From the creation of multiple shopping channels offering friction-less check out experiences to enabling customer service automation and personalized experiences for customers, technologies would serve as the heart of interactive exchanges between e-tailers and customers in the future.
A major detractor of e-commerce is that online shopping portals are not interactive and users cannot interact with products like they can in a brick and mortar environment. Shopping cart abandonment rates are as high as 60-70 percent, especially on apparel purchases.
E-tailers have thus started exploring AR/VR to turn interactions into experiences. The online tourism industry has shown much interest in using VR, allowing travellers to take virtual tours of holiday destinations before choosing packages. On the other hand, AR has seen traction with retailers of home furnishings, apparel, and cosmetics; they are using it to help users evaluate how some particular products would look in their home environment or how the product would suit them. For in-stance, Amazon has opened up VR kiosks in malls in India to promote shopping festivals such as `Amazon Prime Day' on its platform. The VR experience allows customers to walk through virtual stores, offering them a first-hand experience of handling various products and allowing them to trial products using holographic models.
Hiten K. Shah, Research Analyst, TechVision, Frost & Sullivan
Natural Language Processing/ Interaction
Customers shopping online have access to a wide range of information and typically seek more information than offline customers to reinforce their buying decisions. To keep up with the growing volumes of queries from their buyers, e-tailers are now relying on chatbots for customer service. Chatbots have taken over the task of providing relevant information to customers, responding to user questions just as human representatives. This has enabled users to get faster responses to their queries and has also enabled customer service executives to devote their time to more complex issues.
Technological developments in the world of e-commerce have fundamentally changed how customers connect with brands
The integration of National Language Processing (NLP) into e-commerce websites has also greatly boosted in-site search functionalities, providing contextual awareness of what the user is searching for. Contextual awareness abilities have enabled e-commerce sites to give relevant search results to a user even when he/she has not specified the exact keywords. NLP tools have also strengthened the capabilities of voice-based search functionalities. Highly advanced voice analysis engines are now able to take in complex voice-based queries and generate accurate results by matching the search string with the consumer's demographic and personal traits such as the user's age in addition to location and purchase history data. Such capabilities can work with vague commands such as "I want an average-sized affordable black shirt".
The Digital Future
A wide range of technologies has largely automated menial and repetitive tasks on the backend as well as at last mile delivery, freeing companies from problems, such as labour shortages and human errors. It is now virtually possible for an order to be fulfilled without any action from a user or an e-tailer employee, from ordering, processing to fulfilment.
While the highlighted technologies are at the forefront of the technological revolution in e-commerce, there are also several other digital technologies that will have a significant impact on the e-commerce of tomorrow, such as Blockchain and Data Analytics.
In time, new technologies will propel invention of newer business models and completely reinvent businesses. From the creation of multiple shopping channels offering friction-less check out experiences to enabling customer service automation and personalized experiences for customers, technologies would serve as the heart of interactive exchanges between e-tailers and customers in the future.
