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The post How does India shop online? first appeared on PHYGITAL RETAIL CONVENTION (PRC).

New Delhi: AI-powered visual searches have gained immense popularity in the e-commerce sector. ViSenze, a Singapore-based AI-powered visual search and recommendation platform, processed over 175 million visual searches in India in October, a 30% increase as compared to 2022.

Currently, Visual search has become the go-to option for faster and more accurate product discovery because of the ease of use it offers. Gurgaon-based Data Bridge Market Research projects that the visual search market will surge to $32,983 million by 2028, as shoppers won’t be impeded by language or spelling issues, thanks to visual search.

Visual Search in Retail

According to the data from ViSenze, Over 83% of the image searches are from screenshots, underlining the influence that social media has on the modern shopper, with the remaining searches initiated through the camera lens. Online shoppers also use image search to compare prices across platforms as it’s the fastest way to shop for the best deal.

AI-powered Visual Search helps retailers increase their revenue as it helps customers get up to 99% accurate results with image search.

Furthermore, it has also resulted in an increase of 24% in conversion rate with a 15% hike in engagement rate and up to 29 times return on investment (ROI), stated ViSenze’s official website.

ViSenze’s data also shows that a large portion of the visual search queries are from tier 2 and tier 3 Indian cities indicating that a lot of new-to-ecommerce customers prefer visual search to the traditional keyword-based text search. This number is only going to grow as more consumers come online in the coming years.

“Indian internet users spend 44% of their time on social media, which is the highest in the world,” said Oliver Tan, CEO, ViSenze.

“They also use 8.7 social platforms on average. This means that their shopping inspiration often happens on social media. This is one reason why visual search is so important in India,” added Tan.

Different brands like Myntra, Rakuten, Amazon, Levis, and Adidas facilitate the shopping experience with the use of visual searches.

Here’s a look at some of the brands that have seen progressive results in their growth

FNP

For Indian gifting brands, FNP (formerly Ferns n Petals), visual searches have proven to be highly beneficial, especially in cases where users may not recall the complex names of gifting products, for example, a bouquet of Anthurium or a Pampas and Dried Flower Bouquet.

According to the company, it is dependent on Google for image searches, but it plans to enable searches on its platform in the future. Festivals like Rakhi, Diwali, and Valentine’s Day record increases in visual searches with flowers and home decor being the most searched products. FNP also envisions visual searches playing an increasingly pivotal role in the specialized retail sector.

“By enabling users to search with images, we’ve enhanced the discovery process, making it more intuitive and enjoyable,” the company’s Head of Product Management, Chirantan Sharma said.

“We have observed a higher adoption rate among users aged 20 – 35 and anticipate even more sophisticated visual search capabilities, providing users with highly accurate and personalized recommendations,” added Sharma.

Amazon

The e-commerce giant introduced Shop the Look, a web-scale fashion and home product visual search system in 2022, a company publication stated.

In 2019, the company launched the StyleSnap service for fashion products, and in 2020 it expanded the service to support home product searches. In the year 2022, it renamed it to Shop the Look.

The feature aims at leveraging image data from the Amazon product catalogue and adopting effective strategies to reduce the human effort required to annotate data.

Shop the Look has shown a great impact on customers and the number of monthly active users (MAU) of Shop the Look in 2021 has increased by 250%.

“We recently added a new feature to our visual search tool that enables you to add text to your visual search queries,” Llew Mason, Vice President, Shopping said recently on the company blog.

“When you perform a visual search, you’ll see the search bar with the thumbnail of the image you captured, along with a prompt (“+ Add text”) to add any text to help narrow your search results,” added Mason.

Myntra

According to a Visenze case study of the e-commerce platform Myntra, the fashion marketplace’s image search traffic has grown by 35% over the last 12 months contributing significantly to conversions and revenue per user.

With the help of visual searches, Myntra was able to cater to Gen Z users with speed, accuracy and scale in areas of product search.

Myntra uses ViSenze’s Discovery Suite to power its ‘View Similar’ carousel to curate a collection of similar items based on visual attributes like the style or colour of the item end-users are looking at.

This also supports better conversion when certain products are out of stock, increasing revenue per user.

Showpo

Australian fashion retailer Showpo uses shop the look recommendations from Visenze which makes any model image instantly shoppable by processing all of the products displayed automatically.

Users can easily find the other items in the picture and include them in the basket, increasing average order value (AOV) and revenue.

This helped the company curate a collection of similar items and ensured the right items were being shown to the right visitors to achieve a 10% increase in conversion rates.

Zalora

Fashion and lifestyle platform Zalora was able to get a 10% higher engagement rate than before and increase the average order value by 15%, as per Visenze data.

The ease of finding the right product also led to reduced customer churn, increased click-through rates, and ultimately more revenue.

“We want to give our customers joy in shopping by just taking a photo of any fashion objects that grab their attention,” said Karthik Subramanian, CTO, Zalora Group in a Visenze case study.

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Easy returns and last-mile delivery options have made e-commerce a formidable alternative to physical retail in the past two years. The new age retail shopping is defined by the ease of access to internet and e-commerce platforms. With online commerce and door-step delivery becoming a pertinent feature of shopping today, brick-and-mortar retailers must put an increased emphasis on virtual customer interactions to generate sales and offset the possibilities of a slump in store walk-ins. Offline retailers lagging in digital adoption need to fix their disjointed fragmented retail processes and awkward customer experiences, or else they are sure to fall behind in the race.

In the wake of their experience with the pandemic, smart retailers now understand that a lack of digitization and virtual solutions can impede productivity and slow down business. They are therefore transitioning to virtual retails solutions to avoid supply chain disruptions and labor shortages. By thoughtfully virtualizing business operations, eliminating silos between channel, and shifting to omnichannel models, brick-and mortar retailers are responding to the changing market dynamics in an agile and fast manner.

The unhindered rise of e-commerce, personalization, digital mannequins, and automated home deliveries are some of the key elements that will shape the shopping experience in the coming years. These changes will prompt retailers to adopt an omnichannel business model and deliver a consistent shopping experience across online and offline channels. It is now more pertinent than ever to build virtual retail ecosystem and connect physical retail to digital lifestyles.

Retailers must bring the in-store shopping experience online using AR/VR technologies and virtual sales assistants to guide customers and help them choose a product. They should deploy digital BTL activations and in-store activations to engage with customers and drive brand loyalty in the future. A cohesive blend of e-commerce with physical retail is the way forward for brands to maximize sales in a restricted market environment. In an omnichannel design, store promoters can effectively use customer data captured across virtual and physical stores to offer better personalization and product recommendations based on their previous purchases.

Physical retailers need to maximize the value of each store trip and their flagship stores can offer a mix of cafes, art galleries, and shops, etc., in order to drive store footfalls in the future. Omnichannel retail can help manage crowds by offering customers options such as ‘Buy Online Pay in Store,’ curbside pickups, digital payments, and more.

Additionally, retailers can use physical stores to execute experiential events, educate customers on product offerings, and reinforce their brand’s positioning in the market. New technology solutions can be leveraged to transform store formats and drive delightful experiences for prospects and customers. The future of shopping will definitely be a mix of digital and physical retail but, above all, the most crucial aspect would be building personalized relationships with customers and automating inventory and supply chain systems.

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1. ChatBots
With ChatBots gaining more human qualities, it is important to utilize the power of machine learning in online shopping. AI-powered tools have become a central part of a lot of customer-centered experience creation and can emulate the presence of an ‘in-store assistant’ while shopping which can prove to be a great aid for the customer.

2. User Experience Optimization
One of the more important aspects of working in an E-commerce store is to make the customer’s experience as seamless and hassle-free as possible. Similarly, an easy and well-designed user interface can have a lot of impact on the customer as well.

3. Mobile Commerce
Making your E-commerce services available on phones and mobiles is another trend that e-commerce companies must hop on. Making their businesses mobile-friendly allows one to tap into the market with utmost ease since smartphones are a largely available and viable source of growth.

4. Diverse Payment Methods
Consumers today wants to pay for their order in various ways and it is up to the E-marketers to utilize the plethora of various technologies available to integrate a whole lot of diverse payment modes, like E-wallets and Pay later options, available on their websites and apps.

5. Using AR and VR Technology
With the unprecedented growth in consumer tech, using tech-based systems like AR and VR can make online shopping a more immersive and informative experience. The use of such visual technologies can also help companies reach out to a new market.

6. Personalized Marketing
Customers today are asking for personalized services and marketing efforts. The push for using customer-specific materials is great and it has never been easier. Technology and data tracking allow AI to utilize the innumerable resources of the internet and channel-specific marketing content as well as personalized product recommendations to each individual.

7. Data Control
It is important to know that even though there is a lot of importance that is being given to personalized marketing efforts, data privacy concerns are also gaining ground. It is important to balance the personalization aspect with privacy concerns.

This shift in the consumer base and their demands are the driver of change this year. For E-commerce businesses to be successful and profitable, it is necessary to embrace the changes and rework your business model to focus on the customer and their needs. When this is done properly and targeted at the right audience, you will notice a positive shift in the market as well.

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In order to handle the loyalty model similar to what e-commerce portals do to their consumers, shopping centres in India study and follow the international benchmarks. There is no unique successful single model by any mall developer. Every mall has a different aspect, and it is not necessary that all aspects will be good for other malls too. Creating a sustainable model is an option, but it is still doubtful that this will click for shopping centres in different locations mainly Tier I, II, III cities. Consumers in every city can have his/her thoughts different for the loyalty programs. Technology has a major role to play here and then only a uniform model can be created.

Technology which we are using is also not that mature. The other thing is the conservative nature of the industry, and most are not willing to put in a lot of money upfront for these apps. The international market is quite ahead of us. They are not short of resources, and are very mature in approach. If the shopping centre owners want to preserve or own the consumer, they will have to invest accordingly. One must invest and promote it vigorously, enthusiastically and energetically.

The investment on events which is done in time of festivals and occasions, is one generic aspect. The mall must keep aside some sort of money for fuelling the loyalty program, and then largely depend on the retailer support. Today’s customers are seeking experiences to enrich their lives, and a cross-brand loyalty program for malls could be the differentiator mall owners are looking for, as it drives footfall and creates an unforgettable experience at the same time.

-Sandeep Kumar

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The report from Capgemini suggests that Gen Z and Millennial shoppers are now more likely to order products directly from brands, and 72 per cent of all shoppers expect to have significant interactions with physical stores once the pandemic subsides – up from 60 per cent pre-COVID.

More than two-thirds (68 per cent) of Gen Z and over half (58 per cent) of Millennials have ordered products directly from brands in the past six months, compared to 41 per cent on average across all age groups. Only 37 per cent percent of Gen X and 21 per cent of Boomer shoppers have ordered directly from a brand in the last six months. For those who have bought directly from brands, almost two thirds (60 per cent) cite a better buying experience as a reason for purchasing directly, and 59 per cent cite access to brand loyalty programs.

Health and sustainability continue to sway the consumer decisions going forward, and the retailers should consider investment in empowering customers to make informed choices around these. With convenience remaining a key priority for the consumers, delivery and fulfillment are increasingly being transformed from a cost center to a growth driver for many organizations. Today, shoppers are not much willing to pay a premium charge for even fast delivery.

Evolving Consumer Trends
To meet the evolving needs of today’s consumer the report identifies four key actions for brands and retailers to benefit from these underlying consumer trends:

• Collect and analyze first-party consumer data to customize new products and services for specific customer segments
• Develop an omnichannel strategy that incorporates the roles of in-store, ecommerce, direct to consumer and marketplaces
• Reposition delivery and fulfilment services as a growth driver for customer experience
• Set pricing of sustainable products more competitively in line with consumer expectations

— Sandeep Kumar

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The mantra of “A penny saved is a penny earned” is something consumers swear by. With so many products and brands in the market, the impulse to buy is unavoidable. However, the price factor can sometimes create a huge hindrance and this is where cashback websites come into play. A Cashback website helps retailers get higher conversions by offering these new users certain cashback/rewards, ensuring them a cheaper price than the offline store. These cashback websites have also seen a surge in their revenues. Cashback and coupons platform CashKaro’s scale has recorded 74% growth in its operating income in FY21. CashKaro’s income grew to Rs 98.33 crore in FY21 from Rs 56.49 crore in the previous year.

According to Statista, the global cashback industry is expected to be worth more than $200 billion by 2024, with statistics showing that 46% of cashback participants consider it a vital step in their purchase decisions. As per the same research, retailers who have participated in cashback grew their revenue up to two and a half times faster than competitors who do not use them.

Over the past few years, lots of customers have shifted to online shopping, especially in tier 2 and tier 3 cities. With the help of digital wallets, there is always some amount of cashback which the end-user receives and this is how shopping never stops. If discount helps the customers to get attracted to an online site, cashback and coupons ensure that they retain those customers.

As the e-commerce market continues to grow, coupon and cashback models are here to stay, opening newer avenues for retailers to rope in and retain customers. Cashback that offers true value-for-money with the potential for customer retention could well be the new catalyst for Indian e-commerce growth.

— Sadaf Anjum

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That is how the ecommerce equation has modified itself into an effective, prompt and a fascinating ecommerce model, or in common parlance, ‘Quick Commerce’. It was not until 2020, when convenience was redefined through the implications of JUST-IN-TIME delivery model. While we were going through the inconvenience of the pandemic back then, brands like zepto, Dunzo, Bigbasket were reshaping the avenues of convenience for us and making it ULTRACONVENIENT PRO MAX. With the birth of the great idea of Dark Stores in one of the developed countries in the west, in India it was the players of the Last-Mile-Delivery category who took up the idea and implemented it in action. The idea was clear to these brands that for those customers who want a convenient shopping experience albeit being indoors, it was their responsibility to optimize the supply chain in an Indianized manner, and ultimately thus the brands evolved in terms of optimization from two hours to now 10-minute deliveries.

According to a report by Bobble, in the Jan-Mar 2022 quarter, Zepto topped the open rate with 63%, being far greater than Blinkit, Dunzo etc., wherein Dunzo leads with time spent on delivery apps. Recently, there has been some uproar about the quick commerce model, being challenged its efficiency and the involvement of human factor. Despite that, quick commerce is a retail model that offer some economic benefits to retailers. The dark stores used in this model actually resolve some of the biggest warehousing cost challenges faced in traditional ecommerce. They offer quick shopping opportunity, faster delivery, better SKU management on top that better inventory control, thanks to the just in time system.

In spite of the efficient and promising model of Q Commerce, there have been several mixed opinions of experts. Some believe that this model is futuristic and it is going to stay with us for a long time. While others are looking it as an unstable business model, revolving its success around the ongoing uprise in the Indian digital-native startup universe. Whatever the case maybe, the business model has proven itself as an efficient and value providing avenue of ecommerce for the customers. While the jury is out on the intelligence of this model’s unit economics, and if it is ‘inclusive’ and hyperlocal enough to involve the millions of Indian mom-n-pop stores, there is little doubt that retail companies are racing to serve urban (for now) Indians faster and faster.

—— Sayan Mukhopadhyay

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