Experts highlight that the pace of AI adoption in 2024 will be much faster than earlier, but it will depend on certain factors

 

New Delhi: Indian retailers are hoping to ramp up their spending on AI (Artificial Intelligence) in 2024. They seek to achieve stronger client relationships with anticipatory analytics reshaping demand forecasting, and refining inventory management.

The rapid pace of adoption and the increasing areas of operations are owing to the successful implementation of AI in customer management, personalised offerings, ease of finding products and result-oriented productivity that retailers saw in previous years.

IndiaRetailing had earlier reported on how retail companies globally leverage generative AI’s potential in their daily operations and offerings.

These daily operations included AI-based visual searches; ad creation; image, text and video generation for marketing campaigns; supply chain management and many other areas of operations.

Data from Fortune Business Insights show that retailers spent $5.50 billion in 2022 on AI-led automation and projects and this spending is projected to jump by 34% compound-annual-growth-rate (CAGR) to reach $55.53 billion by 2030.

The report further said that India is expected to register the highest CAGR in the adoption and implementation of AI in the Asia-Pacific (APAC) region because of its high demand for automation tools.

While companies used it to boost productivity and to smoothen their daily operations in 2023, they are expected to take the usage to the next level by facilitating training for employees, increasing their spending and also enhancing the areas of operations.

“Retailers who adeptly utilise AI will emerge as the clear winners. There is a significant opportunity for retailers to enhance the accuracy of their services, and many are already advancing rapidly on this path,” said Kumar Rajagopalan, chief executive officer, Retailers Association of India.

Kumar Rajagopalan also explained the impact AI will have on consumers saying that consumers can expect a notable elevation in retail standards. “The integration of AI in retail is more than just an operational upgrade; it’s a strategic move towards creating more customer-focused and efficient retail experiences,” he added.

Areas of focus for AI in retail

According to experts 2024 will witness much broader and more impactful applications of the technology, but the focus areas will depend on industries and other factors.

“Retailers are now embracing AI not just as a tool, but as a core component of their business strategy. The ability of AI to process and analyse vast datasets provides retailers with unprecedented insights into consumer behaviour. These insights enable retailers to develop highly targeted strategies,” Kumar Rajagopalan of RAI said.

AI could be used for enhancing a host of services, from the overall customer experience to security aspects, according to Santosh Reddy, chief technology officer, ShakeDeal, a procurement-focused B2B e-commerce platform.

“2024 signifies a pivotal leap in B2B e-commerce, showcasing AI’s transformative prowess in enhancing customer experiences, operational efficiency, and cybersecurity, and we look forward to it,” Reddy said.

Kartik Narayan, chief executive officer of TeamLease Services, a staffing firm says that personalisation, customer experience, inventory management, demand forecasting, customer service automation, data analysis, market insights, automated warehousing and fulfilment will be the key areas where the retail sector is more aligned to use AI in 2024.

Another area of focus is analysing customers’ patterns and reducing manual work.

“People will use artificial intelligence to study consumption behaviour patterns and flag inconsistencies that will reduce a lot of manual and mundane work,” said Madhav Kasturia, founder, Zippee, an e-commerce fulfilment platform.

“AI will also boost the efficiency of last-mile infrastructure by examining data and compiling patterns. AI will essentially replace data analysts to start with,” Kasturia added.

Factors like supply chain, customer experience, inventory management, demand forecasting, service and warehouse automation will all be the areas that are going to witness more advancements in comparison to 2023.

“In 2024, AI algorithms will revolutionise the landscape of retail through hyper-personalised support, product recommendations, and targeted marketing,” said Sheshgiri Kamath, chief executive officer, Kapture CX, an AI-driven Customer Support Platform for Enterprises.

Kamath adds that AI tools will extend their reach to employee training, workforce management, and productivity enhancement, leveraging analytics for optimised staffing and operational efficiency with a focus on supply chain optimisation, fraud detection and security and price optimisation.

This aligns with findings of a recent survey by hiring and job search platform Indeed, which found that around 59% of employees in India are ready to use and embrace the potential of artificial intelligence and generative AI-based tools in their daily work.

Pace of implementation

While the adoption of the technology is evident, the pace depends on factors like the cost of technology, customised tools for companies, Large Language Modules and their accuracy among other conditional factors.

Kasturia of Zippee said that e-commerce will be one of the early adopters of the technology.

Narayan of TeamLease Services adds that the pace of integration will likely be rapid. The adoption pace will also be influenced by the increasing availability of user-friendly AI tools, enabling even non-technical employees to utilize AI in their daily work.

“The rapid integration of AI is poised to grant a competitive edge to companies. The pace of this transformation may be influenced by regulatory factors, ethical considerations, and the availability of skilled AI professionals,” said Kamath of Kapture CX.

“The pace of AI integration in the D2C market is accelerating rapidly. As technology advances, the potential for increased efficiency and innovation in D2C through AI is significant,” said Deep Bajaj, chief executive officer, Sirona Hygiene, a company that sells feminine hygiene products.

From improving product recommendations and personalised fit suggestions to delivery, here’s how retail biggies are using artificial intelligence to offer delightful customer experiences

New Delhi: Retailers in India are betting big on enhancing the customer experience (CX) with the use of Artificial intelligence (AI) with heavy investments planned in the technology this year 2024.

According to experts, the integration of AI in retail is more than just an operational upgrade; it’s a strategic move towards creating more customer-focused and efficient retail experiences, especially when the scale of operations is large like in the case of fashion e-commerce platform Myntra.

“With a catalogue as vast as ours, comprising 2.3 million styles from 6000+ brands across fashion, beauty and lifestyle, as well as the need to be on top of the fast-evolving fashion trends, it can get challenging for shoppers to find the right product and discover trends,” Myntra’s vice president (VP), of product management Lakshminarayanan Swaminathan said.

Not just Myntra, but other players too are using AI for better CX. Here’s how…

Amazon

The horizontal marketplace has recently added a new feature where it uses AI to help customers find the perfect fit while shopping online as per a recent blog by Apoorv Chaudhri, director of computer vision and machine learning at Amazon Fashion. This feature gives customers shopping for fashion products various options such as personalised size recommendations, fit review highlights, size charts with AI-powered data, AI-backed fit insight tools and so on.

The company also utilises AI in its digital pharmacy business helping improve prescription processing speed, pricing, customer support and delivery.

Myntra

The fashion e-commerce major uses AI and other emerging technology to enhance the overall shopping experience for its customers, the company said. The company uses features like My Stylist, MyFashionGPT, and Maya that enable customers to have a more enhanced and meaningful discovery-led shopping experience.

MyFashionGPT, a generative AI tool for fashion, beauty and lifestyle allows users to search for outfits using natural language. The feature currently boasts nearly 2 million monthly users on average.

My Stylist, an AI-powered design tool, analyses user preferences combined with a deep understanding of trends, enabling users to discover and shop for complete looks.

Maya, the AI-powered chatbot, streamlines discovery and refines choices for customers, eliminating ambiguity in decision-making. The chatbot is adept at handling a wide range of complex queries. Being contextually aware enables Maya to provide recommendations to customers based on the multiple conversations that occurred in the same session, responding in real time.

Peesafe

Gurugram-based personal hygiene brand Peesafe uses AI in areas like personalisation where it recommends products, offers tailored promotions, creating targeted marketing campaigns based on customer data and shopping history. In addition to this, Chatbots offer 24/7 customer support on product information, order tracking, and issue resolution.

At its stores, the company uses smart shelves, personalised digital signage and AI-powered self-checkout kiosks. Other indirect areas where it employs AI include predictive analytics for anticipating customer needs, maintaining stock levels, predicting future trends and sentiment analysis.

Shoppers Stop

Department store chain Shoppers Stop uses large language models (LLMs) and AI to develop Conversational AI.

“We are also experimenting with the metaverse as a novel avenue for customer engagement, in addition to already existing solutions, such as virtual try-ons, immersive brand experiences, and interactive shopping environments,” said Sandeep Jabbal, Chief Digital Transformation and Information Officer in an interview earlier.

The company aims to enhance customer experience with generative AI and conversational AI, with a focus on enabling personalised product recommendations interactive engagements, and real-time assistance.

Indiamart

Using Artificial Intelligence has helped the B2B marketplace become a conversational commerce hub, facilitating 45 crore conversations last year on the lead management system. The AI-based matchmaking technology on the Indiamart platform matches buyer needs to the most suitable suppliers, ensuring seamless connections beyond the restrictions of location or size of the business. Beyond this, AI & ML are also leveraged in various platform aspects, such as multilingual search results and intelligent cataloguing for easy AI-powered product image editing.

AI in stores

In addition to what the retailers are doing, there are several areas where AI is being used. Giving a perspective on where tech service providers are working with retailers on AI, Ajay Aggarwal, head of Retail at Nihilent Ltd. said that retail brands are incorporating AI into their strategies to derive added value from existing loyalty programs.

“By gaining a deeper understanding of customer basket trends and patterns, these brands aim to employ AI-driven insights for the development of personalized marketing strategies, ultimately enhancing customer loyalty and overall satisfaction,” Aggarwal added.

The company help retailers enhance in-store customer experience with AI.

“We are also using AI to enhance in-store customer experience for retailers. Additionally, AI enhances in-store experiences by analysing CCTV feeds, offering insights into footfall patterns and shopper behaviours, identifying high-intent shoppers and more,” said Dipankar Mukherjee, Chief Innovation Officer, Nihilent Limited.

AI Impact

Brands are already experiencing benefits associated with AI. For instance, Pee Safe has seen increased customer satisfaction, loyalty, personalised experience, and quicker resolution.

“Other benefits include higher conversion rates and sales, reduced operating costs and competitive advantage,” shared Vikas Bagaria, Founder and CEO.

In the case of Myntra, those using the MyFashionGPT are adding products from 16% more categories on average than usual.  “1 million of our customer base are currently engaging on average with My Stylist every month. Maya, our AI-powered chatbot users are conveying overwhelmingly positive sentiments, as reflected in the approval ratings,” Swaminathan shared.

Giving insights into the advantages reported by its retail partners Aggarwal of Nihilent said, “We have achieved over a 25% improvement in overall inventory efficiency for the food brands we have partnered with, directly influencing their top-line revenue and profitability by minimizing daily stock-outs and food wastage”.

Sandeep Jabbal, Chief Digital Transformation and Information Officer, at Shoppers Stop, speaks about the company’s technology strategy, areas of investment and focus and key challenges

New Delhi: With almost two decades of experience in the realms of technology and digital transformation, Jabbal stepped into the retail industry as Head of IT at Marks and Spencer Reliance India Ltd. Since then, Jabbal has been using his tech expertise and knowledge to help major retailers like Jubilant FoodWorks Ltd. and Shoppers Stop, a department store chain part of the K. Raheja Corporation to successfully navigate the tricky and ever-evolving technology landscape.

Shoppers Stop, which commenced its journey in 1991 with its inaugural store in Andheri, Mumbai, initially focused on men’s wear. Since then, it has burgeoned into a retail powerhouse, boasting around 105 department stores, around 88 beauty stores, and around seven home-stop stores across 56 cities.

With a total area of 4.1 million square feet (sq. ft.), it caters to an extensive customer base, handling over 49 million walk-ins annually. The workforce comprises over 18,600 employees, which the retailer calls customer care associates. Shoppers Stop’s influence extends beyond mere scale, offering a diverse range of products from over 800 brands, a mix of national, regional and owned and international.

With iconic brands like Kashish, Haute Curry, Fratini, and Life, Shoppers Stop aims to provide diverse fashion choices while streamlining the shopping experience through consistent store designs across all brands. The company’s evolution underscores its commitment to seamless customer experiences. By integrating offline and online channels, the company ensures real-time visibility of merchandise across platforms, synchronized marketing campaigns, and pricing parity. Additionally, with plans to expand its beauty segment through SS Beauty and other mono brands, Shoppers Stop continues to innovate and adapt to the evolving retail landscape.

The company’s revenue from operations was up 8.83% to Rs 1,237.52 crore during the third quarter of the financial year (FY) 2023-24. During the quarter, it added 13 stores, which include four department stores, four beauty, four Intune and one airport store.

Jabbal, who is Shoppers Stop’s Chief Digital Transformation and Information Officer sheds light on the role of technology in enhancing customer experience, working on an omnichannel model and the relevance of cloud technologies in an exclusive interaction with IndiaRetailing.

Edited Excerpts…

What role has technology played in enabling the growth?

Technology has significantly contributed to Shoppers Stop’s expansion by enhancing customer interactions, personalising experiences, and increasing operational effectiveness. Benefiting greatly from a unified view of customers, it has facilitated customised shopping experiences through the use of Artificial Intelligence (AI) and Machine Learning (ML) for precise and personalised marketing campaigns. Furthermore, existing technological capabilities have enabled Shoppers Stop to rapidly scale up, streamlining and reducing the time taken to launch new stores.

It has also enabled the organisation to expand beyond retail and diversify—exclusive distributorship for multiple luxury international beauty brands. Integrations with key business partners are done to create business agility and shorten the supply time from a vendor’s warehouse to Shoppers Stop’s store.

What is the company’s approach towards technology and how does it manifest in its implementation?

Our approach towards technology is characterised by a proactive and forward-thinking approach. This is evident in our strategic investments and initiatives aimed at simplifying processes for both customers and operations. This is manifested in our commitment to adopting advanced technologies and leveraging digital tools to streamline operations and expansions.

In addition, the cloud transformation journey forms the key to our technology strategy and major applications and infrastructure changes were undertaken this year. The trend will continue next year with the target to build a resilient technology platform to minimize operational disruptions.

Can you identify a few areas in which technology has helped Shoppers Stop change the game?

Areas, where Shoppers Stop has leveraged technology, are notably through virtual try-on features that include skin analysers and makeup simulations. The recent introduction of a fragrance finder solution at airport stores simplifies fragrance discovery for travellers. Shoppers Stop has also released a personal shopper app designed for employees, facilitating personalised service.

Additionally, by partnering with leading cloud original equipment manufacturers (OEMs) to delve into AI and investing in low-code no-code (LCNC) solutions to overhaul legacy systems, we have enriched customer engagement. Strengthening the core retail processes for supply chain and finance, we maintain a best-in-class warehouse solution. Our mobile-first strategy has enabled store teams to be more productive on the move.

Tell us about the cutting-edge technologies you work with.

We are leveraging large language models (LLMs) and AI to develop Conversational AI. We are experimenting with the metaverse as a novel avenue for customer engagement, in addition to already existing solutions, such as virtual try-ons, immersive brand experiences, and interactive shopping environments.

Can you shed light on your omnichannel strategy?

Shoppers Stop has effectively harnessed technology to enhance its omnichannel strategy, notably through the endless aisle feature. This service enables customers to order products online from within the store if their desired size or style is unavailable on the shelves, effectively merging in-store and online shopping experiences.

This service, along with other digital initiatives like personal shopper services and a robust online presence, underscores the company’s commitment to a seamless, omnichannel experience for customers.

How much of your business comes from offline versus other channels?

Approximately 96% of Shoppers Stop’s revenue is generated through its offline channels, highlighting its strong presence in physical retail. The online channel accounts for about 4% of the business, serving as a digital complement to its offline operations.

Name three challenges you face in implementing technology across such a large business.

Challenges in technology implementation include managing change and ensuring business adoption, which requires careful coordination and support across all levels of the organisation. Scalability and seamless integration of new technologies with existing systems present complex obstacles.

The last major challenge is maintaining the highest standards of data security and privacy in an era of increasing cyber threats. Technology transition is always the most difficult phase when a fine balance needs to be maintained between keeping the lights on and at the same time creating a robust transformation journey.

How does Shoppers Stop use AI/ML?

We started with deploying traditional ML models like K-means, logistic regression, and decision trees for developing models for persona, propensity, Recency, Frequency and Monetary (RFM) and Market Basket Analysis.

We have also started work for adopting advanced AI models leveraging recent developments in LLMs for in-depth customer insights and improved customer interactions. ML is also applied in many areas of network security with traffic pattern recognition and intelligent pack filtering.

How do you aim to enhance the customer experience using technology?

We aim to enhance customer experience by leveraging cutting-edge technologies such as cloud technologies, generative AI and conversational AI, with a focus on enabling personalised product recommendations and interactive engagements, real-time assistance and, ensuring a seamless and engaging shopping journey for our customers. Recognizing the customer as a single entity irrespective of the multiple channels on which our customers shop, is a key goal for us in customer satisfaction.

Which technologies are you investing in for the future?

We are strategically investing in cloud technologies and areas to eliminate single points of failure to ensure future readiness. Similarly, on the infrastructure side, we are investing in building network redundancies and other business continuity solutions.

Which retail technology will redefine the shopping experience in the future?

Generative AI and Large Language Models (LLMs) will revolutionise retail by offering highly personalised shopping experiences. These technologies will enable tailored product recommendations and enhanced customer service through conversational agents, improving engagement and setting new standards for customer satisfaction and loyalty.

How voice shopping has evolved with time and advances in technology and how retailers are using it to personalise experiences

New Delhi: “Ok Google, where can I find the best phones near me,” or “Ok Google, show me red tees to buy” was a great leap in online shopping when it was launched some years ago. Soon, voice searches led to the introduction of voice-assisted shopping and fuelling the birth of voice commerce. The introduction of smart speakers like Alexa, Echo and Google Home all helped voice search and shopping in terms of devices that facilitate the operations.

Today, voice commerce is a thriving market with a projected transaction value of over $51 billion by 2028 from $21 billion in 2023 as per Research and Markets data.

The market is set to receive a boost with the estimated rise of smart speaker shipment to over 500 million units in 2024 as per data by Global Market Insights. Mobile phones which are another source for voice shopping will also act as a strong impetus for voice commerce and will grow with more and more affordable phones coming in.

“AI-based virtual assistants such as Echo, Alexa, and Google Home have significantly enhanced operations. They have made it possible for customers to shop hands-free, which is particularly beneficial for busy individuals or those with disabilities,” said Chirantan Sharma, Product Head, FNP (Formerly Ferns N Petals).

“The integration with these devices has also increased our platform’s accessibility, allowing users to shop from anywhere in their home and even on the move. The impact is profound in terms of customer convenience and satisfaction, leading to higher engagement rates and a boost in conversions,” added Sharma.

As per data by PwC, people have used voice search for shopping food and groceries, booking dinner reservations and transportation. Clothing purchases stood last in voice commerce but are expected to increase by almost 22% in future with more advanced personalised experience and better product discovery options coming in.

Let’s take a look at how some leading retailers are using voice search…

Walmart

Walmart in 2019 introduced a shortcut that enables customers to order groceries through Apple’s voice assistant, Siri. By linking their Walmart and Siri accounts, users can add items to their Walmart cart through voice commands on their Siri-powered devices. This integration leverages machine learning to understand and fulfil generic requests based on each customer’s purchase history.

FNP

Gifting brand FNP (Formerly Ferns N Petals) has seen a growing trend in voice shopping especially among tech-savvy users. According to the company, the platform’s voice search feature has an accuracy rate of around 90%, it has also invested in refining voice recognition algorithms to understand diverse accents and speech patterns, especially considering the linguistic diversity in India.

“At present, the usage is low for our customers engaging in voice shopping. However, considering the broader industry trend where convenience and hands-free operation are becoming increasingly important, we are focusing on this,” said Sharma of FNP.

“The categories that witness the most voice searches on our platforms are flowers and personalised gifts,” added Sharma.

Amazon

Amazon is the first among the players to build and develop the concept of shopping through smart and connected devices. In a recent update to Amazon’s voice assistant, users can now convert handwritten shopping lists to digital ones using the “scan” feature in the Alexa Shopping List.

Additionally, the “Shop Your List” feature allows users to seamlessly place Amazon fresh or whole foods market orders directly from the Alexa app, offering a convenient one-stop shopping experience.

Flipkart

In 2021, Flipkart introduced voice search functionality on its platform. This feature allowed customers to search for products using speech commands. The Voice Search is capable of helping users search through the product catalogue using colloquial commands, thereby reducing the friction points in their e-commerce journey, a release by the company said.

Domino’s

In 2014, Domino’s Pizza launched the voice assistant feature, Dom in the US, aiming to streamline pizza orders over the phone. Dom not only accepts orders but also provides users with updates on their order status. Dom has recorded half a million orders since its launch. With 50% of sales now coming from digital platforms, Dom’s hands-free technology has proven popular, contributing to Domino’s achievement. The mobile app adds a personalised and seamless experience, allowing users to place orders through voice commands, suggesting additional items, and preventing smartphones from sleeping during the process.

Johnnie Walker

Johnnie Walker, the scotch whiskey brand, utilises a voice search feature to provide virtual assistance, offering users insights into its signature whiskey and fostering a connection with the brand. Through a series of questions tailored to users’ preferences, the voice search guides them to a personalised recommendation of the most suitable Johnnie Walker product.

“Voice control is a new and exciting technology that we were interested in trying. Alexa is the perfect service because its rapidly growing user base looks to it as a hub of innovative experiences from brands interested in having new conversations,” Stephanie Jacoby, vice president, Johnnie Walker North America said in an Amazon blog.

Burger King

In 2017, the American fast-food company used voice search in one of its ads, which raised controversies at the time due to its invasive nature. In a TV commercial, the presenter said, ‘OK, Google, what is the Whopper burger?’.

The voice was intended to trigger the Google Assistants on devices of viewers who had Google Home assistants or Android phones within listening range. The device would then open a Wikipedia page about the Whopper burger.

“Burger King saw an opportunity to do something exciting with the emerging technology of intelligent personal assistant devices,” a Burger King representative told media in 2017.

Voice shopping advantages

Voice shopping is all about ease. It offers a personalised shopping experience, saves typing effort and time and leads to better product discovery.

Literacy agnostic

Since it eliminates the need to type, voice commerce can be adopted by even those who cannot read or write. All they have to do is speak, which makes it universally adaptable. Now, with voice searches being offered in several regional languages by leading players in the field, its potential acceptance has increased much more.  

In 2021, Amazon India expanded its regional language offerings by introducing a voice shopping experience in Hindi followed by Marathi, Bengali, Kannada, Malayalam, Tamil, and Telugu.

“Every month, tens of millions of customers visit Amazon in regional languages and 90% of the customers are from tier II and below cities,” Amazon India Director (Customer Experience and Marketing) Kishore Thota said to PTI.

Analysing that more than 75% of internet users in India come from non-English speaking backgrounds, Flipkart also deployed an in-house natural language understanding and text-to-speech methodology for Indian languages.

Personalised experience

A device that assists in voice shopping can also provide recommendations that align with individual preferences. For instance, if a person asks for a daily essential product through a smart speaker, the voice assistant powered by different large language modules (LLM) can suggest products in addition to the one asked to order. This recommendation is revealed with the existing data pool and history of searches that are with the product and associated device. The ability to offer personalised shopping is directly linked with increased sales.

Product Discovery

The instructions to the device and its data on previous purchases help in better product discovery resulting in error-free and accurate results.

Review of the product

Voice-enabled devices are a great way to gather feedback from consumers.

Efficiency and Multitasking

The PwC data adds that smart speakers play a major role in comparison to mobile phones as people can choose to search for products while doing other work which saves time.

Future of Voice Commerce

Experts say that companies anticipate further integration of AI into smart devices to understand customer preferences better, leading to more personalised shopping experiences. Additionally, advancements in natural language processing will make voice interactions more seamless. Different retailers are exploring innovative features like voice-based payment authorisation and personalised voice shopping assistants.

AI will also play a pivotal role in powering voice recognition systems, ensuring they accurately interpret customer commands. AI also helps in understanding user preferences and search patterns, which aids in delivering more relevant search results and product recommendations.

India’s retail and wholesale sectors faced a 22% increase in cyberattacks in 2023. Here’s what’s making us more vulnerable

New Delhi: In April 2021, hacked customer data complete with names and contact numbers related to 18 million Domino’s Pizza orders went on sale on the dark web. The number of cyberattacks in India has increased by 15% per week on average in 2023, as per a report by cyber security firm Check Point.

The findings further revealed that the retail and wholesale sectors faced a 22% increase, indicating a change in the attacker’s focus. According to the latest Norton Cybersecurity Insights Report, Indians lose an average of Rs 20,000 when shopping online. Surprisingly, 74% of them are not aware of the next steps to be taken if they are a victim of a shopping scam.

Ransomware attackers are increasingly targeting retail businesses, causing financial losses and disrupting online shopping experiences. Cyber security software company Trend Micro in a study said that attacker surface visibility—possible points or attack vectors from where an unauthorised user can access a system and extract data—is challenging today for several reasons.

These include the lack of the right tools with organisations, opaque supply chains, the sheer size, complexity and distributed nature of modern IT environments and constant technology innovation.

The smaller the attack surface, the easier it is to protect.

What makes India prone to retail cyber threats?

Attacks on data take place due to the complexity of retail operations which include several vulnerable attacker surfaces such as the IT infrastructure, supply chain, evolving technology and payments. “One of the primary reasons is the complex web of IT infrastructure in retail,” said Kartik Shahani, country manager, Tenable India, an exposure management company.

“With many retailers regularly implementing new software as they continue to remain nimble and adaptive to customer needs, cyberattack surfaces have expanded,” added Shahani.

In addition to this, increasing adoption in the digital landscape is also what makes the entire system of data handling fragile and risk-prone.

“The industry becomes a more appealing target for cybercriminals looking to take advantage of weaknesses as it embraces digital transformation. An increased attack surface is produced by the increasing use of data-driven technologies, digital payment mechanisms, and e-commerce,” Ritesh Chopra, India Director, Norton, an antivirus and security software provider said.

E-commerce and digital businesses are more vulnerable to such attacks and this is increasing due to a surge in the adoption of digital shopping and payment modes by consumers.

“E-commerce and D2C companies are fledgling outfits with probably a lesser than optimum focus on cybersecurity (this is not to say that larger firms are any safer but with the relatively better focus on cyber security, they are a trifle better off),” said Siju Narayan, a retail industry practitioner and chief experience officer, Rexemptor Consult LLP. Narayan added that cyber attackers too are leveraging advancements in technology, which is why the quality of intrusions has only gotten better with time.

The weak links in retail cyber threats

Supply chain: An area that is vulnerable to cyber-attacks is the supply chain. Attacks here mainly arise due to the interconnections between a retailer’s network and those of its suppliers or third-party vendors. Any loopholes or lack of security measures from the supplier’s end would result in making the retailer’s network susceptible.

Dependence on multiple suppliers, third-party partners and logistic systems for different tasks makes the data handling more complex.

“Supply chain attacks offer malicious actors the opportunity to maximize their impact by infecting multiple organizations through a single supplier’s network infiltration,” explained Shahani of Tenable India.

Payments: With digital payments becoming standard when shopping online, UPI frauds, and credit card skimming are on the rise. “The range of attacks has grown due to the widespread use of digital payment methods and online purchasing platforms,” said Chopra of Norton.

“Considering the amount of first-party data stored on retail systems, retailers are becoming an easy target of all attackers as their security systems are not up to the mark. The demand for first-party data has increased after the recent deprecation of third-party cookies,” said Vivek Bajpai, co-founder and chief technology officer (CTO), GoKwik.

“Most retail merchants rely on technology provided by some small SMBs or they rely on open-source systems, although the cost of having these systems is very low, patching the vulnerabilities of these systems is usually ignored, as most of the retail companies don’t have enough engineering bandwidth,” added Bajpai.

What Retailers are doing

Retailers adopting digital systems and handling data are constantly working to safeguard their data and systems. Measures include storing data behind a firewall, different encryption protocols, intrusion prevention systems, security operation centres, password management, and updating cybersecurity measures.

Retailers in India have all invested a substantial investment in strengthening the measures. In addition to this, companies are compliant with industry standards like the International Organisation for Standardisation (ISO), Payment Card Industry Data Security Standard (PCI DSS) and others.

They also use cutting-edge technologies like artificial intelligence (AI) and machine learning in fraud detection with specialised algorithms.

However, experts still emphasise that retailers in India need to adopt exposure management to reduce cyber risk effectively. Exposure management provides retailers with complete visibility and context into what attackers see, helping them prioritise remediation efforts so the most critical business assets are protected. Investing more in cybersecurity technologies that focus on prevention, detection, and incident response should also be increased at regular intervals.

Slow websites and apps can lead to customer dissatisfaction, lost sales and revenue, and a drop in search engine optimisation (SEO) rankings

New Delhi: With 5G becoming a reality and 6G infrastructure in the works, speed has become an important factor when shopping online. In a survey of more than 2,000 Indian online shoppers, 60% of respondents said they would leave an app mid-engagement if they experienced buffering for longer than 10 seconds. The survey by US-based observability platform New Relic also found that 20% of respondents wouldn’t tolerate more than five seconds of buffering before they abandoned or switched apps.

Clearly, for those selling online, managing latency has become an imperative, simply because the adoption of e-commerce has increased exponentially leading to heightened expectations around it.

Consumers are spoilt due to the advances in technology happening almost every day. “The advent of 5G and a general increase in speed in broadband has led to users expecting a fast and instantaneous loading website/app,” explained Umair Mohammed, ex-CEO at Wigzo, a company by Shiprocket that helps e-commerce enterprises automate their customer engagement.

“For e-commerce, it becomes especially an important issue simply because every visit could potentially be a transaction,” added Mohammed.

“Latency often becomes a prominent issue for retailers during peak traffic periods, such as black Friday, festive season sales, or major product launches when there is a significant surge in site traffic,” New Relic’s Vice President (VP) Sales India Prasad Rai said.

Gifting platform FNP (formerly Ferns N Petals) confirmed Rai’s observation. It admitted to facing latency issues typically during Valentine’s Day, Rakhi, or festive seasons,” said Chirantan Sharma, Product Head, FNP.

Typically, the start-up time of the FNP website is between one second to two seconds with a frame rate of 30-60 frames per second. The network latency is under 100 milliseconds, and resource loading time is under two seconds with interaction latency under 200 milliseconds.

“Our goal is to keep buffering times under 2 seconds, which is in line with industry standards,” Sharma added.

Impact on business

Latency becomes crucial for e-commerce businesses as it can lead to customer dissatisfaction, lost sales and revenue, and a drop in search engine optimisation (SEO) rankings.

For FNP, which uses Amazon Web Services (AWS) as the hosting platform, latency is critical as it directly affects user experience, engagement, and conversion rates. Ensuring low latency is not just a technical necessity but critical for customer satisfaction and retention, added Sharma.

Software company Gigaspaces said that over 10 years ago, e-commerce giant Amazon identified that every 100 milliseconds of latency cost it 1% in sales. Similarly, in 2006, even Google realised that an extra 0.5 seconds in search page generation time led to a 20% drop in traffic.

Different studies highlight that a website’s speed is directly proportional to the conversion rate with the same increasing by 1.05, 1.1 or even 1.2 times with the rise in site performance.

Milliseconds make millions, as per professional services firm Deloitte. In a study conducted by the company, a 0.1-second speed improvement in mobile sites led to an increase in retail conversions by 8.4% with an average order value increase of 9.2%.

That’s why global companies like Google, SportsShoes.com, and eBay work on latency issues to help increase their conversion rates. In 2019, California-based eBay implemented a series of performance improvements to enhance site speed, which it calls ‘Speed by a Thousand Cuts’, the company blog said.

UK-based sportswear brand Sportsshoes.com with the help of UK-based digital marketing agency Propellernet experimented to understand the impact of load times on conversion rates. Utilizing its real user measurement (RUM) tool, Propellernet collected precise data on SportsShoes.com’s site performance. The findings revealed that visits with faster-than-average loading times were 34% more likely to result in conversions compared to slower-than-average visits. When specifically examining mobile visits, the likelihood of conversion increased even more, reaching 41% for faster-than-average mobile visits.

Measures to minimise delay

E-commerce companies deploy several techniques to ensure speed. These include:

• Focusing on the ease of use and load times before building functionalities over functionalities.
• Ensuring that companies use a CDN (content delivery network) to maximise speed.
• Unloading the heavy images/javascript from the website.
• Regular performance monitoring.
• Optimising websites/ app infrastructure.
• Being vigilant on potential slowdowns during updates.
• Using responsive design, compressed images and files.
• Employing lazy loading techniques.
• Ensuring hosting solutions can handle traffic demands.
• Technologies like observability tools.
• Expanding database inventory during high-traffic periods
• Adding virtual machines (VMs) to an existing cluster of computers to support load.

Keeping loading time under two seconds is what retailers aim at considering the competition, emergence of infrastructure and customer expectations. However, researchers say that even a 100-millisecond delay can hurt conversion rates by over 7-10% and anything over two seconds can increase bounce rates by 103%.

With time, the need for speed will gradually increase as new-age connectivity infrastructure like 6G, satellite-based communications like Starlink from SpaceX, Project Kuiper from Amazon and Taara by Google are already in the works. And brands wanting to sell online will do well to never lag on this front.

A look at the approaches and measures retailers adopt to protect their data and systems

New Delhi: Data is the new oil of every industry, and its management and security are a prime concern. Cyber risk is the biggest threat Indian organisations face with 38% of respondents surveyed by accounting firm PricewaterhouseCoopers (PwC) feeling extremely exposed.

As a result, cybersecurity has jumped two spots from number three to number one on the risk radar compared to 2022 in the PwC’s 2023 global risk survey- India edition.

Retailers who handle an enormous pool of personal and financial data of customers, suppliers, vendors, and manufacturers and facilitate online payments are all extremely vulnerable to data breaches and cyber-attacks.

Minimising risks requires constant monitoring and regular investments in cutting-edge technologies.

Retailer’s approach

Retailers take several measures from access control to the management of crucial passwords and information to safeguard their data.

Pee Safe:  Pee Safe follows industry standards to protect user information. All information gathered on the site is securely stored on the Shopify server and on-premises small business server (“SBS”). “The database is stored on servers secured behind a firewall; access to the servers is password-protected and is strictly limited,” shared Vikas Bagaria, founder, Pee Safe, a personal hygiene company.

Companies like Vinculum Solutions, Klaviyo Inc., Paypal India, and Razorpay Software all help Pee Safe in this regard, Bagaria added.

Tata CLiQ: The company has implemented a strategy that includes encryption protocols for all data, both in transit and at rest, utilising industry-standard encryption methods. “We conduct regular security audits and maintain continuous monitoring to promptly identify and address potential vulnerabilities,” said Gopal Asthana, chief executive officer, of e-commerce company Tata CLiQ.

Asthana added that Tata CLiQ’s security infrastructure comprises robust firewalls, intrusion prevention systems (IPS), and a security operations centre (SOC) to prevent and detect unauthorised access and protect against various cyber threats.

Tata CLiQ conducts regular security assessments and risk evaluations to identify areas for improvement. Critical software and system patches are applied promptly and regularly to address known vulnerabilities, maintaining the resilience of the environment. Continuous monitoring of the threat landscape allows it to stay abreast of emerging threats and update the systems accordingly.

SAR Group: On the various measures used in enhancing security, Saurabh Gupta, Group chief information officer (CIO), SAR Group said, “Measures we use are in the areas of access control, encryption, security information and event management (SIEM), backup management and password management.”

SAR Group is in the business of making inverters and reverse osmosis water purifiers in the brand names Livguard, Livfast and Livpure.

In addition, it conducts regular updates. “Updating cybersecurity measures regularly is crucial in ensuring optimal safety against cyber threats. Changes are made as per defined timelines and the organization policies,” said Gupta.

E-commerce enablers like Gokwik that work with retail companies follow stringent processes to safeguard clients’ interests.

Vivek Bajpai, chief technology officer (CTO), GoKwik shared that the company has embraced a proactive stance by leveraging security tools provided by Amazon web services (AWS), Google, and Sophos that incorporate security features and advanced threat detection mechanisms. “Furthermore, our engagement in the CERT-IN (Indian Computer Emergency Response Team) audit process ensures that our systems are resilient against evolving cyber threats both today and in the future,” Bajpai shared.

Experts also add that identifying and addressing vulnerabilities and conducting regular vulnerability assessment and penetration testing (VAPT) through certified third-party vendors every quarter are other measures that help eliminate potential threats.

The AI Angle

Artificial Intelligence (AI) and Machine Learning (ML) have massive potential in fraud detection. Owing to this, over 48% of Indian enterprises surveyed by PwC are considering deploying emerging technology like Generative AI. Tata CLiQ already leverages AI and ML for fraud detection. The company shared that the implementation of AI-driven behavioural analytics has helped it identify anomalies in user behaviour, enhancing its ability to detect and prevent potential threats. The company adopts a zero-trust model, where trust is never assumed and verification is required from anyone attempting to access resources on the network, adding an extra layer of security to its systems.

SAR Group uses AI to detect threats, prevent them and respond to them. In addition, it uses cloud-native application protection platforms (CNAPP) and threat exposure management (TEM).

“We use a trusted gateway partner that uses secure encryption technology to keep customer transactional details confidential at all times,” added Bagaria of PeeSafe.

“Our AI algorithms contribute significantly to the detection and prevention of fraudulent activities, the automation capabilities of AI extend to certain response actions, enabling swift and precise responses to security incidents without the need for direct human intervention,” added Asthana of Tata CLiQ.

The cost factor

The update and usage of different measures in preventing breaches and theft require a consistent amount of investment in cutting-edge technologies. “We invest around Rs 4 lakh a month in ensuring cybersecurity,” shared Bagaria of PeeSafe.

The PwC survey also found that Indian organisations are ramping up investments in this regard. A considerable 55% of its respondents are planning to invest in cybersecurity tools and AI, whereas others are eyeing investments in the areas of ML and automation.

Around 70% of Indian organisations are gathering and analysing cybersecurity and IT data for risk management and opportunity identification. Globally 61% of the organisations are doing the same.

“Substantial investments have been made to strengthen cybersecurity measures, exemplified by the attainment of ISO 27001 certification—an international standard for information security management,” Gupta of the SAR Group said.

What is PCI DSS?

The Payment Card Industry Data Security Standard (PCI DSS) was established in 2004 by major credit card companies such as Visa, MasterCard, Discover Financial Services, JCB International, and American Express. Administered by the Payment Card Industry Security Standards Council (PCI SSC), this set of security standards is designed to enhance the protection of credit and debit card transactions, reducing the risk of data theft and fraud.

Although the PCI SSC lacks legal authority to enforce compliance, adherence to these standards is mandatory for credit or debit card processing businesses. PCI certification is widely recognized as an effective means of securing sensitive data, fostering trust, and establishing enduring customer relationships.

E-commerce enablement platform GoKwik employs a multifaceted approach to ensuring security for e-retailers it works with.

“At its core, our platform adheres to the payment card industry data security standard (PCI DSS), which sets security benchmarks for companies involved in payment processing, ensuring a secure environment for sensitive card information,” said Vivek Bajpai, chief technology officer (CTO), GoKwik.

The ISO 27001 certification 

This applies to any organization seeking to formalize and enhance processes related to information security, privacy, and safeguarding information assets. It enables organizations to showcase alignment with a recognized framework in terms of people, processes, tools, and systems.