By: Rubal Sahni, Area Vice President & Country Manager India – Confluent
As AI technologies become increasingly sophisticated, startups in the retail industry are rapidly evolving. By integrating GenAI and real-time data, they are now able to enhance customer experiences, streamline operations, and drive growth. Within the retail sector, this transformation has had a lasting impact on online shopping and consequently led to the rise of D2C brands.
However, the true power of AI in retail hinges on the availability of high-quality data. Without accurate and reliable data, AI will generate misleading results that could affect a business’s reputation. To excel in the coming decade, startups must focus not just on AI but also on real-time data management.
Transforming customer experience
Driven by AI and real-time data, many startups have been able to not just enhance their operational efficiency, but also provide personalised customer experiences. This has been possible as AI analyses vast amounts of data and provides insights into customer behavior and preferences.
AI-powered chatbots are becoming more advanced and sophisticated. Today, they no longer provide scripted answers to queries from customers. Instead, they can hold seemingly natural conversations and provide real-time support and guidance. In a recent survey, 72 percent of respondents claimed to have used AI-enabled chatbots, which indicates a shift towards a more interactive shopping experience. In fact, another report expects the global chatbot market to reach $123 billion by 2025, with a 24.3 percent annual growth rate.
The AI-driven chatbots are exposed to a constant stream of data. By analysing every conversation, the chatbot learns and adapts, offering increasingly relevant and personalised responses. This translates to happy customers who get help when needed and happy businesses, as they get valuable insights into customer needs and preferences. A case in point is the popular personal care and beauty platform Nykaa leveraging AI-driven chatbots to solve customers’ issues and improve engagement. Over 90 percent of customers who engaged with the AI-driven chatbot rated the conversations as either highly favorable or excellent.
Lenskart, an eyewear retailer, has been leveraging AI to provide virtual try-on features. By using real-time data from customers’ facial scans, Lenskart provides personalised recommendations to its customers. The retailer’s 3D AI algorithms can recommend glasses that will complement the customers’ facial features, thus reducing the time needed to find that perfect pair of glasses.
Meesho, one of the prominent e-commerce platforms in the country, is using data streaming technology to enhance seller and customer experiences. Real-time data streams allow Meesho to analyse trends, optimise product recommendations, and provide dynamic pricing insights, enabling personalised shopping experiences, and helping sellers make data-driven decisions to boost sales and engagement.
Avoiding the pitfalls of poor data
While retailers may be looking to harness the potential of AI, they need to understand the importance of data, and that AI is as good as the data that it is fed. AI may be able to create a personalised shopping experience based on what customers buy and browse for online. However, if this data – comprising information about customers, the products, and their past purchases – is incomplete, the recommendations made by AI will not be accurate.
Thus, data plays a critical role in the success of AI adoption and implementation. Without accurate, comprehensive, and unbiased data, AI tools can produce misleading results, leading to poor customer experiences and damaged brand reputation. Businesses and brands must first put in place robust data management practices, including data cleaning, validation, and enrichment. Only with a strong data foundation will they be able to harness the full potential of AI to drive growth and customer satisfaction. For Indian startups, customer loyalty is paramount, and thus, maintaining high data quality should become a priority.
Future of AI in Indian retail
There is no doubt that the role of AI in retail will grow further and D2C startups are in the prime position to capitalise on this opportunity. A report suggests that by 2025, 20 percent of the top global retailers will use distributed AI systems to optimise operations and get holistic results and that 45 percent of marketing leaders plan on investing in GenAI over the next two years.
Future applications, enabled by mixed reality, advanced analytics, and IoT, may include advanced visual merchandising, trend analysis for new product development, and virtual try-on features in augmented reality. However, the foundation of these innovations will always be high-quality, real-time data.
Startups are sitting on a data goldmine. The retail industry generates 40 petabytes of data every hour of data. But this data is siloed, locked away in different systems. This means that businesses can only see a small piece of the puzzle when it comes to understanding their customers. To fully utilise the power of AI, retailers need to integrate all data – in all formats and from multiple sources – and standardise the format to uncover valuable insights to improve their business.
In the dynamic and diverse Indian retail market, the synergy between real-time data and AI is creating unprecedented opportunities. Indian startups are at the forefront of the AI revolution in the sector. By focusing on high-quality, real-time data management and innovative AI applications, Indian retail startups have the potential to reshape the retail landscape in India and beyond. As they continue to grow and attract investment, we can expect to see even more groundbreaking innovations that cater to the unique needs and preferences of Indian consumers. But whether we are talking about today or tomorrow, retailers need the right data, right now.
