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As Indian E-Commerce Explodes, Players Invest in AI, Robotics and Blockchain

India’s e-commerce scene is exploding as millions are expected to upgrade from basic feature phones to smartphones loaded with all of the capabilities needed to participate in online shopping on the go, in the very short term.

Though just 35 percent of India’s population has access to mobile internet and 871 million (out of a total 1.3 billion) remain unconnected, according to data from International Data Corporation (IDC), the country’s rapidly expanding middle class is poised to drive these numbers in a positive direction. In fact, IDC expects India to add 102 million more smartphone users by 2022 over the 340 million with smart mobile devices in use today.

PwC’s May 2018 TechWorld report said the number of online shoppers in India is expected to grow 2.5x by 2022 over 2017, and reach a market value of $100 billion. What’s more, perhaps Walmart’s recent $16 billion investment in startup FlipKart—and triumph over bidding rival Amazon—demonstrates the strength and potential of India’s emerging digital commerce market.

Sensing the lucrative opportunity, retailers are working to improve their offerings, investing in areas such as table stakes like e-commerce platforms and marketing automation (83 percent apiece) to supply chain management (70 percent) and mobile commerce capabilities (66 percent).

However, PwC said some firms are going a step further and overhauling their strategies in order to ensure a “competitive edge.” Like their U.S. counterparts, forward-thing e-commerce players are investing in the kinds of experiential tech that offer an elevated experience for consumers. Examples of these investments include devoting resources to artificial intelligence (AI) and robotics in an effort to trim product return rates, eliminate fraudulent transactions, and reduce spend on logistics. Yet others see AI’s potential to accelerate voice-based shopping, especially where rural and older shoppers—who commonly face language and dialect barriers—are concerned, PwC said.

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Data and analytics are helping some e-commerce firms optimize inventory by keeping stock levels low while improving efficiency and productivity. Plus, online retailers are looking at blockchain’s potential not just to aid with fraud detection. “With the rise of FinTech and a vast amount of private data being hosted online, blockchain and AI are helping companies determine authenticity in multi-party transactions and expedite payment settlement,” PwC said.

This is not an insignificant consideration, with cyberattacks on the rise in the Asian nation, which set a dubious record last year. “According to research from the Ponemon Institute, in 2017, India recorded the largest average number of breached records at 33,167 (global average = 24,089)…” PwC said.

With the low barriers to entry in the e-commerce market, companies that fail to gain consumers’ trust will see shoppers flee to competitors. “With increasing regulatory pressure and severe strain on the bottom line, businesses that offer a secure and robust online shopping experience will have a competitive edge over others,” PwC said. “As the government considers introducing a national e-commerce policy and is in the process of updating the cyber security policy (last update in 2013), e-commerce companies will need to take a hard look at their business models, internal safeguards and processes to ensure customer data privacy, and assess their susceptibility to risks to ensure scalable growth in the future.”