Enterprises in the retail sector have started deploying various new-age technologies and solutions to streamline their operations and enhance business efficiency. New technologies such as artificial intelligence (AI), the internet of things (IoT), virtual reality (VR), augmented reality (AR) and robotics are being used to provide a personalised experience to customers and offer customised products and services. The Covid-19 pandemic has further provided a boost to this trend towards digitalisation, with companies having to innovate and come up with new or altered offerings to continue serving their customers while maintaining social distancing norms. This digital transformation has, no doubt, come with its own set of challenges, but organisations are meeting them by adopting new business models and amending their ways of working. Industry leaders share their views on how information and communications technology (ICT) is transforming the retail sector, the various opportunities and challenges that this transformation presents, and the way forward…
What are the key ICT trends dominating the retail sector? How has been the adoption of next-generation technologies such as AI, IoT, robotics and AR/VR in India’s retail sector?
Retailers of today are using the most advanced technologies to provide their customers with the best shopping experience and increase their footprint and customer base. With the help of quality IoT and AI technologies, long-standing traditional retail processes are being altered, through the arrival of new-age services such as product customisation, in-store navigation and even contactless trial amidst the Covid-19 pandemic. These offer significant advantages such as reducing the operating costs of retailers and offering engaging, safe and immersive experiences to their consumers. Other trends in the sector include the facilitation of virtual commerce through in-store VR offerings and even training the retail staff through special AR/VR tools to enable skill enhancement, and in turn, increase sales.
The overall landscape and technology trends, particularly during 2020-21, revolved around the uptake of emerging technologies such as big data, cloud computing and cloud engineering, and payment options. Data engines are being developed using these technologies. Meanwhile, payment has become very critical and work is being done on the integration of payment options. At Ferns N Petals (FnP), we are working on creating our own wallet, integrated with most of the state-of-the-art payment options such as Google Pay or PhonePe.
Further, customisation and personalisation have become a vital part of the strategy in the e-commerce space. Personalisation is happening with regard to creating a complete system or a complete environment, that is personalised for respective users. Product discovery is already a challenge for users and to address this, companies are deploying emerging technologies for a smooth product discovery. Customers can now search for a product using a voice search or image-based search. Solr is an extensive search engine, which allows mechanisms such as image-based search or voice-based search, voice-to-text and text-to-voice translation. IoT is also making inroads in product discovery. Almost a year back we had gone live with Alexa integration, which enables users to not only search but also complete the entire order, using Alexa only. Product virtualisation has also picked up pace. Ever since the Covid-19 pandemic, retail has been shifting online and companies are deploying solutions such as AR, VR, 3D view and 4D view to give consumers the same offline experience through online. Another important thing is content dynamism, wherein you give complete control to your business administrators to command the overall content part and also edit personalised content for a user. With this, technology-based systems can control the overall interface and determine what kind of content requires to be displayed on any kind of condition. It can be demography based, or geography based and so, content dynamism is another thing happening in this period. Since FnP is a kind of portal where we have both online as well as offline presence, a lot of omnichannel integration is also happening. We are currently working on something new to integrate both offline and online stores. At present, when you enter an FnP store, it does not have a catalogue such as the one available online. So, this attempt is a complete marrying of online and offline.
Another important thing that is happening is innovation in terms of how the product is being offered to customers. Thus, a lot of innovation is happening in terms of creating a tool that can offer superior customised and personalised technology-based solutions. Because of the pandemic and otherwise also, the online user base is also increasing, which means we need to scale up faster, and at the same time work on the performance of the offline backbone.
The e-commerce industry has seen a massive uptake since the Covid-19 pandemic hit the nation. The first wave reinstated the need for ready availability of essentials at the customers’ doorstep and the need was further reinforced during the second wave of the pandemic. Today, almost all online businesses are ramping up their tech infrastructure to ensure easy accessibility and customer engagement. As a result, AI, machine learning (ML), IoT, robotics and AR/VR are being increasingly used across all customer-facing and operational processes to ensure efficiency. Moreover, these technologies are being implemented to effectively communicate and engage with customers.
According to a report by the International Trade Administration, India’s ICT market is projected to grow to $350 million by 2025. With the rapid digital transformation in the country in the backdrop of the pandemic, this growth is further expected to accelerate. As India’s home-grown e-commerce marketplace, Flipkart has a deep understanding of changing customer behaviours and has been agile and resilient in enabling digital inclusion, in line with the dynamic external scenario. With tech innovations such as Voice Search, Vernacular Language interfaces and Voice Assistant, Flipkart’s role has been pivotal in catalysing the growth of e-commerce in the country and making the purchase journeys of customers seamless.
What are the key technologies being adopted by your organisation? How did ICT/digital solutions help in overcoming the impact of Covid-19 on your business and operations?
To meet the growing demands of the industry our 25,000 square foot central warehousing facility in Ahmedabad has been completely automated, in order to create the best future-ready products. All its functions, ranging from sourcing fabric and manufacturing to demand forecasting and supply, are augmented with in-house technology. During Covid-19, we expanded further to develop our own advanced software for our warehouse and streamline operations, RADIANT (for in-house operations) and LEVANTRO (for manufacturing). We also use the warehouse management system to further enhance our efficiency and reduce manual error.
Looking back at March 2020, when everything was absolutely pulled down, there was no retail business and FnP products depended on offline deliveries. So, we had to be innovative to survive and continue our business. And so, we started digitalising our products. We started selling digital cards or digital products, which means a voice-based product, which was all automated. Second is the digitalisation of the product in terms of cards. So, we created 3D printed or 4D cards, wherein you can upload your images and the system was capable of creating digitalised cards. Thus, we entered into product innovation and once things got normal, we started working on other things such as the overall automation of logistics, supply chain and inventory management.
Innovation has been the key theme for 2020 and 2021. Businesses, irrespective of the sector, are increasingly incorporating innovative tech solutions to scale up to meet the increase in demand, to streamline various operational processes and offer greater ease of communication to internal stakeholders. And the pandemic offered a unique opportunity to rapidly test newly developed technologies at scale to check their efficacy.
At Flipkart, we are constantly cultivating a “culture of innovation”, where we are working towards bringing more robustness into our operations, while making it agile. We use technology at every stage of our operations, ranging from seamless navigational experience on the platform to product purchase, inventory management to quality checking and managing end-to-end supply chain using automation, AI and various other new-age technologies.
In warehouse management and supply chain, automation plays a significant role due to multiple nodes such as fulfilment centres, sorting and planning, delivery hubs and last-mile delivery to customers. We have also introduced automated guided vehicles (AGVs) in our sorting centres to efficiently sort thousands of packages, based on their destinations. From providing customer and seller support remotely to building new capabilities such as vernacular, voice, video and games, we have extensively used new-age technologies in our operations to provide a seamless e-commerce experience to millions of customers across the country.
During the outbreak of the pandemic and subsequent lockdowns, we were able to forge relationships with other retailers and cab operators to ensure that customers were able to purchase their essentials through Flipkart in a seamless manner. What it meant was that customers could look for products on the Flipkart app and the same would be delivered at their doorstep from their nearby modern retail store. We also introduced a contactless payment feature at the customers’ end to contribute towards the fight against Covid, while also bringing more people into the digital payments fold.
What are some of the challenges faced while deploying new-age technologies?
Initially, when implementing a system, one always runs into minor operating difficulties. However, we believe in swift execution and always make it a point to solve any immediate run-time errors, in order to quickly resolve hurdles that can derail daily operations. There are always a few minor unforeseen situations when deploying a new technology on a grand scale; through our in-house tech team, we instinctively make quick management decisions to eliminate any ground-level issues and monitor the situation in the early days of implementation.
The biggest challenge is knowledge acquisition and knowledge development. When you move towards a new technology and you find a problem, which can be solved using the new technology, then you need to acquire the knowledge also. So, the entire rigorous process of training is a challenge and I think it is for the entire industry. Then it leads to talent acquisition and talent retention because you spend time and cost, developing the knowledge and then talent moves and we do not get the right talent because the market is so open.
Another challenge, is spectrum compatibility. Sometimes when you build a new system, you don’t know how compatible it would be with various other devices, as there are new devices and software that are being introduced every day. People are now consuming your platform in Tier 2 or Tier 3 cities, where there is low or limited bandwidth. When you build a new system or adopt a new technology, then maintaining that technology and building the right guidelines, right practices, and right standards are also difficult. So, when you adopt something new, maintenance of that becomes very challenging for you. At FnP, we are still working in terms of creating the right standards, right adherence and right practices for the technology team, so that whatever we are building also remains scalable.
Another challenge is security threats or fraud monitoring. As we are introducing a lot of new payment options, a lot of things are in experimental mode, wherein other overhead security checks or fraud monitoring become challenging. Another challenge is that when you are adopting new technologies or building new systems, you have to integrate them in such an order that they remain scalable. So, robustness and scalability of a new system is also a challenge, which many a time is not successful. So, we have spent lots of time in terms of rearranging our existing system to make it highly compatible and flexible in terms of new tools and new technologies.
Then, technologies such as AR, VR and data science are becoming the new normal in terms of adoption, but at the same time, it leads to a new challenge in terms of overall capability. With limited bandwidth, you need to be focused on meeting the challenge.
The current times have given birth to hyper-focused consumers, where they seek more, and technology companies are rising to the occasion to deliver value and customer delight. It is extremely crucial for e-commerce marketplaces to evolve with the customers, especially in the current scenario. The pandemic has altered consumer behaviour in a significant way, which has forced businesses to rethink and reinvent their operating models to stay relevant.
With the Covid-19 pandemic, various challenges as well as opportunities have emerged in the e-commerce space. The current era demands organisations to be nimble and agile to act according to the changing business scenarios in order to stay relevant. Focusing on the sole benefit and value addition of customers ensures inclusive sustainable growth of the entire e-commerce ecosystem. The first step towards building a simple and resilient business is to have a robust tech infrastructure, which can sustain a large amount of spikes in operations. To achieve this, companies should focus on the interplay of three areas: an organisation that can adapt quickly, applications that can adjust to the changing needs and an IT infrastructure that is reliable and scalable.
Going forward, what technological trends are expected to shape the sector?
VR is all set to dominate the future of the retail industry. The promise of something new is always appealing for the modern shopper, and with unique offerings such as planning, design, research and never-seen-before customer experience, VR is all set to bring a fashion revolution. Additionally, according to Goldman Sachs, the market for AR and VR in retail is set to reach $1.6 billion by 2025. As many as two-thirds of the internet users would be interested in VR and this would completely change the futuristic retail sector in favour of this upcoming technology.
Now everything is becoming a service. Infrastructure is becoming a service; software is also becoming a service. So, there can be new innovations, where everything will become a service.
A lot of focus is there on the payment side, so I think the pre-integration of POS with e-commerce platforms is something next on the cards and lots of work is already happening.
Further, there would be an automated system for inventory management. FnP is currently automating its warehouse system and working on the overall inventory management system. Further, lots of IoT- and robotics-based solutions are being deployed in offline systems such as in logistics and supply chain management. In other countries, people are experimenting with drone-based deliveries and it can be the future for India also. Personalisation is something that is ever-extending and it will keep evolving on a much larger scale. The industry is also working on a buy-online pick-offline kind of system.
These are exciting times for technology companies as customer appetite for experimenting with new products and solutions has never been higher. Capabilities such as AR and VR, conversational commerce and personalisation will play out as key trends in the coming decade. These front-end technologies will be complemented with a robust and agile back-end infrastructure, which further enables effective business continuity planning.
At Flipkart, our systems have been designed to equip employees with the ability to carry out tasks even during disruption, and while working remotely, they have been able to serve consumers seamlessly during this period. Such agility, resilience and dynamism brought by technology will reinforce companies’ faith in their capability to help the organisations sail through any unforeseen circumstances.