How to Improve Customer Engagement with Generative AI

Ways in which retail businesses can embrace generative AI to create hyper-personalised, seamless conversations to secure a lasting competitive edge in the marketplace.

- Phygital Bureau

India is undergoing a rapid digital transformation, with over 650 million Indians now active on social media platforms like Facebook, Instagram, and YouTube, and messaging services like WhatsApp.

Despite this massive online presence, only 30% of users around 200 million-currently shop online. A similar trend is observed among small merchants, where just 15% of the 30 million formalised small businesses registered on the Udyam portal are selling online.

With many future online shoppers and sellers already within the digital ecosystem, India presents a significant untapped opportunity for businesses looking to expand their reach.

The Challenge of App Adoption

Most apps and services currently target 200 million digitally savvy users. However, beyond top categories like social media, messaging, entertainment, Unified Payments Interface (UPI), and horizontal marketplaces, app adoption is limited. Even in highfrequency categories such as grocery, banking, and mobility, monthly active users rarely exceed 35 million. App fatigue is also setting in, with 65% of savvy digital users expressing frustration with app downloads and 40% abandoning purchases when pushed to install new apps. The next 450 million non-savvy digital users remain hesitant to adopt apps due to a preference for assisted shopping, limited phone storage, and difficulties navigating app interfaces. As a result, the app-led model may plateau beyond the top 50 million to 100 million customers, prompting businesses to seek new ways to acquire and engage customers.

The Rise of Conversational journeys

One promising avenue is the implementation of chat-based assisted journeys, or conversational journeys, on platforms with high user engagement like social media and messaging services. Consumers are already informally interacting with businesses-both small and large-through these platforms.