The e-commerce sector in India has seen a remarkable growth since the pandemic and is driven by increasing internet penetration, smartphone usage, and an expanding middle class. E-commerce marketplaces are rapidly adopting emerging IT technologies to stay competitive and for meeting the evolving demands of consumers. These technologies include Artificial Intelligence (AI) and Machine Learning (ML) for personalised shopping experiences, while the Internet of Things (IoT) enables real-time inventory management and smart warehousing.

Big Data and analytics provide deep insights into customer behaviour, optimising marketing strategies and enhancing user experiences. Mobile commerce (m-commerce) focuses on mobile-first strategies, ensuring a seamless and responsive shopping experience, while robotics and automation streamline warehouse operations, increasing efficiency and reducing operational costs.

Battling risks

Though these technological advancements provide agility, scale and cost advantage they also expose the companies to significant IT risks.

Cybersecurity threats, such as data breaches, phishing attacks, and malware, pose a serious risk to e-commerce platforms. To mitigate these risks, companies are implementing robust cybersecurity measures, including encryption, multi-factor authentication, and advanced threat detection systems.In addition to guarding against cyber threats, e-commerce companies must also navigate the complex landscape of data privacy regulations, like GDPR and the Personal Data Protection Bill which require strict compliance. E-commerce companies are adopting strong data governance policies, ensuring customer data is anonymised and protected.

System downtime also presents a big business risk to e-commerce companies. An e-commerce business is typically a large-scale operation with a massive codebase, millions of daily users and high web traffic. As such, system downtime and performance issues are a very real concern. Downtime during high traffic periods can lead to lost sales and customer dissatisfaction. To mitigate this, a scalable cloud infrastructure, content delivery networks (CDNs), and regular performance optimisation to help manage traffic spikes and ensure optimal website performance can be considered.

The applications developed and managed in-house need to continuously evolve to not only support the agile business but also get customised as per customer needs and feedback. E-commerce companies rely on DevSecOps process to enable this agility where enhancements are continuously integrated and deployed along with close monitoring of the security aspects in this process. Commonly used tools for this include GitHub, GitLab, Azure DevOps and Jenkins. The adoption of these technologies is not just a trend but a strategic necessity for staying competitive in a fast-evolving market.

Complex endeavour

Running an e-commerce operation across multiple geographies, thousands of products, and millions of users is an inherently complex endeavour. This complexity is further exacerbated as e-commerce companies typically use several applications to manage their business operations. These include third party services that feed real-time information through APIs, home-grown applications managing revenue that support the website and mobile applications, ever evolving product catalog and inventory and finally ERP that forms the core accounting application.

These applications require seamless integration to ensure real-time data feed and recording of huge volume of transactions. Integration challenges arise when incorporating third-party services, leading to system incompatibilities and data synchronisation issues. Standardised APIs and middleware solutions facilitate seamless integration and efficient operations. Additionally, the dependence on third-party services for critical operations can lead to potential disruptions. Diversifying suppliers and establishing service level agreements (SLAs) with vendors ensure reliability and continuity.

Payment fraud and identity theft are significant concerns in the e-commerce sector. Advanced fraud detection systems, secure payment gateways, and compliance with PCI DSS standards are essential for mitigating these risks.

Advanced and upcoming technologies like AI and ML algorithms, while powerful can potentially result in a bias thereby leading to unfair recommendations and decisions. Regular reviews, broader data sets and ethical guidelines can help in mitigating these risks and ensure appropriate outcomes. Efficient data management is crucial for handling vast amounts of customer data to make AI and ML models more reliable, accurate and less prone to hallucinations in order to ensure a seamless customer experience.

While adoption of emerging IT trends has enabled e-commerce marketplaces in India to stay competitive and scale up their business, it has also given rise to substantial IT risks that require vigilant management. Companies must improve their overall internal controls framework, adopt robust cyber security measures and ensure compliance with data privacy regulations. Tracking latest technology trends and adoption of flexible IT architectures will help e-commerce companies to sustain in a rapidly changing and competitive landscape. By effectively addressing these challenges, e-commerce companies can achieve sustained growth and continue to deliver exceptional customer experiences in the dynamic Indian market.

The writer is Partner, Deloitte India

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