AI-Powered E-commerce Braces for Festive Season Surge

As the 2025 festive season in India approaches, e-commerce and retail companies are prioritizing the use of artificial intelligence (AI) in their strategies. The coming three months will be a crucial test to see if autonomous AI agents can effectively manage the surge in demand during this period.

The festive season also coincides with the rationalisation of goods and service tax (GST) on consumer goods and easing of income tax, measures expected to boost consumer spending on durables, electronics, and personal care items. To capture this demand, companies are relying heavily on AI to adjust supply chains, ramp up production, tweak prices, and roll out new products in real-time.

According to industry data, 73% of consumers say AI improves their shopping experience, and the global AI-powered e-commerce market is expected to reach $8.65 billion by 2025. Indian players like Nykaa and Myntra are already using AI to enhance customer experience, improve product discovery, and streamline logistics. Nykaa, for instance, has more than 40 GenAI initiatives active across various functions and expects a 30% gain in productivity this year, with AI writing nearly half its software code by the end of FY26.

The use of AI in retail is evolving beyond traditional time-series forecasting, with companies now leveraging real-time data and AI agents to anticipate and respond to shifting consumer demand at the pin-code level. However, companies are treading the automation wave cautiously, as risks of hallucinations and algorithmic bias persist. The next three months will be a crucial test for e-commerce firms to harness the transformative potential of AI while mitigating the associated challenges.