With the Indian e-commerce market projected to grow from $112.93 billion in 2024 to an astounding $299 billion by 2029 at a 21.5 per cent CAGR, the influence of these algorithms is only set to deepen. (Photo: Pixabay/Preis_King)
Sanya Sodhi
Dec 16, 2024 15:59 IST First published on: Dec 16, 2024 at 15:56 IST
Recently, I decided to invest in a good pair of running shoes. Aware of how e-commerce algorithms can influence purchasing decisions, I resolved to bypass the digital shopping traps and shop the old-fashioned way. Determined to outsmart the system, I went to a Nike store. After spending 40 minutes trying on various models with the help of a well-meaning salesperson, I walked out with a pair of shoes.
On my first run, however, I realised that the shoes were the wrong model, too small, and significantly more expensive than I anticipated. Ironically, had I trusted the hyper-personalised online recommendations, including the suggested size of 37.5, I might have ended up with the perfect fit.
With the Indian e-commerce market projected to grow from $112.93 billion in 2024 to an astounding $299 billion by 2029 at a 21.5 per cent CAGR, the influence of these algorithms is only set to deepen.
E-commerce platforms no longer just respond to consumer demand, they increasingly create demand, with the help of hyper-personalised marketing algorithms.
The holiday season amplifies this effect. Sale offers combine algorithmic precision with psychological triggers such as scarcity and urgency. For example, flash sales with countdown timers or “only 3 left in stock” notifications exploit our fear of missing out (FOMO) and other cognitive biases, nudging us toward purchases we might not have considered otherwise.
In India, the easy availability of credit, supported by buy-now-pay-later (BNPL) schemes and low-interest offers, has significantly boosted the purchasing power of young professionals. According to the Reserve Bank of India, credit card spending surged by 27 per cent in FY24, with online transactions growing by 20 per cent in March 2024 alone. This surge is largely driven by millennials and Gen Z, who are increasingly embracing digital payment methods.
At the same time, personalised marketing has become a key driver of consumer engagement. A KPMG study reveals that 68 per cent of Indian consumers appreciate personalised recommendations and are more likely to engage with brands that offer tailored experiences. These algorithms track our browsing history, preferences, search patterns, and even the time we spend lingering on specific products. By doing so, they often surpass human expertise, offering an undeniable convenience that saves time and reduces decision fatigue.
But this convenience comes at a cost: Autonomy. When our choices are so heavily influenced by targeted ads and recommendations, the line between free will and manipulation becomes increasingly blurred.
The growing influence of algorithms on consumer behaviour has raised concerns about privacy, data misuse, and ethical marketing practices. A significant example is Shein, the fast-fashion e-commerce brand, which has faced criticism for its data collection practices and its potential to create addictive consumer loops. In 2020, the Indian government banned Shein over concerns about data security and its implications for national security. This ban sparked a broader conversation about the need for regulation around data privacy in e-commerce.
India’s newly enacted Digital Personal Data Protection Act, 2023 aims to address these concerns by regulating how companies collect and use personal data, while also preventing misuse by tech platforms. By enforcing stricter rules on data localisation and transparency, the Bill seeks to address some of the ethical dilemmas surrounding personalised ads and consumer manipulation. As for Shein, the platform is set to make a comeback in collaboration with Reliance Retail soon.
As algorithms grow more sophisticated, the power to influence consumer behaviour is only going to increase. And while we cannot entirely escape the digital systems shaping our choices, we can choose to be more mindful of them. Understanding how personalisation and targeted ads work is the first step in reclaiming some of our autonomy.
Next time you’re faced with an online purchase, pause and ask yourself: Is this something I truly need, or is it something the algorithm thinks I must have?
It’s time to start making smarter, more intentional choices in the digital marketplace. The algorithms are learning from us; maybe it’s time we learn from them too.
The writer is a public health professional working at the intersection of women’s health and artificial intelligence
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