AI-Driven Marketplace: How Algorithms Are Becoming the New Merchandisers

The integration of AI into digital marketplaces is changing the way products are merchandised, bought, and sold today. The AI-driven algorithms are optimising business operations while enhancing the consumer experience. It slowly becoming a central technology for Indian businesses in 2025. A recent report indicates that 98% of Indian business leaders have made AI adoption a top priority for the year, and nearly 80% of surveyed Indian organisations plan to implement AI agents in 2025. This decision is driven by the recognition that AI can deliver operational efficiency, better decision-making, and improved customer experiences. Around 84% of Indian companies are also prioritising skill development to maximise the value of AI integration. This enthusiasm is persistent across sectors, from retail to finance and manufacturing.

Today, several Indian companies are leading the AI-driven market trends. For example, Persistent Systems specialises in AI for healthcare, finance, and retail, offering machine learning and analytics solutions. Infosys provides AI-powered automation and analytics through its Infosys Nia platform. Tata Consultancy Services (TCS) delivers cognitive AI solutions for banking, retail, and manufacturing. Reliance Industries is building AI supercomputing capacity in partnership with NVIDIA, which is the leading hardware manufacturer for AI. Then there are startups like Blend, which are using generative AI to help e-commerce merchants create and edit product visuals instantly, boosting digital marketing and social media campaigns. Rephrase.ai enables the creation of video content from text.

AI is also helping Indian retailers predict demand with intelligent inventory management systems, identify slow-moving SKUs, and optimise stock levels months in advance. Companies make use of the cloud-based AI platforms to forecast which products are likely to become obsolete, reducing capital tied up in unsold inventory. Both Flipkart and Amazon India use AI that analyses millions of data points for predictions. They deploy recommendation engines that anticipate consumer preferences to present personalised product suggestions, which has led to increased customer satisfaction and higher conversion rates. Similarly, Swiggy’s AI enhancements include improved search and voice query capabilities, while Zomato’s Blinkit uses generative AI to suggest recipes based on user searches. They plan to further the AI usage into product photography and customer support. The fitness app HealthifyMe has also launched an AI-powered virtual nutritionist, ‘Ria’, and is using generative AI to provide advice to users and support nutritionists and trainers.

The predictions allow even small retailers to compete with larger players by minimising losses and improving cash flow. India has 65 million MSMEs, but only 5% have a website. Platforms like Vyaparify use AI to help small businesses move online. For these MSMEs, AI automates financial and inventory management tasks such as invoicing, expense tracking, and procurement decisions. Predictive analytics optimise inventory levels, reduce stockouts, and increase profits. Despite concerns about initial investments, the long-term benefits include reduced errors, time savings, and better pricing strategies.

The role of human merchandisers is changing as algorithms take on traditional merchandising tasks. AI tech is acting as a bridge between online and offline retail channels as chatbots carry out conversational commerce, guiding customers on mobile apps, websites, and physical stores. This integration of a brand-specific AI model gives customers a personal touch and promotes a brand feel when shopping. As a result, professionals now focus on setting strategic objectives and overseeing AI-driven processes instead of spot decision-making. Human intervention is reserved for special scenarios such as time-bound promotions or handling ethical considerations like data privacy and algorithmic bias.

Indian companies are investing in upskilling employees, with a strong focus on both technical and soft skills. More than 60% of HR professionals believe AI-powered tools can make hiring faster and easier, but the full potential of AI is realised only when businesses have the right talent to use these tools.

Algorithms are becoming central to merchandising in digital marketplaces. AI is delivering measurable improvements in personalisation, inventory management, and operational efficiency. In India, the adoption of AI is growing across sectors as companies of all sizes are using it to gain a competitive advantage. In the coming times, the intervention will focus on strategic oversight and ethical deployment of AI-driven marketplaces. Moreover, AI adoption will bring challenges such as data privacy and algorithmic bias. Companies must balance innovation with ethical considerations in AI-driven decisions.

Written By -- Dipal Dutta, CEO, RedoQ

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