Artificial intelligence is shifting from customer acquisition to conversion optimisation as retailers seek to reduce cart abandonment, improve checkout journeys and personalise payments, according to Deloitte-Shiprocket joint report
Just one to two out of every 100 visitors to Indian direct-to-consumer (D2C) ecommerce websites complete a purchase, highlighting a significant conversion gap that retailers are increasingly seeking to address through artificial intelligence (AI), according to a joint report by Deloitte India and Shiprocket.
The report finds that while 100 consumers enter an online store, only around 40 browse products meaningfully and about 20 add products to their carts. Between six and eight consumers begin the checkout process before the final conversion rate drops to just one to two completed purchases.
AI Moves To Payment, Checkout
The findings indicate that the next phase of competition in India’s ecommerce sector will centre less on attracting website traffic and more on improving conversion rates through AI-powered checkout experiences, payment intelligence and cart recovery.
According to the report, AI can personalise payment recommendations based on consumer behaviour, location and payment preferences, recommend prepaid payment options, reduce checkout friction and predict return-to-origin (RTO) risks. The technology can also automate abandoned-cart recovery and improve customer retention through personalised post-purchase engagement.
The report estimates that wider adoption of generative AI could increase retail profitability by 30-35 per cent, as businesses deploy the technology across product discovery, marketing, checkout optimisation and fulfilment operations.
Tier 3 Markets Lag Despite Higher Checkout Volume
The report identifies smaller cities as the next frontier for conversion-led growth. According to Shiprocket’s platform data, tier 3 markets account for the largest share of checkout volume across its network, although they continue to record lower conversion rates than metropolitan markets. Metro cities report a checkout conversion rate of 41.82 per cent, compared with 37.69 per cent in Tier 3 markets.
The report attributes the gap partly to payment preferences. While prepaid transactions account for 52.68 per cent of purchases in metro markets, the share falls to 38.19 per cent in tier 3 cities, where cash-on-delivery continues to dominate.
According to the report, brands that tailor checkout experiences to regional payment behaviour and consumer preferences are likely to unlock higher conversion rates in these markets.
Focus Shift From Traffic To Conversion
The report argues that AI adoption is moving beyond customer acquisition towards improving efficiency across the entire commerce journey. Rather than relying solely on search engines and marketplace listings, businesses are increasingly using AI for personalised product discovery, conversational commerce, payment optimisation and fulfilment management
It also notes that more than 60 per cent of India’s online shoppers are expected to come from tier 2 and 3 cities by 2030, making vernacular content, AI-driven recommendations and localised shopping experiences increasingly important for retailers seeking future growth.
According to the report, customer acquisition costs continue to rise; improving conversion efficiency through AI-led personalisation and checkout optimisation will become a key competitive differentiator for ecommerce businesses.
