Evaluating the Impact of Artificial Intelligence on E-Commerce: A Comprehensive Analysis of Customer Experience and Behaviour

Evaluating the Impact of Artificial Intelligence on E-Commerce: A Comprehensive Analysis of Customer Experience and Behaviour

Harsimran Kaur1, Dr. Renu2

1TMIMT,Teerthanker Mahaveer University ,Moradabad,Uttar Pradesh ,India 2TMIMT,Teerthanker Mahaveer University ,Moradabad,Uttar Pradesh ,India harsimrankaur21210@gmail.com, Renukaushik87@gmail.com

ABSTRACT

Artificial intelligence in e-commerce involves utilizing innovative technologies to enhance the online shopping experience. It assists businesses in understanding customer preferences, responding to inquiries through chatbots, and predicting future trends to create a more efficient and personalized shopping experience. This study evaluates customers' benefits, challenges, data privacy, and decision-making power regarding AI's impact on e-commerce. For this research, data were collected and analyzed using questionnaire methods. The questionnaire was distributed among customers to gather insights about their experiences with AI in e-commerce. The sample size for this research is 40 customers, and a convenience sampling method is used to select the samples. The collected data is been analysed and interpreted. The conclusion that can be drawn from the research is that AI impacts customers' decision-making at the time of purchasing a product. Product recommended by AI helps 53% of the customer in influencing their purchasing decision. 46.4% of customers among the sample size say AI-powered customer services are reliable. A maximum of customers using

e-commerce platforms are influenced by AI, and have privacy concerns about their data.

KEYWORDS: – Artificial intelligence, e-commerce, customer satisfaction, purchase decision making

INTRODUCTION

Artificial intelligence (AI) is emerging as a cutting-edge instrument with various uses in everyday life. Robots that behave like humans and react to voice commands from customers have been made possible by artificial intelligence. Information and communications technology (ICT) companies worldwide have noticed artificial intelligence (AI), which is considered the Fourth Industrial Revolution, after the rise of mobile and cloud platforms.

Technological advancement is a drawn-out process even if it improves our lives.

In technology, "intelligence" typically refers to a system's capacity to use available data, learn from it, form opinions, and adjust to novel circumstances. It implies the ability to handle problems successfully within the constraints and circumstances that exist at the moment. The term "artificial" describes intelligence that is not inherent in living creatures but rather is created by the programming and design of computer systems.

Thus, "artificial intelligence" (AI) refers to the computer and software emulation of human intelligence processes. These systems are made to perform tasks requiring intelligence if performed by humans, including learning, decision-making, pattern recognition, and problem-solving. For example, they can process vast amounts of statistical data, uncover trends, make recommendations based on those conclusions, or even put them into action.

Artificial intelligence and electronic commerce have expanded significantly in recent years. The size of China's online retail business grew more in 2018. The online retail deals reached 9 trillion Yuan. Among them, online retail deals of actual merchandise added up to 7 trillion Yuan, an increment of 25.4% from a year earlier. 45.2% of all out-retail deals of social purchaser products increased, a 7.3% expansion from 2017. (Areiqat, A. Y et.al)

BACKGROUND

9001950 The idea of artificial humans was the subject of many early 20th-century media. To the extent that scientists from various backgrounds started to question if creating an artificial brain would be feasible. Some designers even produced what are now called "robots" (the word was first used in a Czech play in 1921), though the majority were somewhat simple. Some could walk and make facial expressions, but most were steam- powered.

AI's inception: 19501956 Development of AI: 19571979 Boom in AI: 19801987 Winter AI: 19871993

Agents of artificial intelligence: 19932011

From 2012 to the present, artificial general intelligence

Researchers' efforts to comprehend how machines might think similarly to humans in the 1950s marked the beginning of the development of artificial intelligence, or AI. Playing simple games and figuring out math problems were the primary tasks of early AI. Artificial intelligence has evolved through machine learning, where computers learn from data instead of only following current commands. Voice assistants, self-driving cars, and clever e- commerce recommendations are all powered by AI today. Its ascent has been facilitated by more extensive data sets, faster computers, and more complex algorithms, all of which have made it a crucial part of modern technology.

The earliest examples of artificial intelligence (AI) in e-commerce date back to online purchasing, when businesses began utilizing basic data analysis to comprehend customer

behaviour. AI became more potent as technology developed, allowing for personalised product suggestions, chatbots for customer support, and automated marketing campaigns. Shopping is now more effective and frictionless because of AI's steady improvements in visual search, fraud detection, and inventory management. AI continues to influence the future of e-commerce with the growth of big data and machine learning, assisting businesses in improving consumer experiences and increasing revenue.

Problem Statement

The shopping experience is changing due to AI's quick adoption in e-commerce. AI has altered how consumers behave when they shop online. While AI-powered solutions like chatbots, recommendation engines, and predictive analytics are changing how customers engage with brands, little is known about how these developments impact consumer behaviour. Companies find it challenging to balance using AI to increase productivity and preserving customer satisfaction, data protection, and trust, among other issues. By examining several aspects that affect the e-commerce business, this study seeks to understand the complex effects of AI on consumer behaviour.

Research Questions

1. How does AI-driven personalization affect e-commerce customers' preferences and purchasing patterns?

2. How do AI-powered customer support systems affect enduring loyalty and customer satisfaction?

3. Do AI-generated product recommendations result in decision fatigue or higher conversion rates?

4. What aspects affect consumers' confidence in AI-driven systems, and how do they view the application of AI in e-commerce?

5. What are the main worries of customers about data usage and privacy on AI-powered ecommerce platforms?

Research Objectives

1. To examine how AI-powered personalisation affects consumers' decisions to buy.

2. To investigate the effects of AI-powered customer support (such as chatbots and virtual assistants) on customer loyalty and satisfaction.

3. To investigate how AI-based product recommendations affect customers' purchasing habits.

4. To look into how customers feel about and trust AI-powered e-commerce.

5. To determine possible obstacles and restrictions to the deployment of AI from the standpoint of consumer behaviour.

   LITERATURE REVIEW

   Bawack, R. E at.el (2022) say that the study provides a complete synthesis of AI research in e-commerce through bibliometric analysis and carefully evaluating the literature. The findings indicate that Chinese colleges are leading the way in this field and that the most crucial study areas are recommender systems, sentiment analysis, trust, customisation, and optimisation. The study also emphasizes how important AI research is in publications related

   to computer science, AI, business, and management. This paper provides valuable insights for scholars and practitioners by highlighting important research topics and trends. It provides practitioners with a structured resource on using AI to boost e-commerce success, while scholars may use it to propose future research directions to enhance the area.

   Soni, V. D. (2020) studies highlights the increasing significance of artificial intelligence (AI) in e-commerce due to rapid technological improvements and the growth of digital platforms. AI gives businesses useful tools to satisfy customers' needs and adjust to market developments as it continues to shape the industry. It offers insights into its wide range of potential uses for expansion and innovation in the future.

   Chie, L. et al.( 20230) showed results emphasizing artificial intelligence is importance in raising consumer satisfaction in the e-commerce industry. The study illustrates how AI- powered shopping carts, recommender systems, chatbots, and picture search features impact customer experiences and purchase behaviour. The results validate that picture searches and recommender systems are essential for increasing consumer happiness and promoting the adoption of AI applications going forward. Through providing insightful information for researchers, customers, and e-commerce businesses, this study advances our knowledge of artificial intelligence's influence on the digital marketplace and its promise for future innovation.

   Balasubramanian, G. (2024) study emphasizes how chatbots' characteristics affect customer happiness and e-commerce purchase decisions. The results show that while perceived usability and engagement do not significantly affect customer satisfaction, responsiveness is a significant factor. This implies that although usability is vital, chatbots' communication and customer service strategies are more significant in determining the user experience.

   Businesses should improve chatbots' response and communication style as e-commerce grows to improve consumer interactions, increase customer happiness, and encourage repeat business.

   Reddy, V. M. (2023) emphasizes the importance of data privacy and security in e-commerce, requiring robust database solutions to protect sensitive customer information. This study emphasizes key security measures, including encryption, access control, and regulatory compliance, as vital for securing e-commerce databases. Emerging technologies like homomorphic encryption and differential privacy provide promising solutions for balancing data protection with analytical capabilities. This paper thoroughly discusses data security challenges by integrating insights from academia, industry, and regulatory bodies. It offers

   practical recommendations for businesses to reduce risks, enhance customer trust, and ensure long-term success in the digital landscape marketplace.

   Nimbalkar, A. A. et al. (2021) says that by improving user experiences and streamlining corporate processes, artificial intelligence is essential to revolutionising the e-commerce sector. AI-driven solutions, ranging from chatbots and virtual assistants to inventory management and tailored recommendations, help merchants stay competitive in the online market. As technology advances, businesses increasingly depend on AI to improve efficiency, boost sales, and meet consumer expectations. The growing investment in AI underscores its importance in shaping the future of e-commerce, making it an essential tool for innovation and success.

   Omenazu, S. (2021), a study, highlights that AI technology is crucial in transforming the e- commerce industry by enhancing business operations, improving customer satisfaction, and optimizing processes like warehouse automation. While it offers numerous benefits, including increased efficiency and better decision-making, challenges such as high implementation costs, specialized knowledge, and potential job displacement must be addressed. Future research will further explore the applications of AI and machine learning in e-commerce and incorporate primary data through surveys to provide deeper insights into their impact on the industry.

   RESEARCH METHODOLOGY

   The research design for this study employs a descriptive and analytical approach, aiming to evaluate the impact of Artificial Intelligence (AI) on the E-Commerce industry. It integrates qualitative methods to comprehensively understand AI applications, benefits, and challenges within this sector. The study utilizes a mixed-methods approach, combining qualitative insights from existing literature with quantitative data from surveys and case studies. The descriptive aspect of the research emphasizes how AI is implemented in e-commerce, while the analytical aspect explores its effects on business performance, customer experience, and operational efficiency by gathering customer information through questionnaires. Primary data is collected from customers to understand their changing behaviour due to AI implementation in e-commerce. A questionnaire is prepared and distributed among customers using the e-commerce platform for data collection. This research reviews various articles, journals, and magazines to gather secondary information. Primary and secondary data collection has been analyzed in this study paper.

   DATA ANALYSIS AND INTERPRETATION

   1. Integration of AI-based features (e.g., Chatbots, personalized recommendations) while shopping

      Figure 1: Integration of AI with customers while shopping

      The graph above illustrates that an equal number of customers interact with AI features such as chatbots and personalized recommendations while shopping. Additionally, 10.7% of customers have never interacted with AI features, and 14.3% have utilized AI features during their shopping experience.

   2. Experience with AI features in e-commerce ( positive rate )

      Figure 2: Experience with AI features in e-commerce (positive rate)

      In conclusion, 3.6% of customers strongly agreed that their experience with AI-based features has been positive, but 42.9 % said neither positive nor negative, 46.4% agreed with this, and 7.1% disagreed. In conclusion, we can say that most customers have positive experiences with AI-featuring tools in e-commerce

   3. Personalized recommendation done by AI helps in the purchasing decision

      Figure 3: AI-driven personalized recommendations assist in purchase decisions.

      Based on customer data, 3.5% strongly agree that AI influenced purchasing decisions. 14.3% disagree, and 53.6% agree. However, 28.6% of customers who are using AI are very neutral. In conclusion, most customers agree with implementing personalized recommendations by AI in e-commerce, which influences purchasing decisions.

   4. Are AI-powered customer services reliable?

      Figure 4: Are AI-powered customer services reliable

      After gathering customer information, it has been analyzed that 39.3% of customers are neutral; they may or may not rely on AI-powered services. However, 46.4% agree, indicating they rely on AI-powered customer services.

   5. AI-based product recommendation influences purchase decision

      Figure 5: AI-based product recommendation influences purchasing decision making

      The above graph shows that 10.7% of customers strongly agree that the product recommended by AI changes their purchase decision-making. 25% of customers are neutral about whether their decision may change. In conclusion, we can say that 46.4 % of customers may change their decision when an AI-based recommended product influences their purchase decision.

   6. Privacy and data security concerns when AI technologies are used?

      Figure 6: Privacy and data security when AI technologies are used

      Research concludes that 53.6% of customers are concerned about their data privacy and security while using AI technologies, whereas 14.3% are neutral regarding their security.

   7. AI in e-commerce leads to biases

Figure 7: AI in e-commerce leads to biases or limited choice

28.6% of customers say they disagree entirely that AI in e-commerce shows any bias. Meanwhile, 17.9% completely agree with this statement. Additionally, 53.6% are uncertain whether AI in e-commerce leads to bias and limits their choices.

DISCUSSION

AI has drastically changed e-commerce by influencing customer happiness and decision- making. By using machine learning algorithms to examine clients' browsing and purchase history, businesses may produce highly customised shopping experiences. This promotes loyalty and raises customer satisfaction (Omenazu S. et al., 2021). AI-powered chatbots and

virtual assistants offer round-the-clock customer service, quickly responding to enquiries and offering help, cutting down on response times and enhancing client satisfaction. Artificial intelligence (AI) provides data-driven insights that assist businesses in making strategic decisions about pricing, inventory control, and marketing campaigns by analysing enormous volumes of customer data. Using predictive analytics to foresee customer preferences and market changes, businesses may proactively modify their strategy to suit shifting expectations. This improves operational efficiency and lowers the possibility of human error. AI also improves fraud detection and cybersecurity, safeguarding clients and companies while encouraging enduring interaction and trust. AI in e-commerce positions businesses for long-term success in the cutthroat digital marketplace by fostering innovation, optimizing workflows, and ensuring a customer-focused approach.

CONCLUSION

It is clear from the research that artificial intelligence is becoming more prevalent in the e- commerce sector. However, it is still far from ideal. E-commerce companies keep improving their AI tools to better satisfy consumer demand. In e-commerce, artificial intelligence is leading the way in fostering creative ideas and improving client experiences. Personalised shopping, product recommendations, and inventory management are a few of the most prominent applications of artificial intelligence in e-commerce. AI can also help businesses take advantage of machine learning and AI's promise in the e-commerce space. However, when buying things using AI, consumers worry about their data privacy, and e-commerce must address this problem.

RECOMMENDATION

After reviewing many different articles, journals, and literature and conducting the survey on the impact of AI in e-commerce on customer behaviour influenced by AI, it has been recommended that reviewing numerous articles, journals, and literature, and conducting a survey on the impact of AI in e-commerce on customer behaviour influenced by AI, it is recommended the following things:-

1. Smarter searchesSmart searches allow customers to navigate their product list more effectively. They also encourage customers to spend more time on their websites, which increases customer engagement, which is essential for building brand loyalty.

2. Retarget potential customersAI is used to retarget potential customers and analyze data analytics to engage individuals who have previously interacted with the brand but did not complete a purchase. By analysing browsing behaviour, AI delivers personalized reminders of various platform items shoppers have viewed or left in their carts.

3. Tailored product recommendations: When a customer searches for their favourite product, a webpage frequently presents tailored choices. To communicate with the customer by asking about their location, browsing history, and history to give an effective or valuable product. By determining their likes and dislikes, AI assists in studying their purchasing behaviour. Personalised product recommendations give customers a more fulfilling online shopping experience and raise the likelihood of returning and becoming devoted brand advocates.

4. Customer service chatbots are valuable tools to replicate online conversations through artificial intelligence (AI) and other technologies like natural language processing (NLP). Podium's Webchat feature offers a chatbot. This Webchat is an effective tool for customer support, as you can observe it functioning on your website and customize it to address frequently asked questions or perform simple tasks. You can ensure prompt customer service by incorporating virtual assistants like AI chatbots into your online store. Furthermore, you can boost website conversion rates, attract new customers, and engage your audience through meaningful discussions on your website.

5. Visual searchVisual search: Customers frequently abandon eCommerce websites when they are unable to locate what they are looking for. Artificial intelligence, which many businesses have already embraced to provide sophisticated visual search capabilities, can solve this problem. Potential customers are more likely to find items that suit their needs and finish checkout when this feature is included.

6. Dynamic pricing- You must research rival prices, consumer demand, and manufacturing expenses to establish your product's ideal price. Artificial intelligence can monitor your competitors' prices and collect pertinent data regarding market demand and supply chain variables. AI streamlines the dynamic pricing process, which involves choosing and modifying the best product price. You must research manufacturing costs, consumer demand, and rival prices to establish the appropriate price for your product. Artificial intelligence can monitor your competitors' prices and collect pertinent data regarding market demand and supply chain variables. AI makes it easier to choose and modify the best product price.

7. Demand forecastingIf you want to predict demand without having enough historical sales data, AI can help. Several eCommerce businesses are using artificial intelligence to estimate demand. By using real-time customer data, including demographics, social media, and online reviews, instead of only historical data, artificial intelligence (AI) improves the precision and dependability of sales and demand projections.

8. Customer sentiment analysis Analyzing customer sentiment is crucial, especially during intense market competition. It helps you understand and quantify your clients' opinions on your product, service, or brand. However, monitoring customer satisfaction levels can be challenging, as there are hundreds or thousands of reviews to organize and assess. AI can assist you if you aim to sift through a large volume of evaluations and comments quickly. AI can swiftly process substantial client feedback, providing e- commerce businesses valuable insights and actionable data.

REFERENCES

Areiqat, A. Y., Alheet, A. F., Qawasmeh, R. A., & Zamil, A. M. (2021). Artificial intelligence and its drastic impact on e-commerce progress. Academy of Strategic Management Journal, 20, 1-11.

Bawack, R. E., Wamba, S. F., Carillo, K. D.A., & Akter, S. (2022). Artificial intelligence in E-Commerce: a bibliometric study and literature review. Electronic markets, 32(1), 297-338.

Soni, V. D. (2020). Emerging roles of artificial intelligence in e-commerce. International Journal of trend in scientific research and development, 4(5), 223225.

Chie, L. A., Jalaludin, F. W., Seah, C. S., Loh, Y. X., & Hen, K. W. (2023). Customer satisfaction towards the application of artificial intelligence in e-commerce.

Balasubramanian, G. (2024). THE ROLE OF AI IN ENHANCING PERSONALIZATION IN E-COMMERCE: A STUDY ON CUSTOMER ENGAGEMENT AND SATISFACTION.

Asian And Pacific Economic Review, 17(2), 160-177.

Reddy, V. M. (2023). Data Privacy and Security in E-commerce: Modern Database Solutions. International Journal of Advanced Engineering Technologies and Innovations, 1(03), 248263.

Nimbalkar, A. A., & Berad, A. T. (2021). The increasing importance of AI applications in e- commerce. Vidyabharati International Interdisciplinary Research Journal, 13(1), 388-391.

Omenazu, S. (2021). Artificial Intelligence in E-Commerce Management: Benefits and Challenges. Turkish Online Journal of Qualitative Inquiry, 12(10).

The Impact of Internet of Things on Retail Industry – Insight Tribune. https://www.nalug.net/the-impact-of-internet-of-things-on-retail-industry/