AI-Driven Personalization and Customer Trust in the Era of Digital Transformation: A Study on Emerging E Commerce Markets in India

Abstract

The aim of this research is to explore the association of AI-based personalization and consumer trust in the fast growing e-commerce environment in India. Leveraging secondary data from academic publications, industry reports, and policy statements, the paper explores how levels of personalization (intensity, relevance and algorithmic autonomy) affect consumer engagement and loyalty. The results show that perceived usefulness and transparency are positively mediated by customer trust, whereas privacy concern significantly negatively affects the route. In addition, digital literacy, cultural orientation and knowledge of regulation moderate the personalization–trust relationship with respect to individual-level differences, highlighting the situational context in consumer judgment in emerging markets.The findings implied that personalization can increase both short-term satisfaction and long-term loyalty toward the platform if it is conducted transparently and ethically. But mounting privacy concerns and varying levels of digital literacy complicate trust-building efforts. Responsible AI governance, inclusive design and proactive communication are among recommendations to maintain consumer trust contained in the report. The paper’s ultimate contribution is in providing an understanding of managing ethical AI personalization to manage a trade-off between innovation and trust in the Indian e-commerce industry, which may have policy, research and practice implications for digital business management.