Influence of AI-Powered Personalization on Consumer Purchase Intention: The Mediating Role of Consumer Trust

Abstract: Artificial Intelligence (AI)-powered personalization has become a cornerstone of modern e-commerce by enabling organizations to deliver customized product recommendations that enhance consumer experiences and influence purchasing decisions. However, the effectiveness of AI-driven personalization depends not only on the quality of recommendations but also on consumers' trust in AI systems. This study examines the influence of AI-powered personalization, perceived transparency, explainability of AI, and perceived privacy protection on purchase intention, with consumer trust serving as the mediating variable. A quantitative, cross-sectional research design was adopted, and data were collected from consumers who had prior experience with AI-enabled personalized recommendations on online shopping platforms. The proposed conceptual model was analyzed using Structural Equation Modelling (SEM) in Jamovi. The findings reveal that AI-powered personalization, perceived transparency, and explainability of AI significantly and positively influence consumer trust, whereas perceived privacy protection does not significantly affect trust. Consumer trust, in turn, exerts a significant positive influence on purchase intention. Furthermore, perceived privacy protection has a significant direct effect on purchase intention, while the direct effects of AI-powered personalization, perceived transparency, and explainability of AI on purchase intention are not statistically significant, indicating that their influence is primarily transmitted through consumer trust. The study highlights the pivotal role of trust as the underlying mechanism linking AI-enabled personalization characteristics to consumers' purchase intentions. The findings contribute to the growing literature on AI-driven consumer behaviour by extending the understanding of trust formation in AI-enabled retail environments and offer practical implications for e-commerce firms seeking to design transparent, explainable, and trustworthy AI recommendation systems that enhance consumer purchase intentions.

Keywords: AI-Powered Personalization; Consumer Trust; Purchase Intention; Explainability of Artificial Intelligence; Perceived Transparency