Artificial intelligence (AI) is one of the most disruptive technologies that have been impacting e-commerce. This review paper will consider AI applications in e-commerce, as well as its challenges and future developments. First of all, this paper will focus on the use of AI in the form of personal recommendations, chatbots, and virtual assistants and sentiment analysis for managing customers’ feedback. In addition, the paper will provide an overview of the use of AI for supply chain and logistics optimization in the context of demand forecasting, inventory management, automated warehouses and delivery route optimization. Thus, the review will pay special attention to machine learning, deep learning, and predictive analytics in increasing the precision of forecasting and minimizing the expenses. On the other hand, this paper will examine the major challenges faced when implementing AI, such as data privacy issues, algorithm bias, cybersecurity issues, high costs, and ethical issues. Finally, the evolving trends such as those of generative AI, large language models, Internet of Things (IoT), and digital twins are also analyzed in this paper as possible drivers of intelligence and sustainability of future e-commerce systems. It has been established that AI is not just a complementary technology but rather a driver for digital transformation of the e-commerce sector. Those organizations that are able to implement AI technologies, overcoming certain challenges, are likely to gain a sustainable competitive advantage.
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