Abstract

The rapid growth in the e-commerce industry demands the development of smarter and more focused marketing strategies. One approach that can be applied is customer segmentation using various features such as Recency, Frequency, and Monetary (RFM), along with machine learning-based clustering methods. The objective of this study is to design and develop a web-based e-commerce customer segmentation application using a combination of RFM features and clustering methods. The study proposes the K-Means algorithm and compares it with K-Medoids and Fuzzy C Means using publicly available e-commerce datasets. Experimental results showed that the K-Means algorithm outperformed K-Medoids and Fuzzy C Means (FCM) based on the Silhouette Score of 0.67305, Davies Bouldin Index of 0.51435, and Calinski Harabasz Index of 5647.89. Through analysis and testing, the designed application has proven effective in grouping customers into relevant segments. These segments are divided into three categories: Loyal, Need Attention, and Promising, visualized in a web-based application dashboard using Streamlit. The developed application allows e-commerce business owners and users from the business, management, and marketing divisions to categorize customers based on transaction data. The results of this study are expected to provide valuable insights to e-commerce management and marketing professionals who are facing increasingly fierce competition.

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