In today’s hyper-competitive digital marketplace, consumers are no longer satisfied with one-size-fits-all shopping experiences. With thousands of options just a click away, modern shoppers expect digital storefronts to understand their unique preferences, anticipate their needs, and deliver relevant interactions instantly. Artificial intelligence (AI) is reshaping e-commerce by enabling firms to personalize products, offers and communication for individual customers. The study examines the factors that influence AI-driven personalization strategies for improving customer experience and retention. A convenience sampling technique was employed to select participants based on their accessibility and willingness to participate in the survey Primary data were collected from 200 online consumers, and seven factors were assessed: personalized product recommendations, chatbot and virtual assistant support, targeted offers and dynamic pricing, data privacy and security assurance, ease of use and website experience, customer engagement and communication, and trust in AI technology. A one-sample t-test compared the mean score of each factor with the scale midpoint of 3. All seven factors had means significantly above the midpoint (p < .001), ranging from 3.61 to 4.15. The findings indicate that consumers view personalization as effective when it is accurate, secure, convenient and trusted. The study suggests that firms should combine AI capability with transparent data practices and a smooth user experience to strengthen customer experience and retention.