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Decentralized AI: The Next Frontier for E-Commerce
Decentralized AI: The Next Frontier for E-Commerce

June 30, 2025

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Artificial intelligence (AI) presents significant opportunities for the e-commerce industry, not only from a customer-facing perspective, by enabling omnichannel, personalized, and mobile-first experiences, but also at the operational level. 

By introducing agentic AI for support and AI bots for management, from stock administration to human resources, AI enables speed and accuracy of work, provides real-time insights for better management, and delivers personalized notifications, allowing fewer people to accomplish more.

More recently, however, it is not just AI but a slightly different form of AI that is making inroads into the e-commerce industry: decentralized AI.

What is decentralized AI?

To better understand decentralized AI, let's first look at AI in its current form. Present AI models are mostly centralized and controlled by large corporations, which own large data warehouses and the computing power to run large language models (LLMs) for AI. 

In the current centralized AI model, all aspects of the AI system, including data, algorithms, and decision-making, are controlled by a single business entity.  

This is raising concerns worldwide, particularly around data privacy, security, accessibility, scalability, biases, and customization.  

Decentralized AI leverages decentralized technology, such as blockchain, to break away from large data warehouses and instead spreads the processing of large quantities of data across a network of nodes. The blockchain mitigates several of the concerns that arise from the centralized AI model. For instance, with blockchain, decision-making is no longer centralized within a few companies but relies on consensus among the network’s nodes. Not incidentally, blockchain also enhances security and privacy. 

 

How does decentralized AI benefit the e-commerce industry?

When examined closely, the benefits of decentralized AI extend beyond e-commerce to encompass various industries. This is precisely why companies such as Filecoin, Raiinmaker, 0G Labs, Masa, and Storj, to name a few, are trying to harness its potential.

Decentralized AI offers several benefits. To begin with, it enables e-commerce companies to access a varied and richer set of data for training of algorithms. As computing is decentralized across multiple nodes, users experience enhanced data accuracy.

With a wider data set, decentralized AI enables businesses to access a far more complete customer profile and reduces bias. The improved quality of data has a direct impact on the quality of suggestions and promotions made to potential customers and, over time, positively impacts customer satisfaction.

At the operational level, enterprises can link to the data sources of suppliers, dispersed warehouses, and online and offline retail stores. Decentralized AI also enables businesses to synchronize data in real-time, allowing them to predict demand better, understand stock levels, and plan inventory. Real-time insights enable retail companies to avoid stockouts and overstocking. 

Fraud is a concern for e-commerce businesses. With decentralized AI, companies can now easily cross-reference consumer transactions. With broader access to user behavior, companies can detect patterns of suggestive fraud, anticipate potential fraud, and take preventive measures. 

 

E-commerce use cases of decentralized AI

The use cases for decentralized AI are still being developed. They are predominantly focused on areas such as pattern detection in consumer behavior, fraud detection, risk management, inventory optimization, and transparency and traceability in the supply chain. 

Decentralized AI enables users to observe consumer behaviour in real-time across various touchpoints. It processes data related to browsing history, recent deals, and customer demographics to tailor marketing — item suggestions, optimize pricing, and launch targeted promotions to increase conversion rates. 

In each of these use cases, businesses can verify the authenticity of a product or a person's actions, ensure compliance, and build trust in the brand. 

 

The decentralized AI opportunity for the e-commerce industry in India

According to the Indian Brand Equity Foundation (IBEF), the Indian e-commerce industry is expected to grow at a CAGR of 27%. They predict that India's B2B online marketplace will reach $200 billion by 2030, and the e-commerce market will reach $292.3 billion by FY28. Decentralized AI will be especially beneficial, as accessing large datasets and setting up large data warehouses for computing power require significant time and investments. 

India is a diverse country, yet innovation is concentrated in large cities for several reasons. Decentralized AI offers an opportunity to level the playing field; for instance, it enables startups in Tier 2 and 3 cities to build and deploy AI applications even with limited cloud infrastructure. Importantly, local AI models can be tuned to the cultural, linguistic, and contextual nuances of different Indian states.

Decentralized AI enables businesses to cost-effectively and easily deploy AI models at the edge, on mobile devices and local servers. This option is ideal for India, which has a large rural and semi-urban population, with limited internet connectivity, yet an aspiration to enjoy the choices and benefits of e-commerce. 

The Digital Personal Data Protection (DPDP) Act, 2023, aligns well with decentralized AI as it enables citizens to retain control of their personal data on-device and reduces the risk of large-scale breaches.

 

What could hold back decentralized AI? 

While decentralized AI holds tremendous opportunities, several aspects still need to be ironed out, for instance, the security of data when it is stored on a public blockchain. In itself, blockchain is promoted as highly secure, but users will still need to be confident that their data will not be compromised in any way. 

Another aspect that needs to be considered is that AI requires large data sets. Users will need to share more and more of their data on-chain so that AI learns.

The e-commerce industry needs to stay tuned to the opportunities of decentralized AI

While decentralized AI is still in its early stages, use cases are continually evolving, and its potential to reshape e-commerce is significant. Given the customer-centric advantages it offers, such as enhanced privacy, reduced bias, and real-time personalization, the e-commerce industry will increasingly shift toward decentralized AI. For businesses seeking to stay ahead of the curve, embracing this innovation early may be the key to sustaining rapid growth and maintaining their competitive advantage.

 


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