Enhancing E-Commerce Customer Segmentation with Fuzzy C-Means Soft Clustering Probabilities

Abstract

Customer segmentation is of paramount importance in the e-commerce industry, enabling businesses to improve marketing strategies and customer engagement. This study compares the performance of two clustering algorithms, K-Means and Fuzzy C-Means (FCM), using Walmart’s public e-commerce dataset of 550,068 transactions. After preprocessing and normalization, the elbow method was applied to determine the optimal number of clusters, yielding seven clusters for K-Means and eight for FCM. Experimental evaluation based on the silhouette score shows that FCM achieved 0.48, outperforming K-Means which scored 0.36, indicating that FCM generated clusters with stronger cohesion and separation. However, this improvement comes at a computational cost. K-Means consistently required less than 0.02 seconds per run, while FCM averaged 0.3 seconds and peaked at 1.38 seconds when the number of clusters increased, making it approximately 20–30 times slower. Cluster distribution analysis further revealed that K-Means produced an uneven segmentation dominated by a single large cluster, whereas FCM generated a more balanced distribution across its clusters. This demonstrates the advantage of FCM in capturing overlapping and multidimensional customer behaviors through partial memberships, in contrast to the rigid and oversimplify assignments of K-Means. These findings highlight the benefit of adopting FCM for e-commerce segmentation, as it provides more interpretable and actionable insights for personalized marketing. At the same time, the trade-off between clustering quality and computation time suggests that future research should explore optimization techniques such as parallelization, approximate fuzzy clustering, or hybrid models that combine the efficiency of hard clustering with the interpretability of soft clustering.