Implementation of RFM method and K-Means algorithm for Customer Segmentation in E-Commerce with Streamlit

Abstract

E-commerce is selling and buying goods through an online or online system. One of the business models in which consumers sell products to other consumers is the Customer to Customer (C2C) business model. One thing that needs to be considered in the business model is knowing the level of customer loyalty. By knowing the level of customer loyalty, the company can provide several different treatments to its customers to maintain good relationships with customers and increase product purchase revenue. In this study, the author wants to segment customers on data in E-commerce companies in Brazil using the K-Means clustering algorithm using the RFM (Recency, Frequency, Monetary) feature and display it in the form of a dashboard using the Streamlit framework. Several stages of research must be carried out. Firstly, taking data from the open public data site (Kaggle), then merging the data to select some data that needs to be used, understanding data by displaying it in graphic form, and conducting data selection to select features/attributes. The step follows the proposed method, performs data preprocessing, creates a model to get the cluster, and finally displays it as a dashboard using Streamlit. Based on the results of the research that has been done, the number of clusters is 4 clusters with the evaluation value of the model using the silhouette score is 0.470.

Keywords

• e-commerce
• customer segmentation
• k-means
• rfm
• streamlit