When Does Artificial Intelligence Pay Off in Electronic Retailing? A Dual-Path Model from Implementation to Competitive Advantage

Artificial intelligence (AI) is reshaping electronic retailing, yet many firms struggle to translate AI adoption into a sustainable competitive advantage, and research still lacks an integrative explanation of how digital maturity, AI implementation, AI-enabled benefits, customer experience, and competitive outcomes are linked in this context. This study develops and tests a capability-to-advantage framework proposing that digital maturity is associated with AI implementation, that AI implementation is associated with qualitative and quantitative AI benefits, and that these benefit streams are linked to digitally mediated customer experience and to differentiation and cost-based competitive advantage. Using survey data from retail employees and managers, we estimated the model with PLS-SEM and applied cIPMA to identify actionable priorities by combining importance-performance evidence with necessity-oriented insights. We triangulated the proposed mechanisms through NVivo-based sentiment and thematic analysis of open-ended comments. Results support all hypothesized relationships. Digital maturity strongly predicts AI implementation, which increases both benefit streams and directly improves the customer experience. Customer experience was the strongest downstream driver of both competitive advantage dimensions and partially mediated the effects of AI-enabled benefits. cIPMA identified customer experience and AI implementation as the primary improvement priorities; qualitative evidence was predominantly positive and highlights efficiency/cost gains and decision support alongside the capability constraints. The study integrates capability-based and customer-experience perspectives to offer a theory-guided explanation of how digital maturity and AI implementation are associated with competitive outcomes in electronic retailing while also offering guidance for managers seeking AI-driven advantage.