AIGP: An LLM-Based Framework for Long-Term Value Alignment in E-Commerce Pricing

Chennan Ma, Yanning Zhang, Siqi Hong, Xiuchong Wang, Fei Xiao, Keping Yang, Bo Zheng

Keywords: E-commerce, Dynamic Pricing, Reinforcement Learning, Long-Term Value, Large Language Model

Abstract: Traditional dynamic pricing models in large-scale e-commerce suffer from limited interpretability, poor utilization of unstructured information, and misalignment with long-term business objectives such as cumulative Gross Merchandise Value (GMV), Return on Investment (ROI) and milestone achievement. We propose AIGP, a novel framework that leverages a Large Language Model (LLM) prompted with domain knowledge, structured data and textual context to make interpretable, knowledge-aware pricing decisions. For efficient deployment while maintaining high-quality outputs, we employ supervised fine-tuning for knowledge distillation. Central to AIGP is the Long-Term Value Estimator (LTVE), trained via offline reinforcement learning on historical data, which serves as a reward model to score candidate pricing actions and select preference pairs for Direct Preference Optimization (DPO), thereby aligning the pricing mechanism with long-term business objectives. Extensive offline evaluations and large-scale online A/B tests on a major e-commerce platform demonstrate that AIGP achieves significant improvements: +13.21% in GMV, +7.59% in ROI, and +8.20% in milestone achievement rate over 14 days compared to the production baseline, while simultaneously providing interpretable and transparent pricing rationales.

Track: Long Paper

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Submission Number: 56