Should manufacturers open live streaming shopping channels?

Tao Zhang and Zhongjun Tang

Journal of Retailing and Consumer Services, 2023, vol. 71, issue C

Abstract: Live streaming shopping, as a novel sales channel, has caught much attention from researchers and practitioners. Its unique features, such as the commission rate, fixed fee and number of followers of the live streamer, appear different from traditional wholesale-contract sales channels. But few studies have examined the impact of these factors on manufacturers’ opening live streaming shopping channel decisions. To address this gap, we develop game theoretic models to examine whether a manufacturer should hire a live streamer to open a live streaming shopping channel on an e-commerce platform where the manufacturer's direct channel and third-party e-retailer co-exist. We consider the impact of the commission rate, fixed fee and number of followers of the live streamer on the operating decisions and profits of the manufacturer and e-retailer. Then we identify the threshold-conditions where the manufacturer and e-retailer are better off or worse off by opening a live streaming shopping channel. We show that opening a live streaming shopping channel may hurt or harm the manufacturer's profit, depending on the interaction of above three factors. The manufacturer may be willing to open a live streaming shopping channel when the commission rate and fixed fee are both small, or when the commission rate and number of followers are both large and the fixed fee is small. The e-retailer could also benefit from opening a live streaming shopping channel. These insights appear novel in the literature. We further show that opening a live streaming shopping channel could improve the consumer surplus. We extend our model to price competition to verify our main conclusions. These insights may help manufacturers decide whether or not to open live streaming shopping channels and help manufacturers and extant retailers develop optimal operating decisions and improve profits when participating in live streaming shopping.

Keywords: Live streaming shopping; e-commerce; Game theory; Supply chain (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joreco:v:71:y:2023:i:c:s0969698922003228

DOI: 10.1016/j.jretconser.2022.103229

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