Seeing is Believing: Does Live Streaming E-commerce Make Brands More Shoppable?

32 Pages Posted: 24 Feb 2022

See all articles by Lina Zhang

Lina Zhang

Nottingham University Business School China, Ningbo, China

Suresh Sethi

University of Texas at Dallas - Naveen Jindal School of Management

Yumeng Zhang

Queen Mary University of London - School of Business and Management

Date Written: October 31, 2021

Abstract

By blending entertainment with instant purchasing, the live-streaming channel has become a significant sales and marketing force in the digital economy. We examine how businesses should exploit this innovative medium to maximize their gains. Specifically, we investigate the manufacturer’s sales quantity decisions, the live streamer’s entertainment quality decision, and the live-streaming channel price decided by either the live streamer or the manufacturer. The integrated scenario when the manufacturer manages its own live-streaming channel is also examined. Our analysis shows that the entertainment quality in the live- streaming channel and the channel price are often leveraged as two complementary weapons to keep the live-streaming channel attractive to consumers. Businesses may differentiate the live-streaming channel with high-quality entertainment and less significant price discount, or reinforce the channel with deep price discount but unremarkable entertainment quality, reflecting a variety of roles the live-streaming channel can perform. Results also show that increased potential market size in the live-streaming channel, stronger spillover effect across channels, and intensified price channel competition could benefit both the manufacturer and the live streamer. Therefore, the utilization of live-streaming channels provides opportunities for businesses to market their products and communicate with potential consumers more efficiently. We also underline the importance of how businesses collaborate and show that it is not always advantageous, even from the manufacturers’ perspective, for them to be assertive. On the contrary, sometimes allowing the live streamer to design the shows and decide the discount offered in the live- streaming channel makes both the manufacturer and the live streamer better off.

Keywords: live-streaming channel, social influence, entertainment quality, transformative marketing, news vendor, multi-channel management

Suggested Citation

Zhang, Lina and Sethi, Suresh and Zhang, Yumeng, Seeing is Believing: Does Live Streaming E-commerce Make Brands More Shoppable? (October 31, 2021). Available at SSRN: https://ssrn.com/abstract=3992063 or http://dx.doi.org/10.2139/ssrn.3992063

Lina Zhang

Nottingham University Business School China, Ningbo, China

Suresh Sethi (Contact Author)

University of Texas at Dallas - Naveen Jindal School of Management ( email )

800 W. Campbell Road, SM30
Richardson, TX 75080-3021
United States

Yumeng Zhang

Queen Mary University of London - School of Business and Management

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