Success and Survival in Livestream Shopping

Abstract

The livestream shopping industry, in which consumers can purchase products directly from live video sessions, is expected to exceed $60 billion in China in 2021 and $25 billion in the US in 2023. Despite the popularity of livestream shopping, many sellers fail within just a few weeks. We investigate the lead indicators of the success and survival of livestream shopping sellers. We ask three questions: 1. Livestream viewers can make purchases directly within the session (the "within-channel direct selling effect") or can use the session to gain information that may inform purchases later on (the "cross-channel spillover effect"). Which of the two effects is more important for seller success? 2. Livestream shopping encompasses three industries: e-commerce, social networks, and entertainment. Which industry-specific key performance indicators (KPIs) predict success? 3. Some sellers use livestream shopping for new product introduction while others use it for mature product inventory liquidation. Which type of seller is more likely to survive? We use a unique dataset from Taobao Live to show that: 1. Sellers who rely more heavily on the within-channel direct selling effect (vs. the cross-channel spillover effect) are less likely to succeed. 2. The e-commerce KPI positively predicts success, while the entertainment KPI negatively predicts success. For the social network KPIs, reach positively predicts success, but engagement rate negatively predicts success, reinforcing the cross-channel spillover effect of livestream shopping. 3. Mature product sellers are more likely to succeed than new product sellers.

Keywords: livestream shopping, survival, e-commerce, entertainment, social network