The Sales Impacts of Traffic Acquisition Promotion in Live Streaming Commerce

40 Pages Posted: 16 May 2022 Last revised: 17 May 2022

See all articles by Wenchang Zhang

Wenchang Zhang

Indiana University, Kelley School of Business

Che-Wei Liu

Indiana University Bloomington - Kelley School of Business

Liu Ming

The Chinese University of Hong Kong, Shenzhen

Yue Cheng

HSBC Business School, Peking University

Date Written: April 13, 2022

Abstract

Live streaming commerce, a combination of live streaming and e-commerce, has been a huge phenomenon over the past few years. Recently, lucky draw (also known as sweepstakes) stands out as one of the most popular promotion innovations for traffic acquisition in live streaming commerce. As a non-price-based operational lever, lucky draws offer not only utilitarian benefits (i.e., winning rewards) but also hedonic benefits that engage and entertain participants (i.e., participating in a social event). Exploiting a comprehensive dataset collected from TikTok (China), we examine lucky draws' sales impacts on livestreaming events. Although the adoption of lucky draw results in an overall sales improvement, it can backfire when streamers stop offering the promotion: The sales of post-adoption events without lucky draws are substantially worse off than pre-adoption ones. These findings highlight both lucky draws' benefits and its adverse spillover, providing operational implications associated with employing this type of promotion. In addition, we find that the lucky draw promotion exhibits significant heterogeneity in terms of impacting sales of streamers with various levels of popularity. Less well-known streamers benefit from the promotion remarkably better than more well-known streamers. Hence, the feature of lucky draw can further benefit platforms by mitigating the inequality of the sales distribution among streamers. Lastly, we explain lucky draws' sales impacts by examining their effects on viewers' participation.

Keywords: Live streaming commerce, Lucky draw, Sales effects, Negative spillover, Difference-in-differences

Suggested Citation

Zhang, Wenchang and Liu, Che-Wei and Ming, Liu and Cheng, Yue, The Sales Impacts of Traffic Acquisition Promotion in Live Streaming Commerce (April 13, 2022). Kelley School of Business Research Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=4083469

Wenchang Zhang (Contact Author)

Indiana University, Kelley School of Business ( email )

Business 670
1309 E. Tenth Street
Bloomington, IN 47401
United States

HOME PAGE: http://www.wenchangzhang.com/

Che-Wei Liu

Indiana University Bloomington - Kelley School of Business ( email )

1309 E 10th Street, Hodge Hall 4100
Bloomington, IN 47405
United States

Liu Ming

The Chinese University of Hong Kong, Shenzhen ( email )

Shenzhen, Guangdong 518172
China

Yue Cheng

HSBC Business School, Peking University

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