Doubling Revenues by Adopting Livestream Shopping: A Synthetic DiD Approach

Abstract

While livestream shopping has attracted enormous attention in the e-commerce world, whether and how it can help online sellers remains questionable. We study the effect of adopting the livestream shopping channel on seller performance. We analyze 2,851 online sellers who adopted the livestream shopping channel from September 2019 to June 2020. To tackle a series of identification challenges, we use three different estimators, two-way fixed effect DiD (TWFE), staggered DiD, and synthetic DiD (SynDiD). We find that adopting the livestream shopping channel increases sellers' total revenue by 107%. Moreover, 47% of the total revenue increase is attributed to the online store channel, suggesting a positive cross-channel spillover effect from the livestream shopping channel to the online store channel. We further examine the mechanisms and find supporting evidence that livestream shopping can not only reduce consumer uncertainty about products via information provision, but also increase consumers' awareness of sellers by offering sellers broader exposure to the public. In addition, although the average price for the same product is 7.6% lower in the livestream shopping channel, which may partially contribute to sellers' increased overall revenue, we find that the salience of price promotions in the livestream shopping channel cannot explain the cross-channel spillover effect.

Keywords: multichannel marketing, livestream shopping, e-commerce, certainty reduction, price promotions