Strategic Livestreaming and Value-Added Services in E-Commerce: Navigating Information Asymmetry and Competition

Abstract

In the context of online shopping, e-commerce livestreaming anchors are essential in mitigating information asymmetry between supply and demand. They demonstrate products, address customer inquiries promptly, and enhance transparency concerning both horizontal and vertical attributes of the products. However, although the valuation of vertical attributes by customers improves, mismatches in horizontal attributes may reduce their purchasing utility due to heterogeneous customer preferences. Moreover, as competition intensifies within the e-commerce retail industry, retailers are increasingly adopting value-added services (VAS) to stimulate demand. This paper utilizes a Hotelling model to examine e-retailers’ livestreaming and VAS investment strategies. Key findings include the following. Firstly, in scenarios characterized by high unit vertical valuation enhancement or low information disclosure levels, non-livestreaming retailers might exit the market. Secondly, equilibrium outcomes indicate that an enhancement in unit vertical valuation encourages retailers to simultaneously adopt livestreaming. Thirdly, retailers with inefficiencies in VAS should prioritize livestreaming when information disclosure levels are elevated. In contrast, retailers with cost-effective VAS should concentrate on livestreaming in scenarios featuring high unit vertical valuation enhancement to bolster competitive advantage.

Keywords: Livestreaming, VAS investment, Information asymmetry, Information disclosure, Competition