Online quality endorsement to improve consumer trust: Blockchain or self-hosted livestream?

Online products have long suffered from consumer distrust, putting them at a disadvantage when online brands compete with offline brands. To address this issue, many online brands have adopted blockchain as a means of quality endorsement to improve consumer trust. Alternatively, livestream e-commerce has shown the capability of both quality endorsement and demand creation by real-time interactions with consumers because the application of AR/VR technology and the use of online sales force can effectively induce the herding mentality. For many small and medium-sized online brands, it remains unclear which approach is better, so we formulate the key tradeoffs in the online brand's choice to improve consumer trust in the presence of offline brand's competition. Our research delves into the influence of three key factors on livestream e-commerce: the cost associated with adopting blockchain technology, the strength of positive network externality, and the potential downside of consumer returns. Contrary to conventional wisdom, we find that when the return cost is high and the network externality in livestream is weak, opting for livestream as a quality endorsement can actually benefit the online brand. We also find that the online brand is capable of mitigating the return cost by transferring it to consumers through charging a high retail price, which increases the likelihood of favoring livestream. Our findings shed light on the building and improvement of online consumer trust, contributing to the high-quality development of online-offline business in the new era of consumption.