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Should manufacturers open live streaming shopping channels?

Author

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  • Zhang, Tao
  • Tang, Zhongjun

Abstract

Live streaming shopping, as a novel sales channel, has caught much attention from researchers and practitioners. Its unique features, such as the commission rate, fixed fee and number of followers of the live streamer, appear different from traditional wholesale-contract sales channels. But few studies have examined the impact of these factors on manufacturers’ opening live streaming shopping channel decisions. To address this gap, we develop game theoretic models to examine whether a manufacturer should hire a live streamer to open a live streaming shopping channel on an e-commerce platform where the manufacturer's direct channel and third-party e-retailer co-exist. We consider the impact of the commission rate, fixed fee and number of followers of the live streamer on the operating decisions and profits of the manufacturer and e-retailer. Then we identify the threshold-conditions where the manufacturer and e-retailer are better off or worse off by opening a live streaming shopping channel. We show that opening a live streaming shopping channel may hurt or harm the manufacturer's profit, depending on the interaction of above three factors. The manufacturer may be willing to open a live streaming shopping channel when the commission rate and fixed fee are both small, or when the commission rate and number of followers are both large and the fixed fee is small. The e-retailer could also benefit from opening a live streaming shopping channel. These insights appear novel in the literature. We further show that opening a live streaming shopping channel could improve the consumer surplus. We extend our model to price competition to verify our main conclusions. These insights may help manufacturers decide whether or not to open live streaming shopping channels and help manufacturers and extant retailers develop optimal operating decisions and improve profits when participating in live streaming shopping.

Suggested Citation

  • Zhang, Tao & Tang, Zhongjun, 2023. "Should manufacturers open live streaming shopping channels?," Journal of Retailing and Consumer Services, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:joreco:v:71:y:2023:i:c:s0969698922003228
    DOI: 10.1016/j.jretconser.2022.103229
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    Cited by:

    1. Xiaojun Mai & Fauziah Sheikh Ahmad & Jiayi Xu, 2023. "A Comprehensive Bibliometric Analysis of Live Streaming Commerce: Mapping the Research Landscape," SAGE Open, , vol. 13(4), pages 21582440231, December.
    2. Minqin Yi & Ming Chen & Jilang Yang, 2024. "Understanding the self-perceived customer experience and repurchase intention in live streaming shopping: evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-13, December.
    3. Zhang, Yanfen & Xu, Qi & Zhang, Guoqing, 2023. "Optimal contracts with moral hazard and adverse selection in a live streaming commerce market," Journal of Retailing and Consumer Services, Elsevier, vol. 74(C).

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