Loss leader strategy in the live streaming considering cross-product and cross-channel spillover effects

Live streaming has developed significantly in recent years. A commonly observed phenomenon in live streaming is that the product is sold at a low price or even at a loss. However, the mechanism driving such a loss leader strategy is not clear. This research aims to study a dual-channel supply chain including a multiproduct retailer and a manufacturer, and explore the adoption of live streaming and loss leader strategy considering coopetition and spillover effects across products and channels. By considering competitive advantage-weakening mechanism, cost-increasing mechanism and revenue-increasing mechanism, we show that the retailer should adopt live streaming only if the cross-channel spillover effect is weak or the cross-channel spillover effect and cross-product spillover effect are both medium. Moreover, we find that the loss leader strategy in live streaming may not benefit the retailer. The retailer should announce a live-stream price lower than the wholesale price if the cross-channel and the cross-product spillover effects are both medium. Additionally, we find that if the direct sales channel owns higher consumer acceptance, the retailer will be more inclined to adopt the loss leader strategy when the cross-product and cross-channel spillover effect are weak. Different from the intuition, if the commission fee is high, increasing commission fee will encourage the retailer even with a weaker cross-product spillover effect to adopt the loss leader strategy.