The interaction between E-tailer’s AI live-stream strategy and supplier encroachment

The rapid advancement of technology has made it easier for the e-tailer’s technology adoption strategy (AI live-stream strategy) and the supplier’s direct-to-consumer sales (encroachment). We employ a game-theoretical framework to examine the strategic interplay of the e-tailer’s AI live-stream decision and the supplier’s encroachment strategy. There are many interesting findings. First, even though the AI live-stream can promote market expansion for the e-tailer, it may still abandon the strategy due to the risk of supplier encroachment when both AI maturity and encroachment cost are at intermediate levels. Second, the e-tailer can strategically adopt AI live-stream to prevent the supplier from encroaching when encroachment cost is small, and AI technology remains either highly mature or moderate-lowly mature. Third, supplier encroachment may compel the e-tailer to invest more or less in AI technology depending on the channel competition and the maturity level of AI technology, but such parameters’ effects are non-monotone. Fourth, if the supplier has the AI live-stream option, it can conditionally benefit from the supplier’s encroachment. Our study provides theoretical insights into e-tailers’ AI live-stream strategy choices in the context of supplier encroachment, highlighting the critical role of AI live-stream strategy in moderating competition in online retailing.