Fly with the Wings of Live-stream Selling – Channel Strategies with/out Consumer Switching

Live-stream selling is becoming increasingly popular in e-commerce platforms, where streamers sell the product through real-time social interactions while consumers make purchases during the live-stream time. Adopting a live-stream channel has profound impacts on the traditional post-price channel. We identify several important dimensions to evaluate the impact of selling through a live-stream channel: (1) whether the live-stream channel appeals more to the high-value consumers or low-value consumers; (2) the streamer’s ability to sell, which brings extra values to consumers through real-time illustrations and social interactions; (3) the consumer’s cost to purchase through the live stream —— consumers need to purchase during the fixed live-stream time. We build a theoretical model to study under which conditions the live-stream channel may be profit-enhancing/hurting. We find that: (1) a dual-channel strategy may not necessarily be better than a single-channel strategy when the seller could induce consumers to switch from one channel to the other; (2) the addition of a live-stream channel may not increase the sales; (3) a streamer’s high ability to sell may result in a profit loss. As a result, the seller may strategically coordinate consumers’ channel switching behavior, for example, by an attractive advanced notice about the live stream show, or posting the playback live show in the post-price channel.