How retailers can gain more profitability driven by digital technology: Live streaming promotion and blockchain technology traceability?

Abstract

Live streaming in e-commerce often faces challenges like counterfeit products and high return rates. To mitigate this issue, retailers can adopt blockchain technology for product traceability to enhance consumer trust, i.e., blockchain-traceable products may be sold in live streaming. Our paper presents three analytical models under various return policies to explore how live streaming and blockchain technology interact in e-commerce. Retailers can invest in live streaming with influencers to attract consumers and in blockchain technology to reduce product returns, benefiting from a demand-enhancing effect and a price-enhancing effect, respectively. The retailer’s investment strategy between live streaming and blockchain technology depends on the interactions of these two effects, moderated by the retailer’s budget type, the market commission level of live streaming, and the traceability cost of blockchain technology. For budget-constrained retailers, live streaming and blockchain technology act as substitutes. When the commission level is low (high) and the traceability cost is high (low), the demand-enhancing (price-enhancing) effect dominates the price-enhancing (demand-enhancing) effect, thus the retailer invests in live streaming (blockchain technology) as a substitute for blockchain technology (live streaming). Conversely, for budget-unconstrained retailers, they may act as complements, prompting investment in both when commission levels and traceability costs are low. The retailer does not invest in either when both the commission level and traceability cost are high. We extend our results to a full refund policy to show the robustness of our result and find that it reduces the retailer’s incentive to invest in live streaming or blockchain technology.