Impact of live commerce spillover effect on supply chain decisions

Abstract

PurposeWith the booming of live commerce, sellers provide products through not only their traditional channels but also the anchors who show products by live broadcast, forming a live commerce supply chain. In fact, such selling mode generates two effects: the live broadcast service of the anchor affects the return rate of products sold live (live commerce effect) and related products of the manufacturer sold via its own channel (live commerce spillover effect). In this paper, the authors investigate the impacts of both live commerce and live commerce spillover effect on the price decisions as well as the anchor's service effort.Design/methodology/approachThe authors establish a live commerce supply chain model where the manufacturer sells related products directly and by the anchor with a wholesale price contract. The manufacturer decides the price of product sold directly based on the anchor's broadcast effort since there exists the live commerce spillover effects. Backward induction is used to solve the Stackelberg game between the manufacturer and the anchor.FindingsThe results show that (1) the existence of the live commerce spillover effect brings more profit to the manufacturer while it reduces the anchor's profit. Moreover, the total profit of the live commerce supply chain first decreases and then increases as the intensity of the live commerce spillover effect improves. (2) The pricing of products sold directly by the manufacturer and sold through the anchor is nonmonotonic with respect to the live commerce spillover effect. (3) The increase in return cost always leads to an increase in the profit of the anchor, whether it is borne by the anchor or by the consumer. (4) If the baseline return probability is high, the anchor should increase her effort, thus securing more profit. However, the spillover effect of live commerce and the horizontal differences between products will discourage the anchor from increasing the live streaming service level.Originality/valueThe study proposes the live commerce supply chain model where the anchor balances the cost and benefit of her live broadcast effort, which lowers the consumers expected return possibility. In addition the live commerce spillover effect is introduced, reducing the expected return rate for the related products without live broadcast (in the direct channel). With the inter-influence of live commerce, the price competition between the live anchor and the manufacturer becomes more complex. By solving the typical live commerce game model, managerial insights are given for the decision makers among the live commerce supply chain.