Spillover effects of live streaming selling in a dual-channel supply chain

Abstract

Live streaming selling is an emerging business mode to promote sales volume by cooperation between the members in e-commence supply chains and the key opinion leader (i.e., KOL). However, the manufacturer or e-retailer who cooperate with the KOL will bring both positive and negative spillover effects in a dual-channel e-commence supply chain. This study investigates the impact of two prominent factors, including spillover effects and consumer acceptance of direct-selling channel on equilibrium results of two sellers under three scenarios, including no KOL scenario, the manufacturer cooperating with KOL scenario (MK), and the e-retailer cooperating with KOL scenario (RK). Our findings show that regardless of the change of the spillover effects and the consumer acceptance, the manufacturer always prefers RK scenario instead of MK scenario. The rationale is that if the live streaming brings the positive spillover effect under RK scenario, the manufacturer can take free-riding behavior to improve his profit; if the live streaming brings the negative spillover effect, the manufacturer might set a lower wholesale price under RK scenario to mitigate the double marginalization. Thus, the RK scenario is the optimal option for the manufacturer in most cases to earn more profit, while the e-retailer has more options under different conditions. Moreover, the main model is extended to discuss the impact of parameters, including different service cost coefficients and consumer returns on sellers’ preference. In addition, the result of numerical studies shows that a Pareto zone can be found to achieve a win-win situation when both manufacturer and e-retailer cooperate with the KOL simultaneously.