When Persuasion Is Too Persuasive: An Empirical Analysis of Product Returns in Livestream e-Commerce

Abstract

Livestream e-commerce features live social interactions that enable real-time, face-to-text communications among a streamer and many customers. We posit such live social interactions generate persuasion effect that eventually leads to higher product returns. Using data from a leading livestream e-commerce firm, we compare the product returns between live sessions with rerun sessions where the only difference is the presence of live social interactions in live sessions but not in rerun sessions, and develop econometric models to estimate the effect of live social interaction intensity on product returns. We find that product returns are higher for the live sessions than for the rerun sessions, and that the magnitude of the effect increases with live social interaction intensity, confirming the adverse persuasion effect in livestream e-commerce. We also find that the persuasion effect of live social interactions on product returns is stronger when the streamer has more experience in hosting livestream sessions and the product price is lower. We estimate that one standard deviation increase in live social interaction intensity can increase the product return rates by as much as 11.68 percentage points in terms of absolute product return rates, which is more than 30% of the average product return rates. Robustness checks, theoretical and managerial implications are also discussed.