This study explores a seller's live-stream adoption and channel strategy, considering the streamer's private influence information and positive and negative spillover effects of live-stream selling.
We develop a game-theoretic model in which the seller designs a contract menu to screen the streamer's private influence information, and we obtain optimal decisions and profits of supply chain members under three strategies: traditional, single live-stream and hybrid channel. We then examine how cross-channel spillover effects and product quality affect channel choice.
Channel choice depends on live-stream spillover effects and preservation profit. A high spillover effect makes the hybrid channel optimal. Otherwise, preservation profit determines whether the seller adopts a single live-stream channel or abandons live-stream. Moreover, higher product quality can enhance the seller's preference for the hybrid channel, whereas a higher probability of high influence can enhance the preference for single live-stream. Under specific conditions, both live-stream sales models can achieve Pareto improvements, but greater consumer acceptance of traditional channel compresses the Pareto region of single live-stream channel and expands that of the hybrid channel.
This study constructs an adverse selection model regarding the streamer's influence, thereby enriching the theoretical foundation of live-stream commerce from an information asymmetry perspective. This paper examines the impact of the spillover effects of live-stream on channel selection, and expands the related research on multi-channel choices in the context of live-stream. By conducting a comprehensive analysis of these two variables, the study provides a more nuanced theoretical explanation for the heterogeneous adoption of live-stream selling observed in practice: why some sellers actively pursue live-stream and multi-channel operations, while others strategically avoid or restrict live-stream depending on their product characteristics and anticipated spillovers.
In practice, sellers should first identify the streamer's real influence by looking at average viewers, engagement, conversion records, category fit and even trial cooperation, rather than relying only on follower counts. They should also use small-scale live-stream tests and follow-up tracking to judge whether live-stream brings positive or negative spillovers to the traditional channel. In addition, channel choice should match product quality: high-quality products are more suitable for the hybrid channel, whereas low-quality products should first improve quality or use a single live-stream channel to build awareness before expanding further.
We examine how spillover effects affect sellers' channel choices under information asymmetry, enriching the existing research on channel selection under information asymmetry.
