Reselling or agency selling? The impact of live-streaming on selling formats

Abstract

Purpose

Choosing the proper selling format for online retail has long been a critical issue for many platforms to consider, whereas the emergence and popularity of live-streaming have had a massive impact on the platform's business. As a result, selecting the suitable operating strategy for the live channel has become another critical issue for platforms. In such a context, what will be the impact of live-streaming on selling formats?

Design/methodology/approach

In order to explore these issues, we identified two selling formats (wholesale reselling or agency selling) as well as two operating strategies (introduce or discard). Thereby, four channel-structures are constructed, namely the reselling-discard model (WN), the reselling-introduce model (WL), the agency-discard model (AN), and the agency-introduce model (AL). We comprehensively compare how different structures affect stakeholders' interests, consumer surplus, and social welfare through equilibrium analyses.

Findings

These results help clarify the impact of critical factors (e.g. self-effort attribute, cross-effort attribute, and commission ratio) on the choice of models. We find that regardless of the selling agreement between the manufacturer and the platform, the introduction of a live store is necessary; specifically, when the commission ratio is high, the platform's optimal decision is first to sign an agency agreement and then apply live selling (AL); conversely, when the commission ratio is low, the platform's optimal strategy is first to enable the live channel and then to select the reselling format (WL), together, this also reveals, from a theoretical perspective.

Originality/value

Our study includes the dual analysis of selling formats and channel operations, considering the inherent dual attributes of service efforts and the external competitive environment.