Retailer’s information sharing and manufacturer’s channel expansion in the live-streaming E-commerce era

Abstract

Numerous manufacturers started to embrace live-streaming selling channels in addition to their preexisting retail channels during the outbreak of COVID-19. Our work investigates a retailer’s optimal strategy for sharing demand information with a manufacturer who may collaborate with a streamer to build a live-streaming selling channel. The results indicate that the manufacturer’s live-streaming selling channel expansion via an influencer does not necessarily harm the retailer because the retailer can free ride on the market expansion due to the social influence of the streamer. We also provide a rationale for the widespread voluntary information sharing observed in the era of live-streaming selling. The retailer can discourage or encourage the manufacturer to establish a live-streaming channel by sharing the demand information, which depends on the streamer’s social influence. In addition, potential changes to the information sharing policy result in several unexpected profit implications for the manufacturer, whose profit exhibits a nonmonotonic relationship to the streamer’s social influence and the channel expansion cost. In other words, our results counterintuitively show that the manufacturer may suffer from cooperating with a highly influential streamer in a live-streaming channel but benefit from choosing a less influential one.