Brands’ Livestream Selling with Influencers’ Converting Fans into Consumers

Abstract

Livestream selling is booming in the digital economy era. In practice, for the benefits such as consumer utility enhancement and the reduction of supply-preference mismatch, many brands are adapting their strategies to livestream selling, wherein some brands cooperate with top influencers to livestream as they can exert efforts to convert the fans into consumers. By contrast, some other brands choose to livestream by themselves to save the commission cost for the influencer, even at the expense of losing fan consumers. In this study, we characterize brands’ key tradeoffs between top influencer-livestream and self-livestream selling strategies. We find that a higher commission rate can incentivize the influencer to exert more efforts to convert fans, but also harms the brand by reducing the proportion of the livestream profit allocated to it and inhibiting it from transferring commission cost to consumers. Therefore, the brand may (not) be suggested to cooperate with the influencer when the commission rate is at a moderate (either low or high) level such that the twofold impacts of the commission rate are balanced (imbalanced). For consumers, their surplus may first decrease and then increase with the influencer commission rate. Our study deepens the understanding of the roles of top influencers and their fans in livestream e-commerce operations.