Live-streaming strategy choices for online retail platforms: external recruitment versus internal cultivation?

Abstract

Purpose Live-streaming sales have emerged as a pivotal strategy for manufacturers to expand market reach and enhance brand influence. However, some manufacturers hire their own staff to conduct live sales, while others outsource to third-party streamers. Our purpose is to address manufacturers' choices regarding live-streaming sales strategies and to explore the principles underlying the mutual influence between manufacturers' decisions and consumer returns. Design/methodology/approach To account for this strategic divergence, we develop a two-stage model integrating consumer purchase and return behaviors, analyzing three sales modes: sales without live streaming (Mode N), live-streaming sales by self-employed streamers (Mode E) and live-streaming sales by third-party streamers (Mode C). We adopt the Stackelberg model to explore optimal decisions and profits under different strategies. Findings In cases where consumers are more concerned about quality, third-party streamers impose quality requirements that compel manufacturers to provide higher-quality products, thereby capitalizing on sales scale advantages through apparent quality improvements. Conversely, products with low discrepancies of online assessments benefit from the stable cost of Mode N. For products with high return rates, self-employed streamers can leverage promotions to reduce return losses. Originality/value We innovatively developed a two-stage model to investigate consumers' distinct responses to placing orders and returning goods, thereby enabling the endogenization of the return rate. And we set parameters such as consumers' worry about potential return costs and the reputation benefits of third-party streamers, reflecting the actual situation.