Information sharing and channel selection when considering live streaming commerce

Abstract With the rise of e‐commerce, some manufacturers tend to establish multiple distribution channels consisting of direct and livestream to earn additional revenue. To counteract manufacturers' distribution strategies, the retailers with private demand information often adopt the information sharing strategy. In our research, we construct a game‐theoretic model to investigate how information‐sharing decisions of retailers and distribution channel selections of manufacturers affect the supply chain. We consider the above procedure in two leadership scenarios: the manufacturer led and the retailer led. Our research fully characterizes the equilibrium outcomes and shows how they are affected by variables such as channel substitutability, key opinion leaders (KOL) commission rate, and network externality. We find that only under the retailer‐led scenario will the retailer choose to share demand information, which indicates the choice of leader has a major impact on each party's strategy. Our studies also unfold that the network externality may hurt the manufacturer when opening the livestream channel and the KOL charges a high commission fee. The manufacturer will decrease the wholesale price to boost wholesale sales, which is called the “bailout effect.” Therefore, we advise that the managers should focus more on the wholesale channel sometimes.