Optimal Live Streaming Strategy of Online Retailer Considering Online Reviews

This study investigates the online retailer’s optimal live streaming strategy, focusing on the impacts of online reviews and the spillover effect of live streaming on the traditional e-commerce channel. Three scenarios are analyzed: traditional e-commerce only (Scenario N), adopting live streaming without the spillover effect (Scenario O, and adopting live streaming with the spillover effect (Scenario OS). Profit-maximization models are developed for both the retailer and the streamer to identify optimal pricing strategies. The findings show that live streaming adoption is beneficial when baseline return rates and the streamer’s sales ability are high, while factors like online review informativeness and consumer acceptance of live streaming are low. With the spillover effect, live streaming remains advantageous, and the conditions for adoption become more flexible, though excessive spillover effect may diminish its competitive edge. Additionally, pricing dynamics reveal that live streaming generally lowers the traditional channel price, but the spillover effect can alter this relationship. The retailer should adjust pricing and commission structures strategically to maximize profitability.