IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v255y2023ics0925527322002973.html
   My bibliography  Save this article

Live commerce retailing with online influencers: Two business models

Author

Listed:
  • Liu, Baolong
  • Wang, Weilong

Abstract

Selling during online influencers’ livestreaming has become prevalent in the retailing sector. Critical decisions for firms to keep the business sustainably profitable include whether it is worth collaborating with influencers, collaboration approaches, and the corresponding pricing and inventory decisions. Based on industrial practice, we investigate two business models: the Influencer-oriented Short-window (IOSW) model and the Market-oriented Long-window (MOLW) model, to understand how the models benefit a firm and how decision-making affects profit sustainability. To this end, we build stochastic optimization models and derive managerial insights. We find that neither of the two models dominates the other, so firms should not irrationally follow a case with successful influencer collaboration experiences. Moreover, a firm’s innovation capacity is the critical competence in the IOSW model, and an influencer’s fan base size is the fundamental driver for profits in the MOLW model. Firms should prioritize the “lowest price” strategy if they are not over-optimistic about the success of the livestream shows.

Suggested Citation

  • Liu, Baolong & Wang, Weilong, 2023. "Live commerce retailing with online influencers: Two business models," International Journal of Production Economics, Elsevier, vol. 255(C).
    • Handle: RePEc:eee:proeco:v:255:y:2023:i:c:s0925527322002973
    DOI: 10.1016/j.ijpe.2022.108715
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527322002973
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2022.108715?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Choi, Tsan-Ming, 2013. "Local sourcing and fashion quick response system: The impacts of carbon footprint tax," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 55(C), pages 43-54.
    2. Gérard P. Cachon & Robert Swinney, 2009. "Purchasing, Pricing, and Quick Response in the Presence of Strategic Consumers," Management Science, INFORMS, vol. 55(3), pages 497-511, March.
    3. Jayakrishnan Nair & Adam Wierman & Bert Zwart, 2016. "Provisioning of Large-Scale Systems: The Interplay Between Network Effects and Strategic Behavior in the User Base," Management Science, INFORMS, vol. 62(6), pages 1830-1841, June.
    4. Liu, Weihua & Long, Shangsong & Wei, Shuang, 2022. "Correlation mechanism between smart technology and smart supply chain innovation performance: A multi-case study from China's companies with Physical Internet," International Journal of Production Economics, Elsevier, vol. 245(C).
    5. Tseng, Ming-Lang & Bui, Tat-Dat & Lim, Ming K. & Fujii, Minoru & Mishra, Umakanta, 2022. "Assessing data-driven sustainable supply chain management indicators for the textile industry under industrial disruption and ambidexterity," International Journal of Production Economics, Elsevier, vol. 245(C).
    6. Gérard P. Cachon & Robert Swinney, 2011. "The Value of Fast Fashion: Quick Response, Enhanced Design, and Strategic Consumer Behavior," Management Science, INFORMS, vol. 57(4), pages 778-795, April.
    7. Anuj Kumar & Yinliang (Ricky) Tan, 2015. "The Demand Effects of Joint Product Advertising in Online Videos," Management Science, INFORMS, vol. 61(8), pages 1921-1937, August.
    8. Wongkitrungrueng, Apiradee & Assarut, Nuttapol, 2020. "The role of live streaming in building consumer trust and engagement with social commerce sellers," Journal of Business Research, Elsevier, vol. 117(C), pages 543-556.
    9. Jonah Berger & Michaela Draganska & Itamar Simonson, 2007. "The Influence of Product Variety on Brand Perception and Choice," Marketing Science, INFORMS, vol. 26(4), pages 460-472, 07-08.
    10. Li Chen & Yao Cui & Hau L. Lee, 2021. "Retailing with 3D Printing," Production and Operations Management, Production and Operations Management Society, vol. 30(7), pages 1986-2007, July.
    11. Liang Guo & Juanjuan Zhang, 2012. "Consumer Deliberation and Product Line Design," Marketing Science, INFORMS, vol. 31(6), pages 995-1007, November.
    12. Campbell, Colin & Farrell, Justine Rapp, 2020. "More than meets the eye: The functional components underlying influencer marketing," Business Horizons, Elsevier, vol. 63(4), pages 469-479.
    13. Wang, Xin & Tao, Zhiying & Liang, Liang & Gou, Qinglong, 2019. "An analysis of salary mechanisms in the sharing economy: The interaction between streamers and unions," International Journal of Production Economics, Elsevier, vol. 214(C), pages 106-124.
    14. Marshall Fisher & Ananth Raman, 1996. "Reducing the Cost of Demand Uncertainty Through Accurate Response to Early Sales," Operations Research, INFORMS, vol. 44(1), pages 87-99, February.
    15. Wen, Xin & Choi, Tsan-Ming & Chung, Sai-Ho, 2019. "Fashion retail supply chain management: A review of operational models," International Journal of Production Economics, Elsevier, vol. 207(C), pages 34-55.
    16. Santiago Gallino & Antonio Moreno, 2018. "The Value of Fit Information in Online Retail: Evidence from a Randomized Field Experiment," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 767-787, October.
    17. Choi, Tsan-Ming, 2020. "Internet based elastic logistics platforms for fashion quick response systems in the digital era," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 143(C).
    18. Friedrich, Anne & Lange, Anne & Elbert, Ralf, 2022. "How additive manufacturing drives business model change: The perspective of logistics service providers," International Journal of Production Economics, Elsevier, vol. 249(C).
    19. Park, Hyun Jung & Lin, Li Min, 2020. "The effects of match-ups on the consumer attitudes toward internet celebrities and their live streaming contents in the context of product endorsement," Journal of Retailing and Consumer Services, Elsevier, vol. 52(C).
    20. Um, Juneho & Lyons, Andrew & Lam, Hugo K.S. & Cheng, T.C.E. & Dominguez-Pery, Carine, 2017. "Product variety management and supply chain performance: A capability perspective on their relationships and competitiveness implications," International Journal of Production Economics, Elsevier, vol. 187(C), pages 15-26.
    21. Kinshuk Jerath & Sang-Hyun Kim & Robert Swinney, 2017. "Product Quality in a Distribution Channel with Inventory Risk," Marketing Science, INFORMS, vol. 36(5), pages 747-761, September.
    22. Juneho Um & Andrew Lyons & Hugo K.S. Lam & T.C.E. Cheng & Carine Dominguez-Pery, 2017. "Product variety management and supply chain performance : A capability perspective on their relationships and competitiveness implications," Post-Print hal-01986046, HAL.
    23. Jiang, Yuanchun & Shang, Jennifer & Liu, Yezheng & May, Jerrold, 2015. "Redesigning promotion strategy for e-commerce competitiveness through pricing and recommendation," International Journal of Production Economics, Elsevier, vol. 167(C), pages 257-270.
    24. Sreedevi, R. & Saranga, Haritha, 2017. "Uncertainty and supply chain risk: The moderating role of supply chain flexibility in risk mitigation," International Journal of Production Economics, Elsevier, vol. 193(C), pages 332-342.
    25. Tsan‐Ming Choi & Stein W. Wallace & Yulan Wang, 2018. "Big Data Analytics in Operations Management," Production and Operations Management, Production and Operations Management Society, vol. 27(10), pages 1868-1883, October.
    26. Leung, Eric K.H. & Lee, Carmen Kar Hang & Ouyang, Zhiyuan, 2022. "From traditional warehouses to Physical Internet hubs: A digital twin-based inbound synchronization framework for PI-order management," International Journal of Production Economics, Elsevier, vol. 244(C).
    27. Dmitri Kuksov & Chenxi Liao, 2019. "Opinion Leaders and Product Variety," Marketing Science, INFORMS, vol. 38(5), pages 812-834, September.
    28. Haoyan Sun & Jianqing Chen & Ming Fan, 2021. "Effect of Live Chat on Traffic‐to‐Sales Conversion: Evidence from an Online Marketplace," Production and Operations Management, Production and Operations Management Society, vol. 30(5), pages 1201-1219, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wang, Siqi & Lim, Xin-Jean & Luo, Xi & Cheah, Jun-Hwa, 2024. "To hesitate or not to hesitate: Can popularity cues minimize the hesitation to checkout in e-commerce?," Journal of Retailing and Consumer Services, Elsevier, vol. 78(C).
    2. Cui, Xueqing & Li, Yongjian & Li, Xiang & Fang, Shulin, 2023. "Livestream e-commerce in a platform supply chain: A product-fit uncertainty reduction perspective," International Journal of Production Economics, Elsevier, vol. 258(C).
    3. Joshi, Raunak & Basu, Sumanta & Jonnalagedda, Sreelata & Avittathur, Balram, 2023. "Multichannel retailer’s channel choice and product pricing: Influence of investment in fit-disclosing technology by competing retailers," International Journal of Production Economics, Elsevier, vol. 262(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dong, Junfeng & Wu, Desheng Dash, 2019. "Two-period pricing and quick response with strategic customers," International Journal of Production Economics, Elsevier, vol. 215(C), pages 165-173.
    2. Yang, Daojian & Qi, Ershi & Li, Yajiao, 2015. "Quick response and supply chain structure with strategic consumers," Omega, Elsevier, vol. 52(C), pages 1-14.
    3. Natalia Szozda & Artur Świerczek, 2022. "Upstream and downstream dyad governance within the network structures: Creating supply chain governance for the customized products," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 873-898, June.
    4. Robert Swinney, 2011. "Selling to Strategic Consumers When Product Value Is Uncertain: The Value of Matching Supply and Demand," Management Science, INFORMS, vol. 57(10), pages 1737-1751, October.
    5. Huang, Lingchen & Liu, Bin & Zhang, Rong, 2024. "Channel strategies for competing retailers: Whether and when to introduce live stream?," European Journal of Operational Research, Elsevier, vol. 312(2), pages 413-426.
    6. Zugang Liu & Anna Nagurney, 2013. "Supply chain networks with global outsourcing and quick-response production under demand and cost uncertainty," Annals of Operations Research, Springer, vol. 208(1), pages 251-289, September.
    7. Choi, Tsan-Ming, 2018. "Incorporating social media observations and bounded rationality into fashion quick response supply chains in the big data era," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 386-397.
    8. Oded Berman & Mohammad M. Fazel-Zarandi & Dmitry Krass, 2019. "Truthful Cheap Talk: Why Operational Flexibility May Lead to Truthful Communication," Management Science, INFORMS, vol. 65(4), pages 1624-1641, April.
    9. Wen, Xin & Siqin, Tana, 2020. "How do product quality uncertainties affect the sharing economy platforms with risk considerations? A mean-variance analysis," International Journal of Production Economics, Elsevier, vol. 224(C).
    10. Aviv, Yossi & Bazhanov, Andrei & Levin, Yuri & Nediak, Mikhail, 2016. "Quantity Competition under Resale Price Maintenance when Most Favored Customers are Strategic," MPRA Paper 72011, University Library of Munich, Germany.
    11. Mao, Zhaofang & Du, Zelin & Yuan, Ruiying & Miao, Qiqi, 2022. "Short-term or long-term cooperation between retailer and MCN? New launched products sales strategies in live streaming e-commerce," Journal of Retailing and Consumer Services, Elsevier, vol. 67(C).
    12. Gérard P. Cachon & Pnina Feldman, 2015. "Price Commitments with Strategic Consumers: Why It Can Be Optimal to Discount More Frequently … Than Optimal," Manufacturing & Service Operations Management, INFORMS, vol. 17(3), pages 399-410, July.
    13. Choi, Tsan-Ming, 2020. "Internet based elastic logistics platforms for fashion quick response systems in the digital era," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 143(C).
    14. Zhang, Yanfen & Xu, Qi & Zhang, Guoqing, 2023. "Optimal contracts with moral hazard and adverse selection in a live streaming commerce market," Journal of Retailing and Consumer Services, Elsevier, vol. 74(C).
    15. Marta Pérez-Pérez & Canan Kocabasoglu-Hillmer & Ana María Serrano-Bedia & María Concepción López-Fernández, 2019. "Manufacturing and Supply Chain Flexibility: Building an Integrative Conceptual Model Through Systematic Literature Review and Bibliometric Analysis," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 20(1), pages 1-23, December.
    16. Xu, Jian & Duan, Yongrui, 2020. "Pricing, ordering, and quick response for online sellers in the presence of consumer disappointment aversion," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    17. Zhang, Xiaojing & Zhang, Yulin, 2024. "Content marketing in the social media platform: Examining the effect of content creation modes on the payoff of participants," Journal of Retailing and Consumer Services, Elsevier, vol. 77(C).
    18. Tsan-Ming Choi & Ya-Jun Cai, 2020. "Impacts of lead time reduction on fabric sourcing in apparel production with yield and environmental considerations," Annals of Operations Research, Springer, vol. 290(1), pages 521-542, July.
    19. Jiawu Peng & Yue Zhao & Lili Dai, 2023. "Equilibrium Strategy of Production and Order in a Two-Echelon Supply Chain with Demand Information Updates and Capacity Restriction," Mathematics, MDPI, vol. 11(23), pages 1-32, November.
    20. Yang, Wenting & Govindan, Kannan & Zhang, Jiantong, 2023. "Spillover effects of live streaming selling in a dual-channel supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:255:y:2023:i:c:s0925527322002973. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.