Commit on Effort or Sales? Value of Commitment in Live-streaming E-commerce

Yongbo Xiao · Jing Yu · Sean X. Zhou

54 citations0/0 files storedProduction and Operations Management

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Supply Chain and Inventory Management Sustainable Supply Chain Management Auction Theory and Applications

Abstract

With rapid development of live-streaming e-commerce, an increasing number of firms are collaborating with live-streamers (e.g., online influencers and celebrities) to host online live-shows for selling their products. To reduce the firm’s risk and motivate it to stock more, live-streamers can commit a minimum sales volume and/or the effort devoted to attracting fans and promoting the upcoming live-show. In this article, we study the roles of such sales and effort commitments on the performance of a “supply chain” in which a seller sells its product via a live-streamer. Product demand at the live-show is random while depending on the live-streamer’s pre-show effort and the seller needs to decide the amount of inventory for sale at the live-show. We consider three scenarios, in which the live-streamer makes sales-only, effort-only, and hybrid commitments, and compare the decisions and profits of both parties. We show that the commitment on sales volume or effort is mutually beneficial to the seller and the live-streamer. Moreover, the hybrid commitment can motivate the seller to stock more inventory and induce more effort from the live-streamer compared to sales-only or effort-only commitment. The live-streamer always prefers the hybrid commitment whereas the seller may prefer the sales-only commitment, for example, when the penalty is at a medium level.

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References

2003Supply Chain Coordination with Contracts 2005Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and Limitations 2001Selling to the Newsvendor: An Analysis of Price-Only Contracts 2002Supply Chain Coordination Under Channel Rebates with Sales Effort Effects 2004The Allocation of Inventory Risk in a Supply Chain: Push, Pull, and Advance-Purchase Discount Contracts 1998Quality and Competition 1997Quick Response in Manufacturer-Retailer Channels 2004Coordinating Contracts for Decentralized Supply Chains with Retailer Promotional Effort

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