Could AI livestream perform better than KOL in cross-border operations?

AI livestream with virtual anchors enables the global brands to promote products by transcending cultural disparities. So the novel business model incorporating AI livestream in cross-border operations is worth investigating to show the tradeoffs in the global brands’ decision between AI and the widely adopted key-opinion-leader (KOL) livestream. We focus on the direct channel because such concern does not exist in the reselling channel by the use of local retailers. We develop a cross-border co-opetition model to show the bright and dark sides of AI livestream, where the tariff cost difference between the livestream channel and the existing retail channel are taken into account. We show that, although the novel features of AI livestream are extensively formulated, this new promotion tool can be beneficial only when (1) the network externality among livestream fans is very strong; or (2) the network externality is relatively weak but the tariff cost in the retail channel is high. The underlying rationality can be interpreted by two interesting effects for the offline retail channel, namely the “suppress effect” in AI livestream and the “bailout effect” in KOL livestream. We further examine the impact of cross-border logistics cost and the KOL’s stronger network externality to show the robustness of the main findings.