Retail Strategies for E-tailers in Live Streaming Commerce: When Does an Influencer Marketing Channel Work?

A growing number of e-tailers are embracing influencer marketing channels and merchant live broadcast channels to promote product sales. Influencer marketing channels provide retailers with potential advantages in attracting consumers but also bring new challenges of possible demand cannibalization and high expenses. This paper develops a stylized model to investigate when the introduction of an influencer marketing channel can improve the profitability of a retailer and social welfare, considering two scenarios with or without a merchant live broadcast channel. We find that, in both scenarios, the fewer waiting cost-sensitive consumers, the easier it is for the retailer to benefit from an influencer marketing channel. Compared with products with lower prices in existing channels, adding an influencer marketing channel to products priced higher in existing channels is more beneficial to the retailer, the influencer, and consumers. We also reveal that, under certain conditions, the merchant live broadcast channel can substitute or enhance the ability of an influencer marketing channel to improve the retailer's profitability.