Abstract Live‐stream selling is becoming increasingly important for online retailing and has been adopted by many manufacturers. In practice, there are two common live‐stream selling modes: third‐party live‐stream selling (T‐LSS) and merchant live‐stream selling (M‐LSS). Meanwhile, facing the manufacturers' live‐stream selling competition, many traditional platform operators (p‐operators) conduct retail service investment to improve competitiveness. Motivated by these practices, we explore the performances of a manufacturer's live‐stream selling and a p‐operator's retail service investment through analytical models. Results show that the p‐operator's retail service investment always benefits itself and the manufacturer, but reduces the probability that introducing the M‐LSS is profitable. Notably, when the p‐operator invests in retail service, the manufacturer should use the M‐LSS if the channel competition is medium and the spillover effect is high. Moreover, when the channel competition is low, the p‐operator's retail service investment and the manufacturer's M‐LSS create a win‐win outcome for both if the positive spillover effect is high enough.
Wei et al. (2026) studied this question.