The value of influencer channel in an emerging livestreaming e-commerce model

This study analytically investigates whether and when a manufacturer should use an influencer channel set up by an e-tailer. Our work is motivated by increasingly popular influencer channels that thoroughly combine livestreaming with e-commerce in global e-retailing markets. Influencers pay a per-unit rent to an e-tailer in exchange for the opportunity to use their traffic or customer base to sell the manufacturer’s products, while the manufacturer can also sell its product to the e-tailer to earn its wholesale price. By deriving the equilibrium channel and characterising firms’ pricing decisions and profits, we find that the influencer channel is an efficient way for the e-tailer to improve profitability, and an efficient shopping format for consumers to increase their surpluses. However, whether a manufacturer should use it depends on the potential of misfit elimination in the influencer channel and the hassle costs of consumers. By extending the basic model to assume that consumers have different channel preferences, we also find that a relatively sizeable experiential consumer group negatively affects the manufacturer when the potential of misfit elimination is relatively high.