Navigating Live Streaming: Retailers’ Strategies in Online–Offline Competition

Live-streaming shopping is reshaping retail markets, especially due to the challenge of high product returns. This article investigates two key decisions for a live-streaming retailer: whether to conduct self-streaming or employ a third-party streamer, and whether to offer return-freight insurance (RI) to consumers. We also explore how an offline retailer adjusts its pricing and in-store assistance in response to the online counterpart’s actions. First, the live-streaming retailer benefits from offering RI only when the RI premium is low. If return-freight compensations are at a high level, the retailer is more likely to offer RI as return-freight compensations increase, probability of online product fit decreases, or probability of consumers’ impulse-buying increases. The three factors have the opposite effect if return-freight compensations are at a low level. Second, in most cases, the live-streaming retailer tends to employ a third-party streamer when the fan effect is high and the fixed fee is low. Otherwise, conducting self-streaming is preferred. Interestingly, offering RI can serve as an alternative to employing a third-party streamer when the RI premium is low—even when the third-party streamer has a strong fan effect and cost-effectiveness. Third, the offline retailer reduces the selling price and in-store assistance level when the live-streaming retailer offers RI at a low RI premium. When the live-streaming retailer employs a third-party streamer with weak fan effects, the offline retailer responds by raising the selling price and improving in-store assistance, compared to when the retailer conducts self-streaming.