Short Video or Not? The Role of Short Videos in Shifting Customers’ Price Sensitivity in Live Streaming Commerce

Problem Definition: We explore the efficiency of two major marketing strategies – price discounts and short videos – in live streaming commerce. Specifically, we study the following questions: (i) What is the sales effect of price discounts? (ii) What is the overall sales effect of posting short videos before live streaming events? and (iii) How do short videos impact the relationship between price discounts and sales? Academic/Practical Relevance: Live streaming commerce is booming, and price discount strategies play an important role in attracting traffic and boosting sales. However, the increasing cost of price discounts due to fierce competition encourages streamers and brands to explore a non-pricing strategy: short videos. The current study increases our understanding of the individual effects, as well as the joint effect, of price discounts and short videos on sales, and provides practical insights about the effective implementation ofthese two strategies.Methodology/Results: Utilizing a comprehensive data set from TikTok (China), we find an inverted U- shaped relationship between price discounts and sales – as the discount deepens, the sales first increase then decrease. Meanwhile, the short video approach (by itself) exhibits a significant effect on improving sales in live streaming events. Finally, we find that short video postings can flatten the inverted U-shaped relationship between price discounts and sales (i.e., customers become less price-sensitive in live streaming events with short videos that have been previously posted). We also examine the heterogeneous effects of short videos in different genres (e.g., entertainment or product videos) and find that only non-product short videos have a flattening effect on discounts.Managerial Implications: Our findings suggest that price discount strategies might not always be ideal as deep discounts can reduce sales. With this taken into consideration, brands and streamers should rely more on the short video strategy as it can not only directly boost sales but also alleviate the negative effect of deep discounts.