Dual channel sales in supply chain: live streaming or traditional e-commerce

Abstract

In recent years, live streaming is becoming a popular channel to sell products all over the world. Compared to traditional e-commerce channel, live streaming channel may not only bring consumers more shopping convenience, but also pose consumers more privacy concern. This paper considers a supply chain consisting of a manufacturer and an e-tailer who sells through dual channels (i.e., live streaming and traditional e-commerce) to explore how shopping convenience and privacy concern affect the optimal decisions. We build game models of two pricing (exogenous and endogenous) and two incentive contracts (wholesale price and two-part tariff). We find that the optimal promotion efforts are decreasing in shopping convenience while increasing in privacy concerns under the wholesale price contract, and independent of them under the two-part tariff contract when pricing is not a decision (such as iPhone); the optimal promotion efforts are increasing in shopping convenience while decreasing in privacy concern when pricing is a decision (such as the seasonal products). Whether the retail pricing is a decision or not, supply chain coordination can be achieved by the two-part tariff contract, but not through the wholesale price contract. Further, the two-part tariff contract is more favorable to the manufacturer if the exogenously given retail price is low, and the wholesale price contract is more favorable to the manufacturer if the retail price is high; the two-part tariff contract is always more beneficial for the supply chain than the wholesale price contract. Finally, we extend our analysis to relax a more realistic form with a variable effort elasticity and verify the robustness of the theoretical results.