When Should Metaverse Technology be Adopted in Live Streaming Considering Consumer Returns?

Abstract

Consumer returns are common in live streaming selling, and metaverse technology is gradually advocated to solve the issue of consumer returns since this technology can significantly enhance the live streaming shopping experience. We consider a supply chain composed of a manufacturer and a retailer with two live streaming scenarios: ML and RL. In scenario ML (RL), the manufacturer (retailer) invites an influencer to open a live streaming channel. We explore the impacts of influencer power and consider the integration of metaverse technology. Our analytical results reveal the following: Under scenario ML, the adoption of metaverse technology increases the manufacturer’s optimal profit at a moderate unit cost of metaverse technology with high influencer power or at a low unit cost. When the manufacturers introduce live streaming, they should adopt metaverse technology when choosing influencers with relatively high influencer power as the unit cost is moderate in the development phase of metaverse technology. Under scenario RL, the retailer should only adopt metaverse technology at a high unit cost with low influencer power or at a low unit cost with high influencer power. This implies a counterintuitive strategy: when cooperating with influencers with lower influencer power, the retailers should adopt metaverse technology despite high costs. Furthermore, regardless of metaverse technology adoption, scenario RL (ML) brings more profit to the manufacturer if influencer power is low (high). This indicates that manufacturers and retailers should choose influencers with greater influence power when introducing live streaming. By extending our model, we examine the robustness of our findings under the scenarios involving channel competition, omni-channel strategy, and live streaming slicing. This study is the first to explore the adoption strategies of metaverse technology in different live streaming supply chain structures considering consumer returns, providing valuable guidance for manufacturers and retailers on when to adopt metaverse technology.