A Stackelberg game analysis of livestreaming sales and product returns in e-commerce

Abstract

Many enterprises selling products on e-commerce platforms have adopted livestreaming to increase sales volume. A high return rate, caused by an exaggerated presentation of the products, can overwhelm the supply chain. Livestreaming considering the product return issue has received little attention in the academic literature. Building on the existing knowledge of the traditional e-commerce sales model, a Stackelberg game model led by an apparel enterprise is established to study livestreaming as a new sales strategy, considering the return rates, the livestreaming anchors’ commission, and the products’ diminishing time-value. A comparative analysis investigates whether the livestreaming sales model increases profitability, considering that some products may be returned. The results show that the return rate has a meaningfully different impact on the optimal price and sales volume of both the apparel enterprise and the third-party liquidation seller. In livestreaming sales, if the commission charged by the anchor passes a certain threshold, the apparel enterprise’s profit will be less than its traditional e-commerce profit, even with a low return rate. It is also found that a higher diminishing time-value coefficient of apparel may correspond to lower pricing by the third-party liquidation seller.