How Live Streaming Drives Online Sales—And Why Strategy Matters
New research shows that live streaming significantly increases online sales—but the biggest gains come when companies align their live streaming strategy with product information needs and customer relationships.
How Live Streaming Drives Online Sales—And Why Strategy Matters
Live streaming has rapidly emerged as a powerful channel in online retail, reshaping how businesses engage customers and drive sales. Yet beyond its growing popularity, questions remain about how live streaming creates value—and which approaches are most effective. New research published in Production and Operations Management, titled “Two Streams to Success: Unpacking the Informational and Relational Roles of Live Streaming in Online Shopping,” shows that not all live streaming strategies influence sales in the same way.
Drawing on large-scale e-commerce data and advanced AI-based video analysis, the study examines how live streaming affects online sales performance. Co-authored by UIC Business Associate Professor Yingda Lu and collaborators from other U.S. business schools, the research demonstrates that live streaming delivers the greatest impact when companies align their strategy with product information needs and customer relationships—rather than treating it as a one-size-fits-all marketing tactic.
Research Questions
To move beyond anecdotal evidence, the researchers examined three questions that are highly relevant to business leaders navigating digital commerce:
- Does adopting live streaming technology increase online product sales?
- Through which mechanisms does live streaming influence purchasing behavior?
- How do seller reputation and existing product information shape the effectiveness of different live streaming strategies?
Together, these questions focus not only on outcomes, but on the conditions under which live streaming delivers the greatest value.
Methodology
Using data from a leading social media live-streaming platform and a major e-commerce marketplace, the researchers analyzed more than 10,000 products sold by hundreds of online retailers. The study combines econometric analysis with a novel deep-learning approach that evaluates video, motion, and speech across hours of live streaming content.
This approach allowed the researchers to distinguish between two fundamentally different live streaming strategies:
- Product-Oriented Live Streaming
Streams that focus on product demonstrations, features, fit, and usage. - Non-Product-Oriented Live Streaming
Streams centered on interaction, entertainment, and relationship-building rather than on direct product information.
By isolating these strategies, the study reveals how live streaming works through different mechanisms depending on context.
Key Findings
Live streaming adoption has a clear and significant impact on sales. On average, retailers who adopt live streaming experience sales increases of more than 40 percent. However, why sales increase depends on how live streaming is used.
Product-oriented live streaming boosts sales by reducing uncertainty. By allowing customers to see products in action, ask questions in real time, and better understand quality and fit, these streams are especially valuable when products lack strong reviews or visual information.
Non-product-oriented live streaming increases sales through a different pathway. These streams strengthen trust, engagement, and customer relationships—often delivering even larger sales gains than product demonstrations, particularly for sellers with strong reputations.
Importantly, the effectiveness of each strategy depends on context:
- Product-oriented streams are most valuable when products have limited reviews or visual information.
- Relationship-focused streams are most effective for sellers with established credibility and strong ratings.
Taken together, these findings show that live streaming drives sales through distinct mechanisms—making strategic alignment, not adoption alone, the key determinant of impact.
Live streaming boosts online sales—but the greatest gains come from aligning it with product information and customer relationships.
What This Means for Managers
For business leaders, the takeaway is clear: live streaming should be treated as a strategic sales channel, not a novelty or one-off promotional tactic. Firms that adopt live streaming thoughtfully—and integrate it into broader customer engagement strategies—see the greatest and most sustained returns.
Managers should begin by aligning their live streaming approach with their business context. Product-oriented streams are particularly effective for newer products or offerings with higher uncertainty, helping customers better evaluate quality and usage. In contrast, relationship-focused streams are powerful tools for trusted sellers looking to deepen loyalty and humanize their brand.
Several practical implications follow:
- Match strategy to context. Choose product-focused or relationship-focused streams based on review volume, visual information, and seller reputation.
- Leverage information gaps. Use live demonstrations to compensate for limited product reviews or imagery.
- Build trust deliberately. Relationship-driven streams can amplify existing credibility and strengthen long-term customer bonds.
- Think long term. The greatest benefits occur when live streaming is embedded into ongoing engagement strategies rather than deployed as isolated events.
Conclusion
As live streaming continues to reshape digital commerce, this research underscores a critical insight: success depends not on adopting live streaming for its own sake, but on using it strategically. By aligning live streaming with product characteristics and customer relationships, firms can turn real-time engagement into measurable sales performance and long-term competitive advantage.
About the journal: Production and Operations Management is a leading peer-reviewed journal in operations and analytics. It appears on the BusinessWeek Top 20, UT Dallas Top 24, and Financial Times Top 50 lists.