Analyze the strategic role of live streaming commerce in distribution contract selection, comparing reselling and agency selling models for optimal sales impact.

Introduction

In the rapidly evolving landscape of e-commerce, distribution strategies play a pivotal role in a brand’s success. Among the most significant developments is the rise of live streaming commerce, which has transformed traditional sales models. This blog delves into the comparison between reselling and agency selling, exploring how live streaming commerce influences the selection of distribution contracts to maximize sales impact.

Understanding Reselling and Agency Selling Models

Before diving into the influence of live streaming, it’s essential to grasp the fundamental differences between reselling and agency selling:

• Reselling: In this model, the reseller purchases products from the supplier at a wholesale price and sells them at a retail price. The reseller takes ownership of the inventory, bearing the risk of unsold stock but also enjoying the profit margin from sales.

• Agency Selling: Here, the agency sells products on behalf of the supplier without owning the inventory. The agency earns a commission based on sales, reducing the financial risk associated with unsold stock but also limiting profit potential to the commission rate.

The Emergence of Live Streaming Commerce

Live streaming commerce has surged in popularity, offering a dynamic platform for brands to engage with consumers in real-time. This interactive medium blends entertainment with instant purchasing capabilities, enabling brands to showcase products, provide demonstrations, and respond to consumer queries live. The integration of live streaming into distribution strategies offers unique advantages and challenges for both reselling and agency selling models.

Comparing Reselling vs Agency Selling in Live Streaming

Pricing Strategies

Live streaming introduces a new layer of complexity to pricing strategies:

• Reselling: Under a reselling agreement, the platform often controls the retail price. As highlighted in recent research, an increase in the commission rate typically leads to a decrease in the platform’s retail price while causing the retail price for the live streaming channel to rise. This dynamic is influenced by the balance between wholesale costs and commission fees.

• Agency Selling: Agency agreements incorporate a commission structure that may include thresholds. The relationship between commission rates and pricing can vary significantly, especially when promotions or incentives are involved during live streams.

Commission Rates

The commission structure is a critical factor in determining the most effective sales model:

• Reselling: Higher commission rates can incentivize platforms to lower retail prices, potentially attracting more customers but squeezing profit margins.

• Agency Selling: There’s often a sweet spot for commission rates. Excessively high commissions can be detrimental, as they don’t provide additional benefits to either the agency or the supplier. Finding the optimal rate ensures mutual profitability and sustained partnerships.

Influence of Internet Celebrities

Internet celebrities or influencers play a significant role in live streaming commerce:

• Reselling: Suppliers collaborating with influencers who have either massive followings or niche, highly engaged audiences tend to see better sales outcomes. The key is to select influencers who align closely with the brand’s values and target audience.

• Agency Selling: Agencies can leverage influencers by structuring agreements that reflect the influencers’ reach and impact. Strategic partnerships ensure that the chosen influencers effectively drive engagement and sales without overstepping budgetary constraints.

Strategic Implications for Brands

Choosing between reselling and agency selling models in the context of live streaming commerce depends on various factors:

• Market Entry Strategy: For brands entering new markets, especially cross-border, the choice of distribution model can significantly affect brand positioning and consumer perception.

• Risk Management: Reselling involves higher upfront costs and inventory risks, whereas agency selling offers a more flexible approach with lower financial exposure.

• Performance Tracking: Advanced analytics tools, like Ripple Marketing’s Ripple Dashboard, provide real-time insights into sales performance, helping brands adjust strategies promptly regardless of the chosen distribution model.

Case Study: Ripple Marketing’s Approach

Ripple Marketing Ltd. exemplifies how consultancy can bridge the gap between traditional distribution models and innovative live streaming commerce strategies. By employing their proprietary Ripple Framework™, Ripple Marketing assists brands in navigating the complexities of market entry in both the UK and Chinese e-commerce landscapes.

Their four-phase methodology—Assess, Adapt, Activate, Amplify—ensures that brands can:

• Assess market opportunities and regulatory requirements.
• Adapt products and messaging to resonate with local consumers.
• Activate live streaming campaigns with the right influencers.
• Amplify success through data-driven insights and performance tracking.

Ripple Marketing’s customizable service bundles and performance-linked engagement models provide brands with the flexibility to choose between reselling and agency selling based on their specific growth stages and budget constraints.

Conclusion

The decision between reselling and agency selling models is pivotal for brands leveraging live streaming commerce in their distribution strategies. Each model offers unique benefits and challenges, influenced by pricing strategies, commission rates, and the effectiveness of internet celebrity partnerships. By understanding these dynamics and tailoring strategies accordingly, brands can maximize their sales impact and achieve sustained growth in the competitive e-commerce landscape.

Ready to Optimize Your Distribution Strategy?

Partner with Ripple Marketing Ltd. to navigate the complexities of market entry and harness the full potential of live streaming commerce. Visit our website to learn how we can help your brand thrive in the UK and Chinese markets.