Artificial Intelligence-Powered Digital Streamers in Online Retail: Empirical Insights and Design Strategies from Experiments

Abstract

As artificial intelligence (AI)-powered digital streamers gain popularity in live commerce, online retailers face critical questions about the actual business value of their operations. This study offers timely, evidence-based insights into the economic impact and optimal design of digital streamers. Although current designs do not significantly improve sales over no live streaming, incorporating behavioral realism—especially enhanced real-time question and answer (Q&A)—can boost sales by 25%, making digital streamers as effective as human hosts. Visual upgrades and human-like voices also help but to a lesser degree. Importantly, not all AI-driven enhancements deliver immediate returns, and imitating human scripts does not guarantee success. Retailers should focus on dynamic human-AI interaction features that drive engagement and trust, such as real-time Q&A and interactive giveaways. Designers are encouraged to integrate multiple realism features to maximize effectiveness while managing cost and scalability. These findings offer actionable guidance for retailers and platform designers seeking to leverage AI effectively and cost efficiently in live streaming commerce.Artificial intelligence (AI)-powered digital streamers are transforming live streaming by autonomously interacting with consumers to promote products in real time. Leveraging advancements in AI, virtual reality, and generative AI, these entities combine human-like visual design (form realism) and interactive capabilities (behavioral realism) to enhance consumer engagement. Despite their growing adoption, the economic impact of digital streamers on product sales and the optimal design strategies remain underexplored. This study addresses two critical questions. (1) What is the economic impact of digital streamers on product sales compared with no live streaming at all? (2) In what ways can form realism (visual appearance) and behavioral realism (verbal communication and human-AI interactions) enhance digital streamers’ effectiveness in live streaming commerce? Using a quasi-experiment and a randomized field experiment, we first assess the baseline performance of digital streamers and subsequently evaluate specific design enhancements. Our findings reveal that unlike human streamers, current digital streamers do not significantly boost sales compared with no live streaming. However, incorporating behavioral realism strategies, such as enhanced real-time question and answer (Q&A) and lottery features, increases sales by 25% and 17%, respectively. Human-like voices and improved visual appearances also contribute to sales gains but to a lesser extent. Among all design strategies, only enhanced real-time Q&A enables digital streamers to achieve sales performance on par with human streamers. This research provides empirical evidence on the business value of digital streamers, advances understanding of anthropomorphic design in live commerce, and offers actionable insights for online retailers. By identifying cost-effective design strategies, this study highlights the transformative potential of digital streamers in digital marketing.History: Ravi Bapna, Senior Editor.Funding: S. Yang gratefully acknowledges support from the National Natural Science Foundation of China [Grants 72372023 and 71972035].Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2023.0024 .