Boosting domestic demand directly fulfills the people’s growing need for a better life and serves as a key engine for building a new development paradigm centered on domestic circulation while promoting mutual reinforcement between domestic and international circulation. With the advancement of digital technology, the penetration rate of digital consumption represented by E-commerce live streaming has steadily increased, exerting a significant impact on domestic demand. From the perspective of consumption channels, E-commerce live streaming may complement offline channels and traditional E-commerce channels (suggesting it drives incremental expansion) or compete with them (indicating it substitutes for existing consumption). Theoretical analysis indicates that, compared to the other two channels, E-commerce livestreaming creates new demand, expands market boundaries, and enhances conversion rates. Based on this, this paper proposes the hypothesis that E-commerce livestreaming has an incremental expansion effect on overall consumption rather than a substitution effect. This paper empirically tests this hypothesis using provincial-quarterly data from 2020 to 2024. Results from benchmark regression, robustness tests, exclusion of competing hypotheses, and instrumental variables all confirm that E-commerce livestreaming drives incremental expansion in overall consumption. Specifically, consumption growth attributable to livestreaming accounts for approximately 8.9% of household consumption growth. Heterogeneity analysis reveals that livestreaming stimulates rural consumption more significantly than urban consumption, with significant variations in consumption-boosting effects across different livestreaming categories—fresh food, exhibiting lower elasticity, showing the strongest effect.