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The effects of BOPS implementation under different pricing strategies in omnichannel retailing

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  • Kong, Ruixiao
  • Luo, Li
  • Chen, Liuxin
  • Keblis, Matthew F.

Abstract

Many retailers have recently implemented buy online and pick up in store (BOPS) by integrating their online and offline channels. In this paper, considering a retailer who sells products through both online and offline channels, we develop a theoretical model to study the effects of BOPS adoption. Using our model, we first analyze how adoption of BOPS affects a retailer’s optimal prices, total demand and profit under consistent and inconsistent pricing strategies where a retailer employs the same pricing strategy both before and after BOPS implementation. We then conduct a comparative analysis of the two pricing strategies, discussing which one is most profitable to the retailer. Subsequently, we analyze the scenario where a retailer uses consistent pricing before BOPS adoption and inconsistent pricing afterwards and the scenario where a retailer uses inconsistent pricing before BOPS adoption and consistent pricing afterwards. We conduct numerical studies to obtain insights on when BOPS is most advantageous and which pricing strategy is better to use. Our study results show that BOPS is not always beneficial to the retailer, depending on the unit operating cost and customer hassle cost in the BOPS channel and the cross-selling profit. We also identify under what conditions a retailer is better off under different scenarios. Moreover, we find that BOPS is more beneficial to the retailer under inconsistent pricing especially when the unit operating cost in the BOPS channel is lower.

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  • Kong, Ruixiao & Luo, Li & Chen, Liuxin & Keblis, Matthew F., 2020. "The effects of BOPS implementation under different pricing strategies in omnichannel retailing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    • Handle: RePEc:eee:transe:v:141:y:2020:i:c:s1366554520306657
    DOI: 10.1016/j.tre.2020.102014
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    Cited by:

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    3. Shiming Yi & Liying Yu & Ziyuan Zhang, 2020. "Research on Pricing Strategy of Dual-Channel Supply Chain Based on Customer Value and Value-Added Service," Mathematics, MDPI, vol. 9(1), pages 1-19, December.
    4. Hou, Rui & Zhao, You & Zhu, Mengqiang & Lin, Xiaogang, 2021. "Price and quality decisions in a vertically-differentiated supply chain with an “Online-to-Store†channel," Journal of Retailing and Consumer Services, Elsevier, vol. 62(C).
    5. Feng, Yue & Zhang, Jianxiong & Feng, Lin & Zhu, Guowei, 2022. "Benefit from a high store visiting cost in an omnichannel with BOPS," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    6. Qian Zheng & Manman Wang & Feng Yang, 2021. "Optimal Channel Strategy for a Fresh Produce E-Commerce Supply Chain," Sustainability, MDPI, vol. 13(11), pages 1-24, May.
    7. Ling Zhao & Jun Liu & Minghua Xiong & Anquan Zou, 2022. "Dual-Channel Retailer’s Multi-Period Inventory and Pricing Policy with the Quantity-Sales Mode," Sustainability, MDPI, vol. 14(18), pages 1-18, September.
    8. Limeng Chai & Yicheng Wang, 2022. "Exploring the Sustainable Usage Intention of BOPS: A Perspective of Channel Integration Quality," Sustainability, MDPI, vol. 14(21), pages 1-16, October.
    9. Li, Zonghuo & Yang, Wensheng & Jin, Hyun Seung & Wang, Di, 2021. "Omnichannel retailing operations with coupon promotions," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    10. Zhou, Yong-Wu & Zhang, Xiong & Zhong, Yuanguang & Cao, Bin & Cheng, T.C. Edwin, 2021. "Dynamic pricing and cross-channel fulfillment for omnichannel retailing industry: An approximation policy and implications," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).
    11. Qiu, Ruozhen & Ma, Lin & Sun, Minghe, 2023. "A robust omnichannel pricing and ordering optimization approach with return policies based on data-driven support vector clustering," European Journal of Operational Research, Elsevier, vol. 305(3), pages 1337-1354.
    12. Jiu, Song, 2022. "Robust omnichannel retail operations with the implementation of ship-from-store," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    13. Jena, Sarat Kumar & Meena, Purushottam, 2022. "Shopping in the omnichannel supply chain under price competition and product return," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).
    14. Yande Gong & Yidan Ma & Zhe Wang, 2022. "Omnichannel Retail Strategy Considering Cost-Sharing and Consumer Heterogeneity under Different Power Structures," Mathematics, MDPI, vol. 10(21), pages 1-32, October.
    15. Sun, Yanhong & Wang, Zihan & Han, Xiaohua, 2020. "Supply chain channel strategies for online retailers: Whether to introduce web showrooms?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 144(C).
    16. Yi He & Qianqian Xu & Da Zhao, 2020. "Impacts of the BOPS Option on Sustainable Retailing," Sustainability, MDPI, vol. 12(20), pages 1-16, October.
    17. Zhao, Yan & Li, Yanhui & Yao, Qi & Guan, Xu, 2023. "Dual-channel retailing strategy vs. omni-channel buy-online-and-pick-up-in-store behaviors with reference freshness effect," International Journal of Production Economics, Elsevier, vol. 263(C).
    18. He, Yi & Xu, Qingyun & Shao, Zhen, 2021. "“Ship-from-store” strategy in platform retailing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    19. Huixin Liu & Fang Liu & Feng Du, 2022. "Research on Platform Operation Strategy Considering Consumers’ Hassle Costs," Sustainability, MDPI, vol. 14(5), pages 1-17, February.
    20. Xueqi Wu & Zhi‐Long Chen, 2022. "Fulfillment scheduling for buy‐online‐pickup‐in‐store orders," Production and Operations Management, Production and Operations Management Society, vol. 31(7), pages 2982-3003, July.
    21. Barman, Abhijit & De, Pijus Kanti & Chakraborty, Ashis Kumar & Lim, Chee Peng & Das, Rubi, 2023. "Optimal pricing policy in a three-layer dual-channel supply chain under government subsidy in green manufacturing," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 204(C), pages 401-429.

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