An Omnichannel Retailing Operation for Solving Joint Inventory Replenishment Control and Dynamic Pricing Problems From the Perspective of Customer Experience

Abstract

Customer experience, a key element in the domain of omnichannel retailing, plays a vital role in attracting consumers. Implementing a new BOPS (buy online, pick up in store) strategy will not only affect the inventory structure and pricing strategy of retail enterprises, but will also impact the original sales channel. In accordance with the consumer experience, a dynamic optimization model of a retailer inventory system was established in this research. Based on the optimal control theory, analyze the optimal control strategies under four sales modes: online, offline, BOPS, and BOPS-PLUS (BOPS and buy offline online-logistics distribution). Through numerical experiments, the inventory control strategies and optimal discounted profits under the four modes are compared and analyzed. The results show that the optimal experience investment and dynamic pricing levels gradually decrease with time, and the inventory state has a vital influence on the discounted profit of the system. The traditional dual-channel retail model is optimal when the channel inventory is not out of stock. In situations where channel inventory is in short supply (both online and offline), a deeply integrated omnichannel retail mode BOPS-PLUS is best. The numerical analysis also reveals that price sensitivity coefficient, experience service coefficient and online return rate also have significant influence on the selection of optimal channel strategy.