Effect of service factors and buy-online-pick-up-in-store strategies through an omnichannel system under an agricultural supply chain management

Abstract

The random demand has made the benefits of online purchasing apparent. The reaction of the retail industry is critically important. If the product is an agricultural product, then managing those products online is more difficult than offline transactions, as those products have special properties to deal with, like different shelf lives. This study aims to develop an optimal strategy for retailers in an agricultural supply chain consisting of a single supplier and a single retailer operating online, offline, and buy-online-pick-up-in-store channels. As an omnichannel strategy, customers purchase agricultural products online and collect them at physical stores. Buy-online-pick-up-in-store is considered an essential omnichannel fulfillment option. The study focuses on a set of traceability technologies, services offered, advertisements, and holding costs that can affect the maximization of retailer profits according to the characteristics of an agricultural product. Delivery service to customers is used as an additional customer option. A stochastic demand function is applied, considering the price, customer preference, and product quality. The effects of decision variables on expected total profit are analyzed, and a sensitivity analysis is conducted. The results indicate that the proposed multi-modal omnichannel (online, offline, and buy-online-pick-up-in-store) policy increases the expected profits of a system by investing in advertising, services offered, product traceability, and product-quality keeping. The numerical results suggest that the retail industry of the whole agricultural supply chain can use the recommended strategy to continue profit through the pandemic because the retail sector controls the major task for revenue generation of the agricultural supply chain.