Effects of BOPS implementation under market competition and decision timing in omnichannel retailing

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One of the most significant fulfillment paradigms is the buy online and pick-up-in-store (BOPS) in omnichannel retailing. However, BOPS incurs many new operational challenges in the presence of competition, like competitive intensity and decision-making timing. To mitigate these problems, a multi-stage, non-cooperative duopoly game is constructed to investigate the competitive implications of introducing a BOPS strategy. First, we consider the situation when competing retailers simultaneously make BOPS decisions. Our results examine how heterogeneous customers choose optimal purchase decisions to maximize their utility and identify the mechanisms of three major effects (i.e., channel migration effect, price self-compensation effect, and limited market share effect). Meanwhile, we analyze when the intensity of competition is strong, intermediate, and weak respectively, the equilibrium strategy of different-type retailers is determined by which configuration. After that, with consideration of total consumer surplus, we shed light on how competing retailers obtain win–win configurations, i.e., both competing retailers and customers are better off, after deploying the BOPS. Subsequently, the investigation extends to broader cases with sequential decisions. Contrary to the common view that second-mover superiority, there exists first-mover superiority in deploying the BOPS. Finally, numerical examples are provided to analyze the impact of cross-selling benefits, fixed cost of BOPS, heterogeneous customer behavior, BOPS convenience, operation cost and competitive intensity on the optimal profit. Our finding was compared with previous studies to provide a novel way to design the BOPS for responding to competitors to maximize customer-oriented profits.