Impact of buy-online-and-return-in-store service on omnichannel retailing: A supply chain competitive perspective

Abstract

Abstract A buy-online-and-return-in-store (BORS) service is an important omnichannel strategy that can be commonly observed in practice. In this study, we explore the BORS adoption strategy and its influence from a competitive perspective. Specifically, we consider two supply chains selling a product in the same market. Each supply chain consists of one supplier and one retailer who operate online and store channels. We find that consumers can return unwanted products to the retailer’s online channel if BORS is unavailable or to the retailer’s either store if BORS is available. In our study, monopolistic (i.e., integration scenario) and competitive environments are considered and numerical analysis is presented. Results reveal that in a monopolistic environment BORS may hurt retailers in certain situations and cause them not to adopt this strategy. However, competitive environments can make both types of retailers prefer to offer BORS in nearly all conditions. In this case, BORS can benefit both supply chains and their members. Moreover, increasing salvage values of the returned product and the proportion of the returned products that need be handled by suppliers can further enhance BORS profitability.