Abstract
This paper focuses on the value of an omnichannel retailing option, Buy-Online-and-Pick-up-in-Store (BOPS), in reducing environmental impact. Analytical models were established to explore the impacts of the BOPS strategy on the pricing and expected profit of the dual-channel retailer as well as the environment. The equilibrium solutions under dual-channel and omnichannel scenarios were obtained. Then, we considered the impact of loyal store consumers in the extended model. We find that the retailer will increase the product price after adopting the BOPS strategy. Our analytical results also show that when the operating cost of the BOPS strategy is relatively low, the total demand under the omnichannel scenario is greater than that under the dual-channel scenario and vice versa. In addition, this strategy can always reduce the environmental impact in terms of the pure online demand. Finally, when the operating cost is lower and the fraction of consumers without channel preference is higher, the retailer can benefit from the BOPS strategy. In this case, the BOPS strategy can achieve profit improvement and environmental impact reduction.
Highlights
In the past decade, people have witnessed the vigorous development of e-commerce
We concentrate on the following research questions: (1) How does the BOPS strategy affect the retailer’s pricing decision? (2) Under what conditions can the retailer benefit from the BOPS strategy? (3) Can this strategy reduce environmental impact? To address the above questions, we consider a retailer who operates both online and offline stores, and develop an analytical model to explore the impacts of the BOPS strategy on the pricing and expected profit of the dual-channel retailer as well as the environment
Considering consumer returns, Liu and Xu [25] investigated the effects of BOPS option on retailer’s optimal pricing and ordering decisions, and the results show that the optimal price, order quantity, and profit increase after adopting the BOPS option
Summary
People have witnessed the vigorous development of e-commerce. Nowadays, online shopping has become a new lifestyle due to its great convenience, which makes online sales continue to grow. Many retailers encourage their consumers to buy online and pick up in stores in the omnichannel retailing context. Can this strategy of encouraging consumers to go to physical stores reduce the environmental impact?. To address the above questions, we consider a retailer who operates both online and offline stores, and develop an analytical model to explore the impacts of the BOPS strategy on the pricing and expected profit of the dual-channel retailer as well as the environment. This paper tries to address the overpackaging problem by introducing a new retail method, the BOPS option, in the omnichannel retailing context.
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