Abstract
The main research question asked in this paper is whether and when a dual-channel retailer (retailer in short) should adopt the “buy online and pick up in store” (BOPS) strategy. To answer this question, we first derive the optimal price decision using the non-BOPS and BOPS strategies. Subsequently, we compare the performance of retailers under non-BOPS and BOPS scenarios. Our main findings are that under the monopoly scenario, retailers may not always benefit from the BOPS strategy. Retailers will benefit only if the offline operational costs are low and the degree of customer acceptance of the online channel is high. However, the BOPS strategy cannot improve dual-channel retailers’ market share. Furthermore, under a Stackelberg game scenario with e-retailers as leaders, when the value of a product is medium and the transaction costs of the offline channel are high, retailers can use the BOPS strategy to enhance their market share. If the degree of customer acceptance of the online channel is also high, retailers can further improve their profits by using the BOPS strategy. Overall, these findings not only provide decision support for retailers, but also enrich the theories on dual-channel retailing in operations management.
Highlights
In 2020, China’s online retail sales exceeded USD 1800 billion, an increase of 10.9%over 2019
From Proposition 1, we know that when the degree of customer acceptance of the online channel is not very high, the dual-channel mode can lead to more profit for the retailer
We mainly focus on whether and when a dual-channel retailer should adopt the buy online and pick up in store” (BOPS) strategy in the “same product different price” strategy when the e-retailer is the leader in a Stackelberg game
Summary
In 2020, China’s online retail sales exceeded USD 1800 billion, an increase of 10.9%. At present, differential prices in the offline and online channels are still very common (e.g., Gome and Wal-Mart) To reflect this business practice, this paper considers a “same product, different price” scenario. Zhang et al [3] extended Gao and Su’s model [2] from non-competitive to competitive environments, they assumed that pure e-retailers and dual-channel retailers have comparable market power in the e-commerce market To fill this research gap, this paper considers that the dual-channel retailers are at a disadvantage in the competition with pure e-retailers, i.e., the e-retailer leader Stackelberg game approach. This paper provides decision support for a retailer to adopt the BOPS strategy under the “same product, different price” with e-retailer as the leaders, and further enriches the theories on dual-channel retailing in operations management. We conclude the findings and offer future research perspectives
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