537 / 2024-04-25 19:53:20

Which Omnichannel Retailing Strategy is Better? BOPS, SFS, or BOPS&SFS

omnichannel retailing,BOPS,SFS,rational expectations equilibrium

With the rapid rise of emerging information technologies, more and more retailers are embracing ``buy-online-and-pickup-in-store" (BOPS) and/or ``ship-from-store" (SFS) initiatives in omnichannel retailing. We consider a retailer who operates simultaneously in online and offline channels and examine the retailer's optimal omnichannel strategy, that is, BOPS, SFS or BOPS&SFS. We investigate the three effects that can occur when the retailer adds BOPS or/and SFS, including demand pooling, demand depooling, and market expansion, and compare the performance of different omnichannel retailing strategies. Our results find that, first, it is not always beneficial for the retailer to enable BOPS/SFS and disclose the true offline inventory availability information. Second, when the density of the store is high, BOPS and SFS have the same value to the retailer if the prices are the same in both online and offline stores. Finally, we find that the BOPS&SFS strategy does not always outperform the BOPS or SFS strategy, especially when the store density is not low. The results of this paper provide some guidance to retailers on the implementation of omnichannel strategies.