Buy online and pickup in-store: Co-opetition strategy of omnichannel supply chain players

Abstract

Buy online and pickup in-store (BOPS), a novel omnichannel retail model that provides customers with a seamless channel experience, is increasing prevalence in the electronic commerce era. This paper develops a theoretical model to investigate the co-opetition strategy of an omnichannel supply chain where a manufacturer sets up a BOPS channel in cooperation with a retailer. Two game models in the absence and presence of the BOPS contract are constructed considering consumer type and channel preference. The results show that adding the BOPS contract increases the online price, while it leads to a higher offline price when the retailer’s BOPS operation cost is small. The manufacturer is willing to introduce the BOPS contract by increasing wholesale price when the retailer’s BOPS operation cost is large. The retailer is likely to take part in the BOPS contract when it obtains a high unit payment provided by the manufacturer or the retailer’s BOPS operation cost is low. Our results provide managerial insights for online companies and physical companies to implement the BOPS strategy, and subsequently, adjust their prices and channel structures to maximize revenues.