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Chinese Journal of Management Science ›› 2019, Vol. 27 ›› Issue (9): 56-67.doi: 10.16381/j.cnki.issn1003-207x.2019.09.006

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Pricing and Service Decision of Omni-channel BOPS: Considering Online Return and Channel Cost

LIU Jin-rong, XU Qi, CHEN Qi   

  1. Glorious Sun School of Business and Management, Donghua University, Shanghai 200051, China
  • Received:2018-07-16 Revised:2019-02-14 Online:2019-09-20 Published:2019-09-29

Abstract: In the global consumer economy, omni-channel retailers and buying experiences are now the norm. With the rise of Omni-channel retailing of online and offline integration, more and more brand retailers are beginning to offer customers the shopping option of BOPS (Buy Online and Pickup in Store). Online channels often result in higher return rates due to lack of product experience. And retailers have a certain cost by providing experience services to customers who arrive at stores. So, in this paper,whether retailers should open BOPS channel, how does BOPS affect the demand and profit, and what's the optimalpricing and experience service decision are researched.With consideration of the online return and channel cost, the profit models for brand retailers before and after opening the BOPS channel are built based on the consumer utility functions under online channel, store channel and BOPS channel, the impacts of BOPS on the demand allocation and profitability of brand retailers are analyzed, and then Newton's method is applied to solve and study the optimal pricing and service decision. The results show that, (1) When a specific relationship is satisfied between the online return rate and the BOPS channel's inconvenience, the opening of BOPS channel can increase the total demand of brand retailers and decrease the demands in online channel and store channel; (2) When the online return rate reaches a certain threshold or the BOPS channel is very convenient, the opening of BOPS channel can increase the total profit of brand retailers; (3) When the online return rate is very low and the shopping cost of online channel is high, the opening of BOPS channel can make brand retailers profit more; (4) Adding BOPS stores with experience service at convenient locations, regardless of the shopping cost of online channel and the online return rate, or even properly increasing the price can make brand retailers profitable. This study can provide some management insights for brand retailers to implement BOPS Omni-channel strategy.

Key words: BOPS channel, pricing, experience service, consumer utility, return rate

CLC Number: