BOPS in Omnichannel Retailing with Return and Cross-selling

Abstract

Many retailers have started to integrate online and store channels (such as BOPS) in order to enhance the consumer experience. This paper studies a decision problem of when it is preferable for a dual-channel retailer to introduce BOPS strategy. Based on the utility functions, we develop a model to investigate the interplay between the monopolist retailer and consumers. Our results show that the introduction of BOPS has two aspects of influence: intensifying channel competition and eliminating the effects of cross-selling. Besides, we find that BOPS is not always beneficial to the retailer. Especially for the store, when the impact of cross-selling is too large or too small, introducing BOPS actually damages the store's profit. Keywords—omnichannel retailing; BOPS;channel competition; cross-selling; return