Research Of The Retailer's Optimization Decisions Based On BOPS With Return Policy

Many retailers have recently started to offer customers the option to buy online and pick up in store(BOPS).We study the impact of the BOPS initiative on consumers and store operations.We first build a benchmark model where a retailer operates both online and offline channels.Customers strategically make channel choices.Then we add the setting of BOPS to develop the model.Return policy is later introduced into the new model.We obtain four findings.First,without the return policy,the implementation of BOPS would make the offline channel more attractive to both consumers and the retailer.Second,After the return policy is introduced,BOPS keeps the attractiveness of offline channel.Third,under the situation of BOPS,return policy makes the consumer channel choices more complicated to predict.Finally,in a decentralized retail system where store and online channels are managed separately,BOPS revenue can be shared across channels to alleviate incentive conflicts,no matter with or without the existence of return policy;and with the return policy,greater percentage of revenue would be attained by the offline channel.Highlights for the retailers: BOPS may not agree with all the enterprises;to attract more consumers to store,BOPS retailers should try their best to create a BOPS-friendly shopping environment;the offline channels can win more BOPS income through reducing offline inventory cost.