Information effect of buy-online-and-pick-up-in-store in omnichannel retailing with store replenishment

This study aims to investigate the information effect of "buy-online-and-pick-up-in-store" (BOPS) in which inventory can be replenished. An analytic model is adopted to investigate the hassle costs of customers using different channels. With a linear or hyperbolic cost-reducing waiting time for BOPS, two types of equilibria are found: 1) where all customers go directly to the store without using BOPS and 2) where all customers use BOPS. The result reveals optimal omnichannel strategies whereby retailers can identify their optimal store inventory levels with information about customer behavior, hassle, and delivery costs. This study suggests a strong incentive to achieve a high density of stores so that retailers can fulfill replenishments at a lower cost. Essentially, this study considers a game-theoretical omnichannel structure for the customer-retailer relationship.