Power structure and pricing in an omnichannel with buy-online-and-pick-up-in-store

Many firms have recently implemented the buy-online-and-pick-up-in-store (BOPS) strategy on store operations. This paper examines the impact of power structures on the decision of pricing and service level in an omnichannel supply chain with BOPS option. We investigate a two-stage omnichannel supply chain that consists of an online manufacturer and an offline retailer. The manufacturer produces products and adopts an online channel while the retailer sells products on both the traditional and the BOPS channels. Based on game theory analysis, the optimal retail prices in different distribution channels and the retailer's optimal service quality in an omnichannel supply chain are derived under different power structures. Our results show that the more powerful retailer enjoys a higher profit while the dominant manufacturer may not benefit from its first-move advantage. No dominance among omnichannel supply chain members lead to the highest service level. Our analysis generates managerial insights into the interaction between firms and provides a guide for implementing the BOPS strategy in omnichannel retailing.