Consumers' Channel Choice and Inventory Management with Buy-Online-and-Pick-up-in-Store

With the development of E-commerce and IT facilities, the online and offline channel are integrated in multiple forms. We study consumers' channel choice and retailer's operational decisions with or without the introduction of Buy-online-pick-up-in-store implementation. We find that under these conditions BOPS is more profitable: (1) the inventory cost is high and additional sales are moderate; (2) the consumer hassle cost in adopting BOPS is low and additional sales are large. Furthermore, we extend the model in a decentralized scenario. This research provides managerial insights to entrepreneurs in channel integration practices.

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