Optimal Pricing and Customer Experience Investment Strategy in an Omnichannel Supply Chain Under BOPS

This study investigates an omnichannel supply chain comprising a manufacturer with online retailing and a physical retailer that provides a shopping experience to consumers. To enhance this shopping experience, the supply chain also offers buy-online-and-pick-up-in-store (BOPS) services. A model was constructed considering the cost-sharing of customer experience investment to improve the performance level of the omnichannel supply chain. The analysis examined the optimal choice of unified pricing or differential pricing for online and offline channels using the Stackelberg game model. The results show that implementation of a cost-sharing cooperation contract can increase customer experience investment and consumer demand and improve supply chain performance. Specifically, the pricing strategy was associated with channel competition and the customer experience factor. The unified pricing strategy performed better when competition intensity was lower, and the differential pricing strategy performed better when competition intensity was higher. Therefore, in the omnichannel supply chain, excessive channel competition should be avoided, and cooperative investment in the customer experience among supply chain actors should be encouraged. This study is novel as it considers customer experience investment level as an endogenous variable, in contrast with previous studies.