Pricing and BOPS channel integration strategies considering online reviews in the digital transformation era

Digital transformation has become a pivotal driver of omni-channel retailing advancement, while simultaneously reshaping consumer purchasing behavior. In response to this shift, an increasing number of retailers have adopted Buy-Online and Pick-Up-in-Store (BOPS) as a strategic instrument for omni-channel integration, aiming to enhance shopping convenience and strengthen profitability. Moreover, given the inherent uncertainties of online shopping, retailers increasingly leverage online reviews to provide consumers with more product information, thereby facilitating informed purchase decisions. Two analytical models are formulated to characterize the scenarios before and after BOPS implementation. A comparative analysis is subsequently conducted to evaluate the effects of BOPS on the retailer's pricing, demand, and profitability. Furthermore, this study examines the influence of online reviews on the retailer's operational performance and investigates their interactive effects with product returns on retailer profitability under both models. The results demonstrate that the introduction of the BOPS channel enhances retailer profitability when at least one of the unit operating cost or return processing cost is low, while the other is low or moderate. Furthermore, the effectiveness level and the weight of online reviews are critical determinants in the retailer's decision-making process. The retailer should retain online reviews when the effectiveness level is high, or when it is low but the weight is high. Finally, considering the combined impact of online reviews and product returns, the analysis suggests that the retailer can achieve enhanced profitability through the adoption of BOPS under specific conditions.