Strategic Interactions in Omnichannel Retailing: Analyzing Brand Competition and Optimal Strategy Selection

The rapid advancement of digital technology has blurred the line between online and brick-and-mortar stores, leading to the proliferation of omnichannel retailing. Two widely adopted strategies are Buy Online and Pick Up in Store (BOPS) and Ship from Store (SFS). This study examines a supply chain where a manufacturer sells national brand products through an e-commerce platform (e-platform) that also offers its own brand products. We analyze the optimal omnichannel strategies for both the e-platform and the manufacturer, considering scenarios of cooperation and brand competition, across four strategy combinations. Our findings highlight that the profits of both the e-platform and manufacturer are primarily influenced by the commission rate, product category valuation and competition intensity. The commission rate plays a pivotal role in shaping the e-platform’s strategy: a low rate leads to direct competition with the manufacturer, while a high rate prioritizes the manufacturer’s products. When the spillover profit is less than the net difference between the customer’s additional benefits and the firm’s additional costs for SFS compared to BOPS, and the commission rate is high, an equilibrium is achieved. Sensitivity analyses reveal that as the product differentiation decrease, the manufacturer’s profits decline, while the e-platform’s profits rise with an increasing commission rate.