Competing e-tailers' adoption strategies of buy-online-and-return-in-store service

Motivated by the practice that some e-tailers cooperate with third-party store channel providers for buy-onlineand-return-in-store (BORS) services, we investigate competing e-tailers' BORS adoption strategies. Specifically, we consider a model where two homogenous e-tailers compete in a market. Each e-tailer sells one horizontally differentiated product to consumers through their online channel. E-tailers can cooperate with an exogenous third-party store channel provider in the market to offer BORS. They need to decide whether to offer BORS and then their retail prices. Results reveal that e-tailers will likely adopt BORS when consumer's online return cost and e-tailer differentiation are relatively large. Otherwise, e-tailers may choose to dismiss it. In terms of profitability, on the one hand, BORS introduction by both e-tailers does not affect their expected profits. On the other hand, BORS introduction by one e-tailer only benefits the one who offers BORS at most or may lead to a lose-lose outcome. Moreover, the basic model has also been extended to two complex cases, considering more third-party store channel providers and more e-tailers.

Automated summary

The study suggests that e-tailers are more likely to adopt buy-online-and-return-in-store (BORS) services when the online return cost for consumers and e-tailer differentiation are high. In terms of profitability, both e-tailers introducing BORS does not impact their expected profits, but if only one e-tailer introduces BORS, it may lead to uneven outcomes or mutual losses. The research also extends the basic model to more complex scenarios involving additional third-party store channel providers and e-tailers.