Optimal omnichannel configuration: the effects of coupon promotion

Purpose This study examines the optimal channel configuration for an omnichannel retail. In this retail model, a manufacturer sets up a Buy-Online-Pickup-in-Store (BOPS) service with a physical retailer. The present study investigates how coupon promotion conducted in distinct channels affects integrative strategies. Design/methodology/approach This paper develops a game-theoretic model to explore two scenarios: uniform pricing and independent pricing. In each scenario, the manufacturer provides online coupons, while the retailer offers in-store coupons. Four channel configurations are constructed, considering consumer value perception and the interaction among the online, BOPS and store channels. Findings The results indicate that the manufacturer and retailer should intensify coupon promotion when more low-value consumers enter the market. Moreover, coupon promotions are stronger under independent pricing than under uniform pricing when the BOPS channel’s hassle cost is high. Additionally, the manufacturer should simultaneously open the online, BOPS and store channels when consumers place a high value on the online and store channels. The retailer should adopt a configuration comprising the online, BOPS, and store channels under uniform pricing, but a configuration of the online and BOPS channels under independent pricing, conditional on a low online-experience value. Originality/value This study extends the existing channel integration model by incorporating joint coupon promotion and pricing strategies. It demonstrates that channel-specific coupon promotions not only regulate channel pricing flexibly but also facilitate consumer channel conversion and optimize the design of channel configuration.