  Omnichannel retailing, a new form of distribution system, seamlessly
integrates the Internet and physical stores. This study considers the pricing
and fulfillment strategies of a retailer that has two sales channels: online
and one physical store. The retailer offers consumers three purchasing options:
delivery from the fulfillment center, buy online and pick up in-store (BOPS),
and purchasing at the store. Consumers choose one of these options to maximize
their utility, dividing them into several segments. Given the retailer can
induce consumers to the profitable segment by adjusting the online and store
prices, our analysis shows that it has three optimal strategies: (1) The
retailer excludes consumers far from the physical store from the market and
lets the others choose BOPS or purchasing at the store. (2) It lets consumers
far from the physical store choose delivery from the fulfillment center and the
others choose BOPS or purchasing at the store. (3) It lets all consumers choose
delivery from the fulfillment center. Finally, we present simple dynamic
simulations that considers how the retailer's optimal strategy changes as
consumers' subjective probability of believing the product is in stock
decreases. The results show that the retailer should offer BOPS in later
periods of the selling season to maximize its profit as the subjective
probability decreases.
