Coupon promotional strategies for buy-online-pick-up-in-store retailing: the role of distribution channel competition

Purpose This study aims to assess the coupon strategies of omnichannel retailers that face competition from e-retailers, which operate online channels, and traditional retailers, which operate physical stores and conduct coupon promotions through a self-built buy-online-pick-up-in-store (BOPS) channel. The current study investigated how distribution channel competition affects coupon strategies. Design/methodology/approach Three game-theoretic models are constructed based on whether the omnichannel retailer provides a coupon or not and whether the competitor is an e-retailer or traditional retailer. For each model, the consumer’s purchase behavior is characterized by utility function. Findings The results show that coupon promotions do not necessarily lead to increased profits. Profits will only increase if the shipping cost in the online channel is high and the hassle cost of BOPS purchases is low. Furthermore, the omnichannel retailer is more likely to provide coupons with larger value when competing with a traditional retailer than when competing with an e-retailer. Nonetheless, the omnichannel retailer benefits more from offering coupons when competing with traditional retailers than with e-retailers only if the hassle and shipping costs are low. Originality/value The study introduces coupon marketing as a co-opetition strategy for BOPS omnichannel. It demonstrates that omnichannel retailers can design distinct coupon strategies to induce consumer channel conversion and resist channel competition, which ultimately optimizes operational policy.