Coordinating pricing and service levels in omni-channel retailing for perishable goods

Purpose This study aims to address e-commerce challenges for perishable goods, including high return rates and supply chain inefficiency. It investigates optimal decision-making and designs a novel contract to coordinate pricing and service levels between suppliers and retailers in an omni-channel setting. Design/methodology/approach The authors develop optimization models for a perishable goods supply chain with online, offline and Buy-Online-Pick-up-in-Store channels. Decision-making is analyzed in centralized, decentralized and coordinated structures. A new Revenue and Service Level Profit-sharing (RSLP) contract is proposed to solve coordination issues, validated through numerical analysis and a case study. Findings The RSLP contract effectively aligns member decisions, achieving full coordination and a win-win outcome. Results show that higher product deterioration rates decrease optimal prices and service levels but increase the contract’s efficiency. Greater customer sensitivity to online service levels significantly improves profitability under coordination. Originality/value To the best of the authors’ knowledge, this study is one of the first to simultaneously model pricing and multichannel service levels for perishables. Its primary originality is the innovative RSLP contract, which incorporates mechanisms to share costs and revenues from service activities that mitigate return risks. The findings provide actionable managerial insights and a new research framework.