Bilateral revenue sharing and two-part tariff contracts for omnichannel coordination strategy

This paper investigates the coordination problem between an online platform and a retailer in the omnichannel retailing with the introduction of buy-online and pick-up-in-store (BOPS). We consider customers' cross-buying behaviors that online customers will buy extra products when picking up products in store. In the traditional revenue sharing contract (referred to as RS), the revenue is shared between the upstream and downstream members. However, considering customers' cross-buying behaviors in the BOPS retailing, the downstream retailer gains an extra revenue. Thus, we designed another mechanism-The bilateral revenue sharing contract (referred to as BRS) to coordinate the proposed system. With the BRS contract, the e-commerce platform shares its BOPS revenue with the retailer and the retailer shares its cross-selling revenue with the platform. The results show that:The BRS contract degenerates into the RS contract when the one of parameter equal to 0 and it cannot coordinate the BOPS system, while the BRS contract can coordinate the system when the margin revenue of the cross-selling is low. Furthermore, we discuss another contract, the Mixed contract (referred to as MC), based on the RS and TPT. We find that the BRS contract can coordinate the system when the margin revenue of the cross-selling is low, the MC does when the margin is not too high, and when the margin is below the medium level, whether to adopt the BRS contract or the MC contract depends on the bargain power of the e-commerce platform. © 2021, Editorial Board of Journal of Systems Engineering Society of China. All right reserved.