A new duty-free policy has been implemented at Hainan Free Trade Port for outlying islands, which enables duty-free retailers to offer customers a mail delivery service for products purchased in Hainan Province. This service reduces the hassles associated with picking up goods at delivery points, such as queuing and carrying goods, thereby encouraging consumers to buy duty-free products and increasing sales for tax-free retailers. According to a statistics report, Hainan’s postal express services have handled over 19 million duty-free delivery packages, including more than 3 million duty-free “postal service” packages for island destinations between February 2021 and 2023.However, duty-free retailers face expensive delivery and labor costs, creating operational challenges. In practice, these retailers offer the mail delivery service through different channels. For example, China Duty-Free Group and Hainan Tourism Duty-Free Shop provide service online and offline, whereas Global Premium Duty-Free Plaza (Haikou) only offers it offline. Despite the operational effect, few studies examine the optimal strategies for duty-free retailers using the mail delivery service. This study thus addresses the following questions for duty-free retailers: 1) Should they offer mail delivery? 2) How does the adoption of this service affect pricing, demand, and profit under different channel strategies? 3) Which channel strategy is most beneficial?To explore these questions, we consider a duty-free retailer operating online and offline channels. We develop a stylized model to investigate the effects of the new mail delivery policy on the duty-free retailer’s optimal pricing decisions and profits under three scenarios. These scenarios include 1) the N model, where the duty-free retailer does not provide the service; 2) the S model, where the service is offered only offline (S model); and 3) the SO model, where it is available online and offline (SO model). We then analyze and compare the optimal pricing decisions and their profits across these scenarios.Our findings are as follows. First, pricing strategies for online and offline channels are influenced by delivery costs. Second, when delivery costs are high, the total demand for duty-free goods decreases under the SO model. When delivery costs are moderate or low, the mail delivery service increases the total demand. Third, when delivery costs are moderate or high, offline channel consumers shift to online purchases under the S model. The duty-free retailer provides mail delivery only for offline channel, which not only fails to motivate consumers to purchase products through the offline channel but also discourages them from visiting physical stores. Fourth, when delivery costs are low, offering the mail delivery service through online and offline channels is more profitable for the duty-free retailer. When delivery costs are moderate, the duty-free retailer is willing to offer mail delivery service exclusively through offline channels. When delivery costs are high, the duty-free retailer tends not to provide the service at all. Fifth, if the hassle of non-mail delivery is relatively low, the duty-free retailer will not provide mail delivery service. If the hassle is high, whether retailers provide the service depends on the hassle of visiting physical stores. Providing mail delivery service only through offline channels more profitable for the duty-free retailer when hassle costs are low, whereas high hassle costs justify offering the service online and offline channels. Finally, the extra cross-selling benefits also affect the duty-free retailer’s optimal decisions. If the extra cross-selling benefits are low, duty-free retailers should not provide mail delivery service. If high, it should be offered only offline.This study has limitations. We only consider a supply chain with a single duty-free retailer. Future research can explore competitive contexts. In addition, we only explore the duty-free retailer’s optimal pricing decisions under the mail delivery policy. Further research can investigate product quality improvement and ordering decisions under this policy.