How does the sharing economy affect the retail industry? This study investigates the impact of service sharing on the decisions and profits of two profit modes in the Online-to-Offline (O2O) retail market. We find that service sharing always improves the profit of the brand supplier as a service demander in both two profit modes, and improves the profit of the offline franchisee as a service provider in the profit-sharing mode under certain circumstances, but always reduces its profit in the non-profit-sharing mode. This is associated with the double marginalisation effect of the non-profit-sharing mode which leads to channel conflicts. Thus, a service-cost sharing mechanism is introduced to coordinate conflicts and achieve a win-win strategy, thereby improving the performance of the entire O2O supply chain. •Non-profit-sharing mode is not a “true service sharing” but a free-riding behaviour.•Profit-sharing mode can achieve a win-win strategy by service sharing under certain conditions.•The brand supplier prefers to adopt the profit-sharing mode in most cases.•The choice of profit modes for the offline franchisee depends on related factors.•Service-cost sharing is an imperfect but effective coordination mechanism.