An e-commerce revenue model where the seller has control over pricing but doesn't keep products in stock and instead transfers customer orders and shipment details to a third-party supplier, who then ships the goods directly to the customer, is called :
- A.Dropshipping Model
- B.Affiliate Revenue Model
- C.Transaction Fee Revenue Model
- D.Agency Revenue Model
Correct answer
Explanation
The correct answer is A, Dropshipping Model. In dropshipping the seller runs the shop and sets the price, while a supplier holds the stock and ships each order straight to the buyer.
A dropshipping store lists products on its website, takes the order and the payment from the customer, and then forwards the order to a wholesaler or manufacturer at the wholesale price. The supplier packs and sends the goods directly, often under the seller's brand. The seller earns the gap between the retail price it charged and the wholesale price it paid. Because no warehouse or inventory is needed, the model is cheap to start, but the seller has little control over stock levels, quality and delivery times.
B is wrong because an affiliate only earns a commission for sending buyers to another seller's site and does not set prices. C is wrong because a transaction fee model earns a cut on each deal made on a platform, as payment gateways do. D is wrong because in the agency model the supplier, not the platform, sets the price.
Exam tip: Dropshipping = seller sets price, supplier holds stock and ships directly.
Practice Questions
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- A.Australia
- B.Canada
- C.The European Union
- D.The United States of America
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- A.1 and 2 only
- B.1, 3 and 4
- C.2 and 3 only
- D.1, 2 and 3
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- A.NOT
- B.OR
- C.AND
- D.Division
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- A.1 and 2
- B.1 and 3
- C.2 and 3
- D.2 and 4
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Read the full explanation →With reference to communication technologies, what is/are the difference/differences between LTE (Long-Term Evolution) and VoLTE (Voice over Long-Term Evolution)? 1. LTE is commonly marketed as 3G and VoLTE is commonly marketed as advanced 3G. 2. LTE is data-only technology and VoLTE is voice-only technology. Select the correct answer using the code given below.
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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