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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:
Explanation
The correct answer is Dropshipping Model.
Dropshipping is an e-commerce retail fulfillment method where a store does not keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third-party supplier, who then ships it directly to the customer. The seller acts as a middleman who controls the marketing, storefront, and retail pricing, but never physically handles the product or manages inventory.
- Affiliate Revenue Model: Involves promoting another company's product for a commission. The affiliate does not control the product's pricing or handle the transaction directly.
- Transaction Fee Revenue Model: A company receives a fee for facilitating or executing a transaction (e.g., payment gateways or auction sites).
- Agency Revenue Model: An agent acts on behalf of a principal to sell goods or services, typically earning a fixed commission rather than setting their own retail prices.
PROVENANCE & STUDY PATTERN
Guest previewThis is a borderline bouncer if you only stick to traditional macroeconomy books. However, with the rise of the digital economy, e-commerce FDI rules, and gig work in the news, basic digital business models are now fair game. You need to track basic tech-economy terms from the business pages.
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Explicitly defines the model as one where the retailer does not maintain physical inventory.
- Confirms the retailer fulfills orders by buying from a supplier who ships directly to the consumer.
- Highlights that the retailer focuses on marketing and sales while the supplier handles logistics.
- Identifies 'dropshipping' as a specific fulfillment strategy distinct from traditional logistics.
- Categorizes it alongside direct fulfillment and third-party fulfillment in e-commerce curriculum.
- Used in a government-backed (ASAP Kerala) vocational training context for digital supply chains.
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