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 :
Show answer
Answer: A. In dropshipping, the seller sets prices and takes orders but holds no stock; the order goes to a third-party supplier, who ships directly to the customer.
Watch for: Agency and dropshipping both use third parties; the clue is that the seller controls pricing.
Why the other options are wrong
- B. Wrong because affiliates earn commission for referring buyers and do not set prices.
- C. Wrong because a transaction fee model earns a fee per transaction for enabling it.
- D. Wrong because an agency model lets the supplier, not the seller, control the price.
Source to check: Department for Promotion of Industry and Internal Trade, Consumer Protection (E-Commerce) Rules 2020 and standard e-commerce glossaries (Shopify, 'What is dropshipping')
Answer from the provisional UPSC key; it may change when the final key is out. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.