UPSC CSE Prelims
Service Sector Previous Year Questions (PYQs)
Showing solved Previous Year Questions for Chapter: Service Sector
Topic Breakdown: Scroll →
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:
Detailed Explanation:
Dropshipping = the seller sets the price and takes orders, but never stocks the product. When someone buys, the seller just forwards the order to a third-party supplier, who ships directly to the customer. Seller earns the profit margin (difference between wholesale cost and retail price).
Why other options are wrong:
| Option | What it actually means | Why not this |
|---|---|---|
| Affiliate Revenue | You earn commission by promoting someone else's product | No pricing control, no fulfillment role |
| Transaction Fee | Platform charges a fee for enabling a transaction (like payment gateways) | Not about selling/shipping products |
| Agency Revenue | Earning by providing services (marketing, design) | Not about physical goods at all |
Memory Trick: Dropship = "Drop the stock, ship via someone else" — seller controls price, never touches the product.
E-commerce Revenue Models
| Model | Key Idea |
|---|---|
| Dropshipping | No inventory; seller forwards order to supplier who ships directly; seller controls price |
| Affiliate Revenue | Earn commission for driving sales to another company |
| Transaction Fee | Platform earns fee/commission for facilitating a transaction (e.g., Amazon marketplace fee, payment gateway) |
| Agency Model | Charging clients for services (not products) — digital marketing, design, consulting |
| Subscription Model | Recurring payment for continued access (e.g., Netflix, SaaS) |
| Wholesale Model | Buying products in bulk at low cost, selling at retail price (does hold inventory, unlike dropshipping) |
| White Label/Private Label | Selling a manufacturer's product under your own brand name |
Key Distinction to Remember:
- Dropshipping = No inventory + Price control + Order forwarding
- Wholesale = Inventory held + Bulk buying
- Affiliate = No price control, just referral commission
- Agency = Service-based, not product-based
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