E-Commerce Ecosystem: Platforms, Marketplaces vs Inventory Model, Value Chain and Key Stakeholders Questions

Question 1

Define e-commerce ecosystem.

Accepted Answer

An **e-commerce ecosystem** is the network of participants (customers, sellers, platform, payments, logistics) and processes that enable online buying and selling (concept).

Question 2

Marketplace model means the platform connects multiple sellers and buyers. (True/False)

Accepted Answer

True. A **marketplace** connects many sellers with many buyers and facilitates transactions (concept).

Question 3

State one revenue source for an e-commerce platform.

Accepted Answer

**Commission (take-rate)** on each sale (or advertising fees) is a common revenue source (any one) (concept).

Question 4

In an inventory model, the platform owns/controls stock. (True/False)

Accepted Answer

True. In the **inventory (owned) model**, the platform sells products from stock it owns/controls (concept).

Question 5

What is last-mile delivery?

Accepted Answer

**Last-mile delivery** is the final delivery step from the local hub/warehouse to the customer’s address (concept).

Question 6

Ratings and reviews are trust mechanisms in e-commerce. (True/False)

Accepted Answer

True. **Ratings and reviews** reduce information gap and help build trust in online buying (concept).

Question 7

Differentiate marketplace model and inventory model (any three points) using a table.

Accepted Answer

Difference (concept):

| Basis | **Marketplace model** | **Inventory model** |
|---|---|---|
| Inventory ownership | platform usually **does not own** stock | platform **owns/controls** stock |
| Control | moderate control via policies | high control over quality/packaging/delivery |
| Risk | lower inventory risk | higher inventory/obsolescence risk |

Any three points are sufficient.

Question 8

Explain the e-commerce value chain (any six stages) and draw a simple flowchart.

Accepted Answer

Value chain = value added across stages (concept). Any six:
- seller/brand
- platform discovery/listing
- order placement
- **payment** + fraud checks
- **fulfilment** (pick-pack-ship)
- logistics + **last-mile**
- delivery to customer
- returns/refunds (reverse logistics)

Flowchart:

```text
Seller -> Platform -> Payment -> Fulfilment -> Delivery -> Support/Returns
```

Question 9

List key stakeholders in e-commerce and write one role of each (use a table).

Accepted Answer

Stakeholders and roles (concept):

| Stakeholder | One key role |
|---|---|
| **Customer** | demand, feedback/reviews |
| **Seller/Brand** | supply products, pricing, packing |
| **Platform** | discovery, policies, order management |
| **Payment partner** | secure payment + settlement/refunds |
| **Logistics partner** | delivery + reverse logistics |

Any four–five stakeholders with correct roles are enough.

Question 10

Explain how marketplaces earn revenue (any three sources) with a small table.

Accepted Answer

Revenue sources (concept):

| Source | Meaning |
|---|---|
| **Commission** | % of sale value (take-rate) |
| **Advertising** | sponsored listings/banner ads |
| Fulfilment/logistics fees | warehousing, shipping services |
| Subscription/listing fees | seller onboarding/plan fees |

Write any three with one-line explanation.

Question 11

Write a short note on network effects in e-commerce with a simple loop/flow diagram.

Accepted Answer

**Network effect** means the platform becomes more valuable as more users participate (concept).

Example loop:

```text
More Sellers -> More Variety -> More Buyers -> More Orders -> Attracts More Sellers
```

This creates a positive growth cycle for marketplaces (concept).

Question 12

Explain reverse logistics in e-commerce and mention any three activities (use a table).

Accepted Answer

**Reverse logistics** is the process of moving goods back from the customer to the seller/warehouse for return, refund, repair, or replacement (concept).

| Activity | What it includes (concept) |
|---|---|
| Pickup | collecting returned item from customer |
| Quality check | inspection/verification at hub |
| Refund/Replacement | processing refund or re-shipment |
| Restocking/Disposal | put-back to inventory or safe disposal |

Write any three activities with one-line explanation.

Question 13

Explain marketplace vs inventory model in detail and include a comparison table (exam-style).

Accepted Answer

### Meaning
- **Marketplace model**: platform connects multiple sellers with buyers; platform typically does not own inventory (concept).
- **Inventory model**: platform owns/controls stock and sells directly (concept).

### Comparison (table)

| Basis | **Marketplace** | **Inventory** |
|---|---|---|
| Inventory ownership | not owned by platform | owned/controlled by platform |
| Variety | high (many sellers) | limited to stocked items |
| Control | moderate (policy-based) | high (end-to-end control) |
| Risk | lower inventory risk | higher inventory/obsolescence risk |
| Revenue | commission, ads, services | product margin + services |

Conclusion: Marketplace prioritizes assortment and scalability; inventory prioritizes control and experience (concept).

Question 14

Describe the e-commerce value chain and roles of stakeholders (exam-style) with a flowchart and a table.

Accepted Answer

### Value chain (flow)

```text
Seller/Brand -> Platform (discovery/order) -> Payment -> Fulfilment -> Logistics -> Customer -> Support/Returns
```

### Stakeholder roles (table)

| Stakeholder | Role (concept) |
|---|---|
| **Platform** | traffic, search, policies, order management |
| **Seller/Brand** | product supply, pricing, packing |
| **Payment partner** | secure payment, settlement, refunds |
| **Logistics** | delivery + reverse logistics |
| **Customer** | purchase decisions + feedback/reviews |

Conclusion: Smooth coordination across these participants improves service quality, trust and repeat purchases (concept).

Question 15

Explain trust mechanisms in e-commerce and how they reduce risk (exam-style) with a table.

Accepted Answer

### Why trust mechanisms are needed
Online buyers cannot physically verify products, so platforms must reduce information gap and fraud risk (concept).

### Trust mechanisms (table)

| Mechanism | How it reduces risk (concept) |
|---|---|
| **Ratings & reviews** | signals product/seller quality |
| Verified sellers/brand stores | reduces fake seller risk |
| Return/refund policy | reduces perceived purchase risk |
| Secure payments + fraud checks | reduces payment fraud/chargebacks |
| Clear grievance redressal | improves confidence and retention |

Conclusion: Strong trust systems improve conversion, repeat purchases and ecosystem health (concept).

Basis	Marketplace model	Inventory model
Inventory ownership	platform usually does not own stock	platform owns/controls stock
Control	moderate control via policies	high control over quality/packaging/delivery
Risk	lower inventory risk	higher inventory/obsolescence risk

E-Commerce Ecosystem: Platforms, Marketplaces vs Inventory Model, Value Chain and Key Stakeholders

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