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 ✓ UPSC's answer
- (b) Affiliate Revenue Model
- (c) Transaction Fee Revenue Model
- (d) Agency Revenue Model
Why the answer is (a)
• In dropshipping the online seller lists and prices products but holds no inventory; when an order arrives, it forwards the order and shipping details to a supplier, who ships directly to the customer, and the seller keeps the margin.
• This matches every element of the description: seller controls pricing, no stock, third-party supplier fulfils and ships.
• The affiliate model earns commissions by referring customers to another seller's site; the affiliate neither sets prices nor handles orders.
• The transaction-fee model (e.g. marketplaces, payment gateways) charges a fee per transaction without selling goods itself; the agency model earns a fee for acting on a client's behalf.
• Hence option (a).
Why the other options are wrong
- (b) Affiliate Revenue Model
- An affiliate only refers customers for a commission and does not set prices or handle orders.
- (c) Transaction Fee Revenue Model
- A transaction-fee model charges per transaction; it does not describe order forwarding to a supplier.
- (d) Agency Revenue Model
- An agency model earns fees for representing a client, not for reselling shipped goods.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2026, held on 24 May 2026. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.