E-commerce and Digital Retail
Digital retail models
The exam tests marketplace, D2C, omnichannel and quick-commerce models, plus the unit economics of online selling. A marketplace connects sellers and buyers and earns commission, advertising or fulfilment fees. A D2C brand sells through its own site or app. Omnichannel links store, web and app stock, payment and returns. Quick commerce relies on dark stores and short delivery radii.
Metrics and mechanics
- Conversion rate = orders ÷ sessions.
- Average order value (AOV) = sales ÷ orders.
- Customer acquisition cost (CAC) = marketing spend ÷ new customers.
- Repeat rate = returning customers ÷ total customers. Product pages need accurate title, images, price, stock, delivery promise and return policy. Check payment success, shipping cost and marketplace commission before judging profitability.
Worked example
A store gets 20,000 sessions in a month, converts 2% and has an AOV of ₹800. Sales = 20,000 × 0.02 × 800 = ₹3,20,000. If conversion rises to 2.5%, sales become 20,000 × 0.025 × 800 = ₹4,00,000, an increase of ₹80,000 with the same traffic. The reasoning: online sales depend on traffic, conversion and basket value together.
Traps
Do not treat sessions or followers as sales. Do not ignore return rates, failed payments, shipping and commission when calculating margin. Do not promise delivery dates that logistics cannot meet. Collect customer data only with consent and secure it.