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NTN ECOMM practice questions

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Question 1E-commerce fundamentals and business models

An individual sells a used bicycle to another individual through an online classifieds listing. Which e-commerce transaction type does this represent?

  1. B2G
  2. C2C Correct answer.
  3. B2C
  4. B2B

Explanation

Transaction types are classified by who sits on each side of the exchange. Here both the buyer and the seller are private individuals, which makes it consumer-to-consumer.

Question 2E-commerce fundamentals and business models

A distributor of laboratory equipment sells only to hospitals and research institutes through its password-protected web portal. Which model is this?

  1. C2B
  2. B2B Correct answer.
  3. B2C
  4. C2C

Explanation

The model is named after the parties transacting rather than the technology used. A business seller and business buyers make this business-to-business commerce, whether or not a portal is involved.

Question 3E-commerce fundamentals and business models

Which of the following is the clearest example of social commerce?

  1. Buying an item in an influencer's livestream with in-stream checkout Correct answer.
  2. Ordering from a printed catalogue by telephone
  3. Buying a product from a retailer's site after clicking a search ad
  4. Comparing prices across several retailers using a price comparison site

Explanation

Social commerce means the purchase is initiated and completed inside a social platform or community context. In-stream checkout during influencer content fits that definition, while advertising or comparison sites simply redirect shoppers elsewhere.

Question 4E-commerce fundamentals and business models

In an affiliate marketing programme, how does the affiliate typically earn revenue?

  1. Earning a share of the advertising impressions delivered on the affiliate's page
  2. Earning a commission when a referred visitor completes a purchase Correct answer.
  3. Charging the merchant a fixed listing fee for each promoted product
  4. Buying the merchant's stock at wholesale prices and reselling it at a markup

Explanation

Affiliate marketing is performance-based: the merchant rewards a partner only for traffic the partner generates that converts into a defined action such as a sale.

Question 5E-commerce fundamentals and business models

Which feature distinguishes the marketplace model from the reseller model?

  1. The operator never takes ownership of the goods that are sold Correct answer.
  2. The operator buys goods from manufacturers and resells them
  3. The operator holds all inventory in its own warehouses
  4. The operator sets one price that every seller must charge

Explanation

A marketplace connects independent sellers with buyers and earns fees, so inventory risk stays with those sellers. A reseller buys goods and resells them, bearing the inventory risk itself.

Question 6E-commerce fundamentals and business models

What does gross merchandise value (GMV) measure in e-commerce reporting?

  1. Growth rate of monthly active user accounts
  2. Gross profit remaining after shipping and payment processing costs
  3. Average number of visits per unique shopper per month
  4. Total value of merchandise sold through a platform in a given period Correct answer.

Explanation

GMV captures the sales volume passing through a platform before returns and fees are netted out. It is a scale indicator rather than a measure of profit.

Question 7E-commerce fundamentals and business models

Which of these products has a marginal cost of reproduction close to zero?

  1. A paperback book printed and shipped per order
  2. A hand-assembled mechanical wristwatch
  3. A downloadable e-book sold through an online store Correct answer.
  4. A refrigerated meal kit delivered weekly

Explanation

A digital file is created once and then copied at almost no extra cost, so the marginal cost of an additional unit approaches zero. Physical goods each require materials, labour and delivery.

Question 8E-commerce fundamentals and business models

What is disintermediation in e-commerce?

  1. Removing a traditional intermediary, as when a manufacturer sells direct online Correct answer.
  2. Adding a new layer of distributors and agents between the producer and the end buyer
  3. Moving a transaction from a mobile device to a desktop computer
  4. Dividing a retailer into separate online and offline legal entities

Explanation

Disintermediation means cutting an existing middle layer out of the value chain, typically because the internet lets a producer reach buyers directly.

Question 9E-commerce fundamentals and business models

An online retailer offers free delivery on orders over $50. Which metric is this tactic most directly designed to influence?

  1. Site availability during peak traffic
  2. Return on advertising spend
  3. Average order value Correct answer.
  4. Payment authorisation success rate

Explanation

A free-delivery threshold gives shoppers a financial reason to add items until the basket reaches the threshold. That lifts the average value of each order placed.

Question 10E-commerce fundamentals and business models

An online grocery start-up rents small urban premises that hold stock for picking and packing delivery orders, and the premises are closed to the public. These facilities are best described as:

  1. Factory outlets
  2. Category-killer outlets
  3. Pop-up shops
  4. Dark stores Correct answer.

Explanation

Dark stores are retail-grade facilities used only to fulfil online orders. They are laid out for rapid picking rather than for browsing customers.

Question 11E-commerce fundamentals and business models

A software firm gives away a working version of its product at no charge and charges for advanced features and higher usage limits. Which revenue model is this?

  1. Freemium Correct answer.
  2. Transaction fee
  3. Affiliate commission
  4. Display advertising

Explanation

Freemium pairs a free tier that drives adoption with paid upgrades that convert a subset of users into revenue. The free version acts as the acquisition engine rather than a dead end.

Question 12E-commerce fundamentals and business models

Which situation best illustrates the long tail in online retail?

  1. A shopping site ranks its catalogue strictly by current best-seller status in every category
  2. A shop concentrates most of its revenue on ten blockbuster products that it promotes heavily on the home page
  3. An online bookseller profits from thousands of rarely sold niche titles because listing them costs little Correct answer.
  4. A retailer trims its catalogue down to the fastest-moving lines to reduce warehousing costs

Explanation

The long tail describes revenue earned from a large number of low-volume niche items. It becomes viable when the cost of carrying extra catalogue items is close to zero.

Question 13E-commerce fundamentals and business models

Which observation most directly demonstrates a network effect on a two-sided marketplace?

  1. Prices are cut across the whole catalogue during a seasonal clearance event for members
  2. More merchants attract more shoppers, and more shoppers attract more merchants Correct answer.
  3. Server and bandwidth costs per order fall as the platform buys hardware in bulk
  4. Brand recognition rises sharply after a national television advertising campaign is launched

Explanation

A network effect exists when the product becomes more valuable to a user as the number of other users grows. Cross-side attraction between merchants and shoppers is the classic marketplace case.

Question 14E-commerce fundamentals and business models

Which statement accurately describes a dropshipping arrangement?

  1. The retailer buys stock in bulk and stores it in its own warehouse before selling it on
  2. The retailer pays the supplier's invoice only after the shopper returns the item
  3. The retailer sells stock it never holds, and a supplier ships each order to the shopper Correct answer.
  4. The supplier sets the retail price and answers all customer queries

Explanation

In dropshipping the retailer acts as the sales front end while the supplier holds the stock and fulfils each order. Inventory risk therefore shifts upstream to the supplier.

Question 15E-commerce fundamentals and business models

A website received 40,000 sessions and recorded 1,200 orders in a month. What is its conversion rate?

  1. 0.3%
  2. 3.0% Correct answer.
  3. 1.2%
  4. 33%

Explanation

Conversion rate equals orders divided by sessions: 1,200 ÷ 40,000 = 0.03, which is 3.0%.

Question 16E-commerce fundamentals and business models

Which calculation gives customer acquisition cost (CAC)?

  1. Customer service and returns handling spend averaged over each order placed
  2. Total revenue earned from a new customer's very first order placed on the site
  3. Cost of the goods sold on any order that a newly acquired customer places
  4. Total sales and marketing spend divided by new customers won in the period Correct answer.

Explanation

CAC compares the money spent to win customers with the number of customers actually won in that period. The result is the average cost of acquiring one customer.

Question 17E-commerce fundamentals and business models

A manufacturer opens its own consumer web store and undercuts the prices its established retail partners charge for the same products. Which consequence is most likely?

  1. Retail partners may reduce their promotion of the manufacturer's products or stop stocking them Correct answer.
  2. The manufacturer will find it impossible to accept card payments in its own online store
  3. Consumers will be unable to find the manufacturer's store through search engines or ads
  4. The manufacturer will lose ownership of its own product data to its online payment provider

Explanation

Direct online selling that undercuts channel partners creates channel conflict, because partners lose margin on the same items. Partners often retaliate by de-emphasising or dropping the brand.

Question 18E-commerce fundamentals and business models

Which statement describes a pure-play online retailer?

  1. It sells only as a third-party seller on other companies' marketplaces
  2. It sells exclusively to business and public-sector buyers
  3. It runs physical stores and a website that share the same inventory
  4. It sells only through digital channels and operates no physical stores Correct answer.

Explanation

A pure-play online retailer conducts all of its selling through digital channels. This contrasts with bricks-and-clicks retailers that also operate physical stores.

Question 19E-commerce fundamentals and business models

Which change is most likely to reduce checkout abandonment caused by friction at the account step?

  1. Requiring shoppers to create a password before they can pay
  2. Revealing shipping charges only after payment is taken
  3. Letting shoppers complete the purchase as a guest Correct answer.
  4. Adding extra form fields to collect marketing preferences

Explanation

Forced registration adds effort and the risk of a forgotten password before the order is complete. Guest checkout removes that barrier while still permitting an optional account afterwards.

Question 20E-commerce fundamentals and business models

A retailer lets a shopper buy online and collect from a nearby store, with both channels drawing on the same stock records. This practice is best described as:

  1. A marketplace model
  2. Pure-play retailing
  3. An omnichannel strategy Correct answer.
  4. A flash-sale model

Explanation

Omnichannel retailing integrates store and online channels so customers can move between them within one purchase journey. Shared inventory data is what makes that integration work.

Question 21E-commerce fundamentals and business models

A marketplace charges sellers a commission and grows both its buyer and seller bases. Which explanation best accounts for why such platforms often dominate their category?

  1. Cross-side network effects make it more valuable as both sides grow, concentrating the market Correct answer.
  2. Price skimming allows the platform to keep charging early adopters premium fees indefinitely
  3. Bulk purchasing of warehousing space lowers the unit cost of fulfilment as order volume rises
  4. The bullwhip effect allows the platform to smooth demand variability across its supply chain partners

Explanation

When each new participant on one side raises value for the other side, growth reinforces itself and late entrants struggle to reach comparable liquidity. The market therefore tends to concentrate around one or two platforms.

Question 22E-commerce fundamentals and business models

A subscription service starts the month with 10,000 active subscribers. During the month 800 cancel and 500 new subscribers join. What is the monthly churn rate?

  1. 13.0%
  2. 8.0% Correct answer.
  3. 16.0%
  4. 5.0%

Explanation

Churn is measured against the base at the start of the period: 800 ÷ 10,000 = 8%. New sign-ups affect net growth but do not enter the churn calculation.

Question 23E-commerce fundamentals and business models

Which scenario is the clearest example of reintermediation?

  1. A price comparison service closes down because shoppers now go straight to the retailers' own sites
  2. A manufacturer stops selling through distributors and serves customers only from its own website
  3. A new aggregator sits between buyers and sellers, adding comparison, escrow payment and delivery Correct answer.
  4. A retailer shuts its website and reverts to taking orders from printed catalogues by telephone

Explanation

Reintermediation occurs when a new intermediary enters the chain, often supplying services such as trust, payment protection or logistics that the original parties cannot easily provide.

Question 24E-commerce fundamentals and business models

An online seller earns a 25% gross margin and spends 30% of revenue on paid search attributed entirely to first orders from new customers. Ignoring all other costs, which conclusion is best supported?

  1. Every first order is profitable because the gross margin on the goods themselves is positive
  2. The money spent on acquisition has no bearing on whether a customer's first order is profitable
  3. The seller can raise its prices with no effect on the quantity that shoppers are willing to buy
  4. First orders from new customers lose money, so viability rests on repeat purchases and lifetime value Correct answer.

Explanation

Margin and acquisition cost must be compared on the same order: a 25% margin against a 30% acquisition spend leaves a five-point shortfall. Payback therefore has to come from later orders placed by the same customer.

Question 25E-commerce fundamentals and business models

Which description correctly characterises the consumer-to-business (C2B) model?

  1. Individuals supply skills, content or assets that businesses pay to use Correct answer.
  2. Governments buy office supplies from private companies through tenders
  3. Consumers buy goods from other consumers at fixed retail prices
  4. Businesses sell surplus stock to other businesses at auction

Explanation

In C2B the individual is the supplier of value and the business is the buyer, as on freelance platforms, stock photography marketplaces or paid user-generated content programmes.

Question 26E-commerce fundamentals and business models

A company sells pallets of cleaning supplies only to hotels, restaurants and offices, invoicing those organisations on 30-day terms. Which e-commerce business model does this describe?

  1. Business-to-consumer (B2C)
  2. Consumer-to-consumer (C2C)
  3. Consumer-to-business (C2B)
  4. Business-to-business (B2B) Correct answer.

Explanation

The model is classified by who sits on each side of the transaction. Here the seller is a business and every buyer is another organisation buying for its own operations, not for personal use, which makes it business-to-business. Invoice-based, bulk purchasing on credit terms is also typical of B2B commerce.

Question 27E-commerce fundamentals and business models

A news website publishes its articles free of charge and earns most of its income by selling space on its pages to brands that want to reach its readers. Which revenue model is this?

  1. Subscription model
  2. Online advertising model Correct answer.
  3. Transaction fee model
  4. Affiliate model

Explanation

In an advertising model the audience consumes content without paying and the revenue comes from third parties buying access to that audience's attention. The defining feature is that the payer and the user are different parties. A commission-based or referral-based arrangement would instead tie income to sales completed through the site.

Question 28E-commerce fundamentals and business models

An online store negotiates supply agreements with brands, buys the goods outright, sets its own selling prices, warehouses the stock and absorbs the loss when items remain unsold. Which business model is this?

  1. Affiliate model
  2. Marketplace model
  3. Subscription model
  4. Reseller model Correct answer.

Explanation

The decisive test is who takes ownership of inventory and the risk attached to it. A reseller buys stock, controls pricing and bears the cost of unsold goods, earning a trading margin. Platforms that merely connect buyers and sellers do not carry this inventory risk.

Question 29E-commerce fundamentals and business models

A supermarket chain designs a range of staple goods, has them manufactured by outside factories, and sells them under a brand name that it owns at prices below comparable national brands. Which term describes this range?

  1. Exclusive distribution
  2. Dropshipping
  3. Licensing
  4. Private label Correct answer.

Explanation

Private label, also called own-brand or store-brand, means the retailer controls the brand and specification while outsourcing production. Because the retailer avoids national-brand marketing spend and buys manufacturing capacity competitively, it can price below branded equivalents. The retailer still buys and holds the stock, so this is distinct from arrangements where a supplier ships directly.

Question 30E-commerce fundamentals and business models

An online retailer pays its suppliers 60 days after receiving stock, while customers pay by card at checkout and the funds settle within two days. Inventory sells through quickly and sales are expanding fast. Which explanation best accounts for the retailer needing little external cash to fund that growth?

  1. Revenue is recorded before the cost of goods, so reported profit overstates the cash generated
  2. Rising sales automatically reduce the amount owed to suppliers, which frees cash each month
  3. Stock is written off at the point of sale, which removes it from the balance sheet
  4. Cash from customers arrives well before suppliers are paid, so growth generates cash Correct answer.

Explanation

This is the cash conversion cycle: cash received from customers minus cash paid to suppliers. When customers pay in days and suppliers are paid in 60 days, each sale brings cash in before payment goes out, so a growing order book throws off rather than absorbs cash. This is sometimes described as negative working capital, though it reverses sharply if growth stalls or terms tighten.

Question 31Online storefront and platform management

What is the primary purpose of a SKU on an online storefront?

  1. To uniquely identify each sellable item Correct answer.
  2. To record the customer's delivery preference
  3. To describe the marketing headline of a product
  4. To set the page title used by search engines

Explanation

A SKU is the merchant's internal identifier that ties a specific sellable configuration to its stock record, price and reporting. Marketing copy, page titles and customer preferences are handled by other fields and do not identify inventory.

Question 32Online storefront and platform management

A product is marked out of stock yet the storefront still shows an active 'Add to cart' button. Which setting most directly governs this behaviour?

  1. The store's default currency
  2. The product's tax class
  3. The backorder availability setting Correct answer.
  4. The category display mode

Explanation

The backorders setting decides whether an item can be purchased when quantity reaches zero, so it is what keeps the cart button active. Tax class, currency and category display affect presentation or pricing, not purchasability at zero stock.

Question 33Online storefront and platform management

On a storefront, breadcrumb navigation primarily helps shoppers by doing what?

  1. Showing the page's position in the catalogue hierarchy Correct answer.
  2. Encrypting payment details during checkout
  3. Applying discount codes automatically at checkout
  4. Caching product images on the web server

Explanation

Breadcrumbs are a secondary navigation trail that shows the category path back to the home page, aiding orientation and internal linking. They have no role in payments, promotions or server caching.

Question 34Online storefront and platform management

Which configuration is required before a storefront can safely accept card payments?

  1. A minimum of three product images per item
  2. A dedicated IP address for the mail server
  3. A public sitemap submitted to search engines
  4. A valid TLS certificate serving the site over HTTPS Correct answer.

Explanation

Payment pages must be served over HTTPS with a valid certificate so credentials and card form data are encrypted in transit, which is also a PCI DSS requirement. Catalogue images, mail infrastructure and sitemaps do not secure the checkout flow.

Question 35Online storefront and platform management

A shirt is sold in three sizes and four colours. Which catalogue structure models this most efficiently?

  1. One configurable product with size and colour variants Correct answer.
  2. Three grouped products, one for each colour family
  3. One simple product listing the sizes in the description field
  4. Twelve standalone simple products with duplicated descriptions

Explanation

A configurable product holds the shared attributes once and generates a child variant for each size and colour combination, keeping stock, price and content manageable. The other approaches either duplicate content twelve times or hide real purchasable options in free text.

Question 36Online storefront and platform management

Which sequence best matches a standard order lifecycle on an e-commerce platform?

  1. Invoiced, Pending, Shipped, Complete
  2. Pending, Processing, Shipped, Complete Correct answer.
  3. Complete, Processing, Shipped, Pending
  4. Shipped, Pending, Invoiced, Complete

Explanation

Orders normally begin in a pending state after placement, move to processing once payment or stock is confirmed, then shipped, and finally complete when fulfilment is closed. The other sequences place closure or shipment before the steps that must precede them.

Question 37Online storefront and platform management

A store needs an 'About Us' page that is not a catalogue item. What should be created?

  1. A virtual product with a zero price
  2. A CMS page linked from the store's footer Correct answer.
  3. A catalogue price rule
  4. A new product attribute set

Explanation

Informational content such as About Us, terms or contact details belongs in a content management page that can be linked from navigation or the footer. Products, attribute sets and price rules all belong to the commerce catalogue and would not present editorial content.

Question 38Online storefront and platform management

Why do many storefronts enable guest checkout alongside registered accounts?

  1. It exempts the merchant from PCI DSS scope
  2. It removes the need to calculate shipping costs
  3. It allows the store to skip order confirmation emails
  4. It reduces friction for first-time buyers Correct answer.

Explanation

Forcing account creation adds a step where new shoppers commonly abandon, so guest checkout lowers the barrier to completing a first order. It does not affect shipping calculation, card data scope or the obligation to confirm orders.

Question 39Online storefront and platform management

A product is discontinued and its URL is permanently removed. Which action best preserves search rankings and user experience?

  1. Leave the old URL returning the default server page
  2. 301-redirect the old URL to the closest relevant page Correct answer.
  3. Return a 404 and delete all internal links
  4. Add a 302 redirect to the store's home page

Explanation

A permanent 301 redirect passes link equity to a relevant replacement and sends shoppers somewhere useful. A temporary 302 or a home page redirect does not transfer ranking signals to a topical destination, and dead ends lose the traffic entirely.

Question 40Online storefront and platform management

A store sells to customers in several tax jurisdictions. Which address normally drives the sales tax rate for a shipped order?

  1. The delivery address of the order Correct answer.
  2. The store's head office address
  3. The billing address of the payment card
  4. The address of the payment gateway

Explanation

Destination-based tax rules calculate the rate from where the goods are delivered, since that is where the taxable transaction is consummated. The store's own address, the card billing address and the gateway location do not determine the destination rate.

Question 41Online storefront and platform management

To stop two shoppers buying the last unit at the same moment, the platform should do what?

  1. Reserve stock at checkout and release it if payment fails Correct answer.
  2. Allow negative stock and reconcile at month end
  3. Display stock levels as 'many available'
  4. Decrease stock only when the order is archived

Explanation

Reserving quantity when checkout begins makes the unit unavailable to other carts and releases it after a failed or expired payment. Decrementing late or permitting negative stock both allow the same unit to be promised twice.

Question 42Online storefront and platform management

Layered navigation is most valuable in a category that does what?

  1. Has fewer than five products in total
  2. Contains many products with shared filterable attributes Correct answer.
  3. Contains a single product with no attributes
  4. Is used only as a landing page for paid ads

Explanation

Faceted filtering pays off when shoppers must narrow a large set by attributes such as size, brand or price range. Small categories or thin landing pages gain little from extra filters and may even add clutter.

Question 43Online storefront and platform management

A store owner wants warehouse staff to update stock quantities but not change prices. What should be configured?

  1. A separate store view for the warehouse
  2. A customer group with wholesale pricing
  3. A shared administrator account for all staff
  4. A role with catalogue inventory permissions only Correct answer.

Explanation

Admin user roles restrict which areas of the backend an account can reach, so granting only inventory permissions satisfies the requirement. Shared admin accounts, customer groups and store views do not limit what a logged-in user can edit.

Question 44Online storefront and platform management

Two cart price rules both match the same order. What determines whether both discounts apply?

  1. The customer's browser language
  2. The order's chosen shipping method
  3. The stop-further-rules flag and rule priority Correct answer.
  4. The number of images on the product

Explanation

Cart price rules carry a priority order and an option to stop processing further rules once one matches, which together decide whether subsequent discounts are evaluated. Shipping method, language and media have no effect on discount evaluation.

Question 45Online storefront and platform management

The same product page is reachable through a category URL and through several filtered search URLs. Which measure limits duplicate-content dilution?

  1. Setting a canonical URL on the product page Correct answer.
  2. Removing the product from the sitemap
  3. Shortening the product description text
  4. Adding a nofollow attribute to the site logo

Explanation

A canonical tag tells search engines which URL is the preferred version, consolidating ranking signals from the filter and category variants. Logo attributes, copy length and sitemap inclusion do not address near-duplicate URLs.

Question 46Online storefront and platform management

A merchant wants funds held at checkout but captured only after the warehouse confirms dispatch. Which sequence fits?

  1. Authorize at checkout, then capture at dispatch Correct answer.
  2. Refund at checkout, then authorize at dispatch
  3. Authorize and capture together, then void
  4. Capture at checkout, then refund on dispatch

Explanation

An authorization places a hold on the customer's funds, and a later capture converts that hold into a settlement once the merchant is ready to fulfil. Immediate capture followed by refunds ties up money and creates avoidable refund traffic.

Question 47Online storefront and platform management

A store ships by weight tiers. Which shipping configuration produces accurate charges at checkout?

  1. A single rate based on the number of line items
  2. A flat rate applied to every order
  3. Free shipping with no conditions
  4. A table rate keyed on the cart's total weight Correct answer.

Explanation

Weight-based table rates read the combined cart weight and look up the matching price band, which is the only option that reflects the actual shipping cost driver. Flat, free and item-count rates ignore the weight variable entirely.

Question 48Online storefront and platform management

Why should product images carry descriptive alternative text?

  1. It prevents the image from being cached
  2. It encrypts the image during transmission
  3. It supports accessibility and image search indexing Correct answer.
  4. It reduces the file size of the image

Explanation

Alt text is read by screen readers for shoppers who cannot see the image and is also used by search engines to understand image content. It has no effect on file size, transport security or caching.

Question 49Online storefront and platform management

A merchant wants one catalogue shared across two storefronts that use different currencies and languages. What is the standard platform approach?

  1. Duplicate the entire database for each storefront
  2. Run each storefront as an independent catalogue with copied products
  3. Use one storefront and switch currency by cookie
  4. Create separate store views over a shared catalogue Correct answer.

Explanation

Store views sit beneath a website or store and let the same products be presented with different locale, currency and theme settings. Copying the catalogue or database duplicates maintenance, while a cookie switch does not deliver true localisation.

Question 50Online storefront and platform management

An abandoned cart recovery email is generally most effective when it is sent at what point?

  1. After the customer buys the same item again
  2. Within a few hours of the cart being abandoned Correct answer.
  3. Twelve days after the cart was created
  4. Only to customers who never registered

Explanation

Intent decays quickly, so a reminder sent while the shopper is still considering the purchase converts far better than a late one. Delaying for many days or waiting until after a repeat purchase removes the reason to return.