Fig. 1.1 shows an online retailer's advertisement on their website. SMARTPHONES FOR SALE AT $960 FLASH SALE 24 monthly payments on direct debit on phone contract. 20% deposit. 0% interest. [Figure 1.1] Use Fig. 1.1 to help you answer the following questions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2024). The mark or mark type is shown in brackets.

1. [1] Discount/promotion/special deal/low price/quick sale/short period of time/time-limited
2. [1] To attract customers/increase sales/impulse buying
3. [4] Answer = $32 (4)
4. [4] Method = 20% of $960 = $192 (1) $960 – $192 (1) = $768 (1) divided by 24
5. [4] OR = 20% of $960 = $192 (1) $960 + $192 (0) = 1152 divided by 24 (1) = 48 (1) 3 marks for OFR
6. [2] Lower costs/cheap (1) no need to have expensive retail premises/customer facing staff/staff wages/can insert advert on website themselves/cheaper than television/newspapers (1)
7. [2] Can operate from anywhere (1) as emails/orders can be received worldwide (1)
8. [2] Operates 24/7 (1) potential customers can visit website at any time (1)
9. [2] Widens market / global reach (1) to reach a wide range of potential customers / many people have access to the internet / can sell smartphones worldwide / attracts more customers (1)
10. [2] Can provide good customer service (1) include information/details / answer customer queries (1)
11. [2] Increased customer intelligence (1) able to use digital tools to target customers/track customers/find out customer needs (1)
12. [2] Can target customers (1) many people will visit a website / meet their wants / can customise content (1)
13. [2] Increase in customers buying online (1) potential for more sales/increases sales / persuades more people to buy (1)
14. [2] Less time intensive (1) as ordering / payments automatically activated online (1)
15. [2] Better cash flow (1) if customers pay by credit/debit card (1)
16. [2] Ecommerce website enables higher profit margins (1) making more profit on each product advertised/sold (1)
17. [2] Having a website increases retailer's search engine optimization (SEO) (1) which can help drive more traffic to their website (1)
18. [3] Yes - Deliver products quickly/efficiently/fast (1) to any location (1) can have same day delivery / door-to-door (1) saves costs of delivery/transport costs (1) no fuel used (1) by car/van (1) eliminates human errors (1) such as negligence/wrong recipients (1) deliver goods to inaccessible/remote places (1) that have poor communications / transportation networks (1) operates 24/7 (1) environmentally friendly (1) reduces carbon dioxide emissions (1) compared to road transport (1) reduces road congestion (1) as fewer delivery vans on the road (1)
19. [3] No - Expensive/costly (1) requires a significant investment to create a network of drones (1) affected by weather (1) e.g. storms/wind (1) can easily fall from the sky (1) safety concerns due to possible drone crash near crowded areas (1) privacy threat in urban areas (1) can affect/injure wildlife (1) high risk of malfunction during delivery (1) e.g. battery defects (1) needs monitoring (1) drones easily lost/stolen (1) end up in wrong address/wrong location (1) goods can be easily lost/stolen (1) leading to losing customers (1) not suitable for heavy goods (1)
20. [2] An important factor affecting the location of an online retailer is availability of power.
21. [2] A smartphone insurance policy is likely to cover cracked screens.
22. [6] Warehousing is the process of storing goods before they are sold.
23. [6] Online retailers sell goods using the internet.
24. [6] Goods are stored – to meet demand / waiting for delivery
25. [6] Increased online returns – greater warehouse space required
26. [6] Picking orders – selecting items until order is complete
27. [6] Protection / safety – from damage / theft / weather
28. [6] To help in stockpiling - act as a reservoir ahead of demand
29. [6] Enables goods to be bought in bulk – at lower prices / needs large space
30. [6] Place for processing to be carried out – e.g. packaging / branding / labelling – will help with transporting / advertising
31. [6] To even out supply – so prices are kept stable
32. [6] To meet unexpected demand so consumers are not disappointed
33. [6] Evaluation: As an online retailer, warehousing is a very important element of the supply chain. Online shopping continues to grow and many businesses are exclusively operating online. With the need to fulfil as many customer orders as quickly as possible, warehouses become necessary. Proper warehouse storage ensures that companies are able to safekeep their large supply of goods and execute order management efficiently. A good online retailer's warehouse will keep their customers happy. This can increase their customer loyalty, and make the ecommerce retailer more attractive to potential buyers