Question

From the following models - subscriptions (usually all you can eat), a la carte (pay for what you use) and “freemium” (uses advertising revenue to provide content for free), make TWO recommendations on ways to start generating more revenue via the eCommerce website.

Answer 1

An e-commerce website can use the above mentioned models to generate revenue in the following manner:-

a) Providing unlimited free delivery to all the subscribed users while the unsubscribed users have to pay a specific amount as the delivery charges. This will help the company in increasing the subscriptions as the regular users will be tempted to get free delivery on their frequent purchases.

The company can maintain their profits and logistics charges in this case by assuming that such a service will increase orders from consumers which will help in applying scale of operations theory to the delivery of the products and bring down the overall cost of transportation.

b) Through the a la carte model, an e-commerce website for a mobile plan can offer services where the user doesn't have to buy standard plans sold by the company. Instead, the user can select his or her choice of services for the plan and pay for what he/she uses. For example - while some users need more internet on their plan, others require to make international calls. Therefore, pay for what you use plan can help in streamlining the mobile plan of the suers according to their needs.