CEC E-commerce Strategy & Planning 5 — Questions and Answers
Question 1: A brand's repeat purchase rate is 15% while industry average is 40%. Which strategic initiative should the consultant recommend first?
- Increase paid search spend
- Implement a post-purchase loyalty and retention email program (Correct answer)
- Expand to new marketplaces
- Redesign the homepage
Correct answer: Implement a post-purchase loyalty and retention email program
Low repeat purchase rate indicates weak post-purchase engagement; retention email sequences and loyalty programs directly address this gap.
Question 2: What does 'contribution margin' measure in e-commerce financial planning?
- Total revenue minus total expenses
- Revenue minus variable costs, before fixed overhead (Correct answer)
- Net profit after tax
- Gross revenue from a single channel
Correct answer: Revenue minus variable costs, before fixed overhead
Contribution margin isolates the per-unit or per-order profit available to cover fixed costs after accounting for variable costs like COGS and shipping.
Question 3: A consultant is advising on exit strategy options for a profitable e-commerce brand. Which buyer type typically pays the highest multiple?
- Individual angel investor
- Strategic acquirer in the same vertical (Correct answer)
- Private equity roll-up fund
- Competing e-commerce brand at the same size
Correct answer: Strategic acquirer in the same vertical
Strategic acquirers pay premium multiples because they can extract synergies—customer overlap, shared infrastructure, cross-sell—that financial buyers cannot.
Question 4: Which e-commerce strategy uses behavioral and demographic data to show different homepage content to different customer segments?
- A/B testing
- Personalization (Correct answer)
- Retargeting
- Lookalike audience targeting
Correct answer: Personalization
Personalization dynamically adapts on-site content, product recommendations, and messaging based on individual user data to increase relevance and conversion.
Question 5: What is the strategic purpose of a competitive pricing audit in e-commerce?
- To reduce warehouse costs
- To ensure prices remain competitive while protecting margin (Correct answer)
- To identify new product categories to enter
- To optimize paid ad bidding strategies
Correct answer: To ensure prices remain competitive while protecting margin
A competitive pricing audit benchmarks your prices against rivals so you can adjust dynamically to remain attractive without unnecessarily sacrificing margin.
Question 6: An e-commerce brand has a 70% cart abandonment rate. Which tactic has the most proven impact on recovering these lost sales?
- Adding more product images to the cart page
- Sending an automated cart abandonment email sequence (Correct answer)
- Reducing the number of product variants
- Switching payment processors
Correct answer: Sending an automated cart abandonment email sequence
Automated cart abandonment emails recover an average of 5–15% of abandoned carts and are consistently among the highest-ROI retention tactics.
Question 7: Porter's Five Forces framework is used in e-commerce strategy primarily to:
- Allocate marketing budget across channels
- Assess the competitive intensity and attractiveness of a market (Correct answer)
- Design the website information architecture
- Configure product recommendation algorithms
Correct answer: Assess the competitive intensity and attractiveness of a market
Porter's Five Forces evaluates supplier power, buyer power, competitive rivalry, threat of substitutes, and new entrant barriers to gauge market profitability.
CEC E-commerce Strategy & Planning 5
A brand's repeat purchase rate is 15% while industry average is 40%.
Which strategic initiative should the consultant recommend first?