2024 HCI Prelim EC H1 Paper 1 QP

1 © Hwa Chong Institution 2024 8843/01/A/C2 Prelim 2024 HWA CHONG INSTITUTION C2 Preliminary Examinations 2024 Higher 1 CANDIDATE NAME CT GROUP 23 ECONOMICS Paper 1 Case Study Questions Additional Materials: Answer Booklet 8843/01 9 September 2024 3 hours READ THESE INSTRUCTIONS FIRST Read all instructions printed on the cover page of the 12-page answer booklet carefully. Write all your particulars clearly on the cover page of the 12-page answer booklet. Write in dark blue or black pen on both sides of the paper. You may use a soft HB pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid and tape. Answer ALL questions. Write all your answers in the 12-page booklet and subsequent 4-page booklets (if required). Do all your rough work in pen using the answer booklet and cross it through without making it illegible. Do not tear out any part of this booklet. Begin case study question 1 and question 2 on a new page within the answer booklet. All work must be handed in. If you have used any additional 4 -page booklets, please insert them inside the 12–page answer booklet. The number of marks is given in brackets [ ] at the end of each question or part question. You may use a calculator. You are advised to spend several minutes reading through the questions before you begin writing your answers. You are reminded for the need for good English and clear presentation in your answers. This document consists of 9 printed pages and 1 blank page. [Turn over

2 © Hwa Chong Institution 2024 8843/01/A/C2 Prelim 2024 Answer all questions Question 1: Trends in the market for e-commerce Figure 1: Global sales revenue for e-commerce, 2014 to 2027 (US$ billion) *forecasted from 2023 onwards Source: Statista Table 1: Estimated share of global e-commerce revenue by segments, 2023 (%) Segment Percentage Share (%) Electronics 23.1 Fashion 21.1 Toys and Hobbies 19.7 Beauty, Health and Personal Care 10.4 Others 25.7 Source: Statista Extract 1: Consumer sensitivity to prices in e-commerce Price sensitivity is a crucial consideration for e -commerce firms as it influences pricing decisions, revenue optimisation, and competition within the online marketplace. By understanding it effectively, e-commerce firms can gain a competitive edge and enhance their profitability. Online shoppers tend to be more price sensitive compared to traditional brick-and-mortar shoppers. The ease of comparing prices across different online retailers and the abundance of options available make it convenient for consumers to find the best deals . As a result, consumers are more likely to switch to alternative online stores offering lower prices. In addition, e -commerce firms often use promotions, discounts, and special offers to attract customers and drive sales. Source: Price2spy.com 6 July 2023.

3 © Hwa Chong Institution 2024 8843/01/A/C2 Prelim 2024 Extract 2: The demise of brick-and-mortar giants in China Consumer goods retailer Carrefour with its large supermarkets and even larger hypermarkets is slowly collapsing in China. The French retail giant opened its first store in the country in Beijing in 1995 selling a huge variety of produce that were a highly attractive novelty. Carrefour then expanded rapidly in China, opening hypermarkets in Shan ghai as well as in Jiangsu, Guangdong, Sichuan, Yunnan, and other provinces. By 2010, Carrefour was the largest foreign retailer in China with a total of 249 stores in 23 provinces, eventually reaching a peak of 259 in 2017 . Carrefour’s sales in China steadily climbed up to 2015, when it reached a peak of US$4.55 billion. What changed? In one word: e -commerce. China’s e -commerce revolution was underway, and consumption habits began steadily shifting from in-store to online. It was estimated that online sales took away the demand from supermarket by about 12% per year on ave rage from 2015 to 2020. Other supermarket chains such as Tesco, Walmart and Big Box have left or in the process of decreasing its presence in the China market. With rentals and growing wage pressure by an average of 8% per year from 2015 to 2020, the entire supermarket industry was left high and dry. Some made half -hearted attempts to launch an e - commerce app and smaller convenience stores, but these did not amount to much. Source: The China Project, 9 February 2023 Extract 3: Live streaming, gamification spur rise of ‘retailtainment’ Ms Nur Rahmah Jaafar was among the rare breed of millennials who do not like shopping online, preferring instead the experience of being able to touch and feel the items while browsing in a physical store. But all that changed when the COVID -19 pandemic hi t. The 29 -year-old school counsellor now regularly shops online for clothes for herself and her son. She buys the clothes through live stream sessions on Instagram (IG). “I am the kind who likes to go out and experience myself. The thing that comes close to an interaction is an IG live. You have the model modelling (the clothes) for you. It’s as close as you can get to real life,” said Ms Nur Rahmah, who shops about once or twice a month through these live stream sessions. Beyond the interaction, the gamification of live streams, such as through quizzes or contests, is also another factor that entices Ms Nur Rahmah to keep joining these sessions. “You get addicted to it. Some IG live (stream sessions) can be very competitive. You have to bid for the product and fastest fingers first. There is that thrill that comes with it,” she said. The addictive element in live stream shopping is also a major draw for Ms Lynnette Goh, 30, who believes that this method of selling thrives on the FOMO (the fear of missing out) mentality. “When I watch a live stream, I always get very hungry to buy the item. It’s very fun to watch, it fuels your need for it. But sometimes I buy already then regret, because it’s fuelled by emotional decisions,” said Ms Goh. She acknowledged that she often bo ught more than what she needs. A stronger Singapore dollar also made the decision to purchase goods from other countries via live streaming affordable, further fueling the desire to buy the products without much consideration. Live stream selling itself is not exactly new, and was already a big thing in China even before the pandemic began creating havoc around the world early last year. It first became mainstream in 2016 when tech giant Alibaba’s e-commerce site Taobao launched its live function. [Turn over

4 © Hwa Chong Institution 2024 8843/01/A/C2 Prelim 2024 The industry is now an integral part of China’s wider e-commerce landscape, having grown by more than 280 per cent between 2017 and 2020, according to a McKinsey report. The growth was further spurred by the pandemic and is estimated to be valued at US$171 billion in 2020. Source: Channel News Asia, 22 Nov 2021 Extract 4: Why plastic in e-commerce may be a difficult habit to kick The amount of plastic used for packaging in e-commerce is higher than what would have been used through traditional brick-and-mortar retail. One reason for this is because e-commerce increases the number of shipments. In conventional retail, goods are ofte n transported in bulk to the retailer, whereas with e-commerce, goods are usually sent on an individual basis directly to the consumer. The plastic used to cover the surface area of the goods is considerably less when transported in bulk. The complexity of the e-commerce supply chain also makes the specific charac