NJC 2022 H1 Economics Prelim P1 QP

This document consists of 8 printed pages and 4 blank pages. NATIONAL JUNIOR COLLEGE Economics Department © NJC 2022 8823/01/Aug/22 [Turn over ECONOMICS 8823/01 Paper 1 22 August 2022 3 hours No Additional Materials are required. READ THESE INSTRUCTIONS FIRST An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. NATIONAL JUNIOR COLLEGE SH2 Preliminary Examinations for General Certificate of Education Advanced Level Higher 1

2 © NJC 2022 8823/01/Aug/22 Answer all questions. Question 1: A winner in the pandemic – Amazon Table 1: Retail revenue of the top ten largest Public Retailers (2010 and 2020) US Retailer Retail Revenue in 2010 (in US$ billion) Retail Revenue in 2020 (in US$ billion) Amazon 50 1,400 Walmart 179 339 The Home Depot 47 267 Costco 24 134 Lowe’s 29 102 Source: visualcapitalist.com, accessed 29 June 2020 Extract 1: E-commerce worldwide Over the last few years, electronic commerce (e-commerce) has become an indispensable part of the global retail framework. The retail landscape has undergone a substantial tran sformation following the advent of the internet, and thanks to the ongoing digitalisation of modern life. As Wireless Fidelity (Wi-Fi) access and internet adoption are rapidly increasing worldwide, the number of digital buyers keeps climbing every year. In 2020, over two billion people purchased goods or services online, and during the same year, e-retail sales surpassed US$4.2 trillion dollars worldwide. Internet users can choose from various online platforms to browse, compare, and purchase the items or services they need. As of 2019, online marketplaces account for the largest share of online purchases worldwide. Leading the global ranking of online retail websites in terms of traffic is Amazon: The Seattle-based e-commerce giant that offers e-retail, computing services, consumer electronics, and digital content registered over 5.2 billion unique visitors in June 2020. In terms of gross merchandise value (GMV), however, Amazon ranks third behind Chinese competitors Taobao and Tmall. Both platforms are operated by the Alibaba Group, the leading online commerce provider in Asia. One of the most visible trends in the world of e -commerce is the unprecedented usage of mobile devices. In 2021, smartphones accounted for almost 70 % of all retail website visits worldwide, although desktop and tablet visits generated higher conversion rates in 2020. As the adoption of mobile devices is progressing at a rapid pace, especially in regions that lack other digital infrastructure, mobile integration will continue to shape the shopping experience of the future. Mobile commerce (m- commerce) is particularly popular across Asia, with countries like South Korea generating up to 65% of their total online transaction volume via mobile traffic. The coronavirus (COVID-19) pandemic continues to have a significant influence on e-commerce and online consumer behaviour around the world. As millions of people stayed home in early 2020 t o contain the spread of the virus, digital channels have become the most popular alternative to crowded stores and in-person shopping. In June 2020, global retail e -commerce traffic stood at a record 22 billion monthly visits, with demand being exceptional ly high for everyday items such as groceries, clothing, but also retail tech nological items. How online usage, purchasing habits, and the overall future of e-commerce and the global retail industry will look like in 2021 and beyond will largely depend on the further progression of COVID-19.

3 © NJC 2022 8823/01/Aug/22 In a year of widespread and often devastating hardships, no business or industry came through 2020 untouched by the COVID-19 pandemic. But for some key sectors, the news was not all bad. An example would be Amazon and o ther online retailers who are among the biggest winners of the pandemic. Amazon.com, Inc. is an American multinational technology company which focuses on e- commerce, cloud computing, digital streaming, and artificial intelligence. Source: Statista.com, accessed 28 June 2022 Extract 2: Market strategy of Amazon Amazon is interesting not just because of its competitive scope, but also because of its market strategy. Amazon’s service is differentiated. A differentiation strategy is where the product or service is either perceived to be, or is, of superior customer value and has a definite price premium. Amazon is ultra-keen on customer feedback, and Jeff Bezos, founder and chief executive officer of Amazon.com, Inc., has spread customer focus as a mantra throughout the organisation. Such service differentiation does not just bring loyalty but also encourages customers to buy more from Amazon. The company is venturing into some perhaps unexpected new areas , for example, by exploiting its distinctive capability in handling large amounts of data and for new types of c ustomers, sending a shiver down the spines of many large Information Technology (IT) companies. Source: accaglobal.com, accessed 14 July 2022 Extract 3: China’s online shopping addiction is killing its green packaging drive The e-commerce industry is trying to reduce plastic waste from the millions of packages it ships every day. If you worry about all the waste generated by the annual rush of holiday shopping and gift giving, it is nothing compared to the mountains of discar ded packaging that comes from a single event in China. On 11 November each year, the world’s biggest consumer market goes into overdrive as e-commerce giants like Alibaba Group Holdings Ltd. and JD.com Inc. lure shoppers with huge bargains during the Singles’ Day bonanza. Alibaba reported almost 500 billion yuan ( US$76 billion) of sales this year, nearly four times U nited States (US) Black Friday and Cyber Monday spending combined. Greenpeace, an independent global campaigning network that acts to change attitudes and behaviour to protect and conserve the environment, estimates that Singles’ Day generated 52,400 metric tons of carbon dioxide (CO2) from manufacturing, packaging and shipping in 2017. The national railway has to employ hundreds of high-speed trains to help with deliveries every year. As President Xi Jinping pushes for stronger environmental protection and consumers grow more eco- conscious, the nation’s e -commerce giants are under pressure to find greener ways to handle the annual extravaganza, starting with plastic. China’s soaring use of the material has become one of the world’s most pressing environmental issues but s witching to other materials is costly for smaller businesses and the government has struggled to implement a plan to phase out single-use plastics. E-commerce companies are trying to stem the tide. For Singles’ Day this year, Alibaba’s logistics arm Cainiao designed recyclable corrugated cardboard boxes that do not have to be sealed with plastic [Turn over

4 © NJC 2022 8823/01/Aug/22 tape. The company offered the packaging to more than 500 sellers on Tmall, including brands like Nestle SA and Procter & Gamble Co. The so -called zipper boxes cost twice as much as their usual packaging. Cainiao says it used 190,000 plastic -free boxes and 3 million biodegradable bags to package Singles’ Day ord ers this year. While that is a step forward, it is just a fraction of the total increase in packaging this year. Cainiao emblazons the boxes with dolphin images to ‘raise