Tirtiranium is an online clothing store whose business model is based

Question

Tirtiranium is an online clothing store whose business model is based on connecting buyers and independent garment makers in Third World countries, a process that is meant to ensure that profits go directly to the workers and not to middlemen such as retail clothing stores. However, the total profit to the garment makers is not substantially larger than if they worked in factories or sold their clothes to stores.

Which of the following, if true, does most to explain the argument above?

A. Tirtiranium offers consumers the chance to donate a few dollars to charity during checkout, in addition to each purchase, as do many other clothing stores.
B. The price consumers pay includes shipping costs, which are higher for Tirtiranium products than for clothes from a traditional retail chain.
C. Conscious consumers are often willing to pay a few extra dollars for a product that is branded as a socially responsible choice.
D. In order to incentivize them to leave factories and work with Tirtiranium, the company offers garment makers a one-time cash bonus which is equal to their monthly salary at their previous job.
E. A third of Tirtiranium’s profits are from online advertising on their site, and not from sales.

strangelrose · Answer

B is the best choice the rest are out of scope

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GMATBusters · Answer

Official Explanation:

The argument states that Tirtiranium does not actually benefit garment makers, which means that either the prices are too low for them or the expenses are too high. In answer choice(B) we find what we expected to find – there are higher expenses, which make the garment makers’ profits smaller.

GMATBusters · Answer

C) Conscious consumers are often willing to pay a few extra dollars for a product that is branded as a socially responsible choice.
 
The workers either work for online company or small factory or supply to stores, their products will always be unbranded.

So, Conscious consumers who want to go for branded product don't effect the argument.

VasundharaS · Answer

So I was confused b/w B and E - don't they just make similar points? The total income the products are getting is less and that is leading to minimal change in income

Hazel33 · Answer

Is this an official problem? 
Kindly help with the explanation as I am unable to form a logic here.

StuffMob · Answer

Official Explanation:

The argument states that Tirtiranium does not actually benefit garment makers, which means that either the prices are too low for them or the expenses are too high. In answer choice(B) we find what we expected to find – there are higher expenses, which make the garment makers’ profits smaller.

But in option B it says the consumer pays for the shipping costs as well. Therefore does not cause a problem for the garment makers margins.

guddo · Answer

Tirtiranium is an online clothing store whose business model is based on connecting buyers and independent garment makers in Third World countries, a process that is meant to ensure that profits go directly to the workers and not to middlemen such as retail clothing stores. However, the total profit to the garment makers is not substantially larger than if they worked in factories or sold their clothes to stores. 
 
Which of the following, if true, does most to explain the argument above?

The puzzle is that Tirtiranium removes retail middlemen, so garment makers should receive more profit. But they do not receive much more than before.  The best explanation  is that some other cost reduces the money available to the garment makers, even though retail middlemen are removed.

(A) Tirtiranium offers consumers the chance to donate a few dollars to charity during checkout, in addition to each purchase, as do many other clothing stores.

This does not explain why garment makers’ profits are not much higher. Optional charity donations are separate from the garment makers’ earnings.

(B) The price consumers pay includes shipping costs, which are higher for Tirtiranium products than for clothes from a traditional retail chain.

This is correct. If shipping costs are much higher, then much of what consumers pay may go toward shipping rather than to the garment makers. So even without retail middlemen, the makers’  net profit  may not be substantially larger.

(C) Conscious consumers are often willing to pay a few extra dollars for a product that is branded as a socially responsible choice.

This makes the puzzle harder to explain. If consumers pay extra, we would expect garment makers to earn more, not about the same.

(D) In order to incentivize them to leave factories and work with Tirtiranium, the company offers garment makers a one-time cash bonus which is equal to their monthly salary at their previous job.

This does not explain ongoing profit. A one-time bonus does not explain why total profit from garment sales is not substantially larger.

(E) A third of Tirtiranium’s profits are from online advertising on their site, and not from sales.

This is not relevant. The issue is how much garment makers earn from selling clothes through Tirtiranium, not where Tirtiranium itself earns advertising revenue.

Answer: (B)

quosaperiam · Answer

I am struggling with this question because all the answer choices seem somewhat out of scope to me.
Even B does not seem completely convincing. It says that the price paid by consumers includes the higher shipping costs, so it sounds as though the consumers, rather than the garment makers, are covering those costs. In that case, why would the higher shipping expenses reduce the garment makers’ profits?
Am I missing an implicit assumption that the total price must remain competitive, so higher shipping costs leave a smaller portion of the payment for the garment makers?

Tirtiranium is an online clothing store whose business model is based

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Tirtiranium is an online clothing store whose business model is based

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