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Analyze A/B test with revenue–cost tradeoffs

Last updated: Mar 29, 2026

Quick Overview

This question evaluates a data scientist's skills in experimental design and statistical inference for A/B testing, revenue-impact modeling with skewed and zero-inflated metrics, segmentation for heterogeneous treatment effects, and constrained optimization to balance contribution and operational risk.

  • hard
  • Instacart
  • Analytics & Experimentation
  • Data Scientist

Analyze A/B test with revenue–cost tradeoffs

Company: Instacart

Role: Data Scientist

Category: Analytics & Experimentation

Difficulty: hard

Interview Round: Onsite

You receive a take‑home A/B test on a checkout change that promotes same‑day delivery. Primary metrics: conversion rate, average order value (AOV), take rate (platform % of GMV), and delivery cost per order. Data characteristics: n≈50k users/arm; right‑skewed AOV and cost; unequal variances between arms (variance ratio ≈2); 15% of orders have zero delivery cost due to promos. a) Choose and justify the correct hypothesis test(s) for each metric (e.g., Welch’s t‑test vs classic t‑test vs nonparametric/bootstrapping vs z‑test), and specify distributional assumptions you rely on and how you’ll validate them. b) Quantify net revenue impact: define and compute contribution per order = GMV×take_rate − delivery_cost, allowing delivery_cost to increase with order volume and acknowledging take_rate saturation at high discounts. Show how you’d model cost scaling (e.g., piecewise/queueing‑informed function) and diminishing take_rate, and how you’d propagate uncertainty to a final decision. c) Propose a segmentation plan (e.g., market, daypart, basket size, new vs repeat) to detect heterogeneous treatment effects; explain how you’ll control for multiplicity and avoid overfitting while still surfacing actionable segments. d) Given operational risk of manually increasing shopper supply, propose an optimization objective and constraints that balance short‑term contribution lift with service‑level metrics (SLAs, cancellation risk).

Quick Answer: This question evaluates a data scientist's skills in experimental design and statistical inference for A/B testing, revenue-impact modeling with skewed and zero-inflated metrics, segmentation for heterogeneous treatment effects, and constrained optimization to balance contribution and operational risk.

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Instacart
Oct 13, 2025, 9:49 PM
Data Scientist
Onsite
Analytics & Experimentation
7
0

A/B Test: Same‑Day Delivery Checkout Change

You are evaluating a checkout UI change that promotes same‑day delivery. The experiment is a standard two‑arm A/B test with ≈50,000 users per arm. Primary metrics:

  • Conversion rate (CR)
  • Average order value (AOV)
  • Take rate (platform % of GMV)
  • Delivery cost per order

Data characteristics and wrinkles:

  • AOV and delivery cost are right‑skewed.
  • Unequal variances between arms (variance ratio ≈ 2).
  • 15% of orders have zero delivery cost (promotions/free delivery).

Tasks

a) For each metric, choose and justify appropriate hypothesis test(s) (e.g., Welch’s t‑test vs classic t‑test vs nonparametric/bootstrapping vs z‑test). State the key distributional assumptions and how you would validate them.

b) Quantify net revenue impact. Define contribution per order = GMV × take_rate − delivery_cost. Allow delivery_cost to increase with order volume (operational scaling) and take_rate to saturate at high discounts. Show how you’d model cost scaling (e.g., piecewise/queueing‑informed function) and diminishing take_rate, then propagate uncertainty to a final decision.

c) Propose a segmentation plan (e.g., market, daypart, basket size, new vs repeat) to detect heterogeneous treatment effects. Explain multiplicity control and how to avoid overfitting while surfacing actionable segments.

d) Given operational risk of manually increasing shopper supply, propose an optimization objective and constraints that balance short‑term contribution lift with service‑level metrics (SLAs, cancellation risk).

Solution

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