You are advising an early-stage grocery delivery company. Work through the following growth, profitability, and regional-pricing case. The numbers below are illustrative practice data; treat them as a one-month forecast rather than known company facts. ### Constraints & Assumptions - Merchandise value is gross marketplace volume, not platform revenue. - Service fees and merchant commissions are percentages of merchandise value. - All listed costs are borne by the platform; ignore taxes and any unlisted costs. - Use expected values for the arithmetic, then discuss the uncertainty hidden by those point estimates. ### Clarifying Questions to Ask - What objective and time horizon define “grow”: orders, active customers, retention, contribution profit, or long-run market share? - Is courier or merchant capacity currently the binding constraint? - Does the company care more about reaching break-even or learning quickly in the new region? ### Part 1: Build a Growth Framework How would you diagnose the business and decide where to invest to grow it? Cover customer demand, merchant selection, courier supply, retention, pricing, and unit economics. Name a north-star outcome, leading indicators, and guardrails. #### What This Part Should Cover - The marketplace funnel and the interaction among customers, merchants, and couriers. - Segmentation by market maturity, customer cohort, order occasion, and supply conditions. - A metric tree that connects acquisition and retention to order volume and contribution profit. - A way to prioritize interventions and test whether they caused incremental growth. ### Part 2: Calculate and Check Monthly Profit The current region has the following monthly data: | Item | Value | |---|---:| | Completed orders | 40,000 | | Average merchandise value per order | $60.00 | | Delivery fee paid by customer | $5.50 per order | | Service fee | 6% of merchandise value | | Merchant commission | 8% of merchandise value | | Courier pay | $7.00 per order | | Payment and chargeback cost | $2.00 per order | | Support and refund cost | $1.10 per order | | Fixed regional operating cost | $120,000 | Calculate gross merchandise value, platform revenue, variable cost, contribution profit, and operating profit. Then explain how you would check whether the answer is reasonable. #### Clarifying Questions for this Part - Are fees calculated on completed orders only? - Is fixed regional cost incremental and fully attributable to this month? #### What This Part Should Cover - Correct separation of merchandise value, platform revenue, variable cost, and fixed cost. - Profit per order and at least one margin or reconciliation check. - Awareness that averages may hide cohort, geography, refund, or peak-time effects. ### Part 3: Compare Two Pricing Strategies for a New Region For a new-region launch, compare these one-month forecasts: | Item | Strategy A | Strategy B | |---|---:|---:| | Expected completed orders | 25,000 | 30,000 | | Average merchandise value per order | $64.00 | $60.00 | | Delivery fee | $5.00 | $3.00 | | Service fee | 5% | 7% | | Merchant commission | 7% | 8% | | Courier pay per order | $7.60 | $8.10 | | Payment, support, and refund cost per order | $2.20 | $2.30 | | Fixed regional operating cost | $80,000 | $80,000 | Calculate expected platform revenue, contribution profit, and operating profit for each strategy. Which strategy would you recommend, and what additional evidence could change your choice? #### What This Part Should Cover - Comparable per-order and total economics for both strategies. - A recommendation that distinguishes the arithmetic result from uncertain demand and retention assumptions. - Break-even or sensitivity analysis and a plan to validate price elasticity and marketplace effects. ### What a Strong Answer Covers - A structured business model before calculation. - Accurate arithmetic with units and transparent assumptions. - Reasonableness checks that catch omitted costs, double-counted merchandise value, and misleading averages. - A decision that balances near-term profit, growth, uncertainty, and learnability. ### Follow-up Questions 1. How would you estimate the causal effect of a lower delivery fee on order frequency? 2. Which segments could make the average unit economics misleading? 3. How would your recommendation change if courier wait time worsened as order volume increased?