New E‑commerce Product Line: Pre‑Investment Quantification and Test Plan

You are evaluating whether to invest engineering and operational resources to launch a new e‑commerce product line on an existing consumer platform. Assume you can target by geo/device, run A/B tests for 2–4 weeks, and have access to historical traffic, conversion, AOV, and margin data.

Provide the following:

1. Market sizing
   • Top‑down: Estimate TAM, SAM, and SOM for the category; state assumptions.
   • Bottom‑up: Size impact using current traffic and funnel metrics. Explicitly model two exposure scenarios: a broad surface affecting >20% of users and a niche surface affecting ~5%.
2. Economics and detectability
   • Compute expected incremental revenue (or contribution margin) from launch over a 12‑month horizon.
   • Include fixed build/operational costs and the opportunity cost of test traffic.
   • Compute the minimum detectable uplift (MDE) for a 2‑week A/B test and compare it to the economically required uplift to be viable.
3. Experiment design
   • Propose a test plan: targeting, ramp schedule, primary KPIs, counter‑metrics/guardrails, and a clear go/no‑go bar tied to business value.
4. Cannibalization risk
   • Show how you would de‑risk cannibalization of existing categories and define leading indicators you’d monitor before revenue impacts are visible.
5. Short‑term vs long‑term trade‑offs
   • Specify what you’d do if short‑term engagement drops but long‑term retention is likely to improve. Include measurement plan and decision rules.