Measure Impact of Merchant Variety on Consumer Experience

Q: Measure Impact of Merchant Variety on Consumer Experience

This question evaluates a data scientist's ability to define supply- and consumer-level variety metrics and to design causal experiments that quantify how expanding merchant selection impacts consumer experience and marketplace health.

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Question

Scenario

A two‑sided food delivery marketplace wants to understand the impact of expanding merchant selection (e.g., onboarding more restaurants, expanding delivery radius, surfacing more diverse options) on consumer experience and marketplace health.

Task

Define success metrics that capture merchant variety at both the supply (merchant/market) and consumer levels.
Propose an experiment (or alternative causal design) to quantify the effect of increasing selection on user outcomes, with attention to unit of randomization, guardrails, and heterogeneous effects.

Questions

What metrics would you use to measure merchant variety at the merchant/market level and at the consumer level?
How would you design and analyze an A/B test (or alternative) to measure the causal effect of increasing selection?

Hints

Consider diversity indices (Shannon entropy, Simpson, HHI), conversion, retention.
Specify unit of randomization, guardrail metrics, and heterogeneous effects analyses.

Measure Impact of Merchant Variety on Consumer Experience

Scenario

Task

Questions

Hints

Solution

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