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mediumFinancial Analyst interview question

How would you analyse the unit economics of an online grocery delivery business?

What the interviewer wants to hear

  • Define the unit, usually one order
  • Revenue per order: commission or margin, delivery fee, ads
  • Variable costs: delivery, packaging, payment fees, discounts, warehouse costs
  • Contribution per order and its trend with scale
  • Customer level: CAC, order frequency, retention and payback

Model answer

I start by defining the unit, which for grocery delivery is usually one order. On the revenue side I look at average order value, the gross margin on the products, delivery fees and any advertising income from brands. Then I subtract the variable costs of that order: rider cost, packaging, payment gateway fees, discounts and the variable part of the dark store or warehouse cost. What remains is contribution per order. I check how this changes with order density, because more orders per store and per rider usually lower the cost per order. Then I move to the customer level: what it costs to acquire a customer, how many orders they place a month, and how many are still ordering after three or six months. Combining contribution per order with frequency and retention gives lifetime value and the CAC payback period, which tells me if growth is creating or destroying value.

Can you answer it under time pressure?

Take a timed medium round and get scored on every answer.

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