Wayfair has three shipping methods that they use to deliver products to customers. They are considering changing the shipping price of one of these methods. What is the impact of this change in price on profits?
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First case. love to hear other approahces/feedback. My set up structure:
So I understand Wayfair is a platform that connects millions of customers to many thousands of products in pursuit of their vision to help everybody anywhere create the feeling of home. I also know that shipping price is a significant factor in the customer experience and can negatively impact abandoned cart and other metrics. Are we aligned on my context setting?
Some clarifications
1. what is the goal in changing a shipping cost? ie. customer acquisition, retention (reduce churn), increase profit, decrease loss, deliver more satisfying experience. reduce losses
2. Is there a target shipping method in scope for change? I will assume yes otherwise this is first a strategy question around which shipping method(s) should have a price change and why. correct
3. Is this a global shipping method? yes
4. Are there any logistics contracts that stipulate a volume requirement for this shipping method? no
5. is this an expedited shipping option? yes
6. is this option offered for free where an order is eligible? yes, in NA
Let me restate the problem statement
Wayfair has 3 shipping methods and is considering changing the price on a global expedited method to reduce losses, there are no contractual stipulations on this action but I do know that shipping is critical to customer experience and can negatively impact conversion and other metrics. Further this method is offered free on eligible orders in NA.
Structure
Perform a causal analysis to determine the various ways this change can impact profit.
I will consider various metrics related to profit: ie. average order value, #items per order, #orders per customer per timeframe, total volume of orders per timeframe
Structure:
Analyze for direct/indirect impact
direct (where this shipping method selected) - investigate metrics
1. deter orders: people order less often (#orders where this method is selected & total revenue of orders where this method is selected )
2. impact on order size: people order enough to meet eleigibility for free in NA or globally have bigger carts to ensure they don't pay shipping on multiple orders (average order value & items per order)
3. decreased conversion/abandonement on carts where this method is charged
indirect (where this method is not)
1. impact on customer acquisition
2. impact on CLV
3. deltas on alternate shipping options
4. impact on retention
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