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How do you calculate the market size of the Food Delivery Service industry?

Case Interview Guesstimate Market sizing
Recent activity on Apr 11, 2023
6 Answers
22.2 k Views
Wibi asked on Jun 30, 2018

assume that it is an open-ended question:

- choose a city/region

- no specific target market in terms of supply/demand side

Overview of answers

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Best answer
Serhat
Expert
replied on Apr 25, 2019
BCG | Kellogg MBA |82% Success rate| 450+ case interview| 5+ year consulting | 30+ projects in ~10 countries

Hi Wibi,

We are happy to provide you feedback on your solutions.

Would you want to try your best solution first? Happy to improve it together.

Best

Serhat

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THEERTHA HARIHARAN replied on Jun 30, 2018
Management Student at BIM

Let us consider the city of Coimbatore, Tamil Nadu, India for our calculation.Coimbatore has a total population of 10,50,721 people. Then approximately it will be about 2,62,681 households. Since Coimbatore is one of the urbanised households in India. Since it is also called the Manchester of South India. Food delivery service is a huge market here.The city has a huge amount of people with upper middleclass and rich background.

It is hard to figure out the exact percentage of upper middle class and rich in india since only about 3% of Indians pay income tax and file their tax returns. Since Coimbatore is one of the urbanised centres , the number of people who are ready to afford food delivery is quite high than the national average. Already few industries are doing fine including SWIGGY which was loaunched recently. Many Restaurents already have their own Food Delivery Service. Since the many companies like Uber have already launched apps to place orders the competition is going to be fierce.

Considering 30% of the population come under affordable/willing category a little larger than the national average, we get 78,804 households. Eliminating various constraints such as Restaurents, Traditional Hotels, Various other conventional competitions it would be like 60% of the households who will be willing. Then we get 47,282 households. Considering on average they order once a month for average of Rs.1,750 then, The market size would be 5,67,384 deliveries a year, thats 1,554 deliveries per day.

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Shreyas updated an answer on Nov 08, 2018

Estimate market size of swiggy food delivery service in Mumbai

Let us assume that the population of Mumbai is 10 crores

Out of the hundred percent population let's say 50% a man and 50% of women

35% of the 50% male population and 35% of the 50% women population is working class and each . 5% are children and. 5% are senior citizens who would be in ordering from swiggy

That adds up (. 5 + 35 + . 5)*2= 72%

72% of 10 crores is 7. 2 crore

let's say swiggy gets its 65% business from high income group 30% business from medium income group and 5% business from low income group

The probability that a low income group person would buy from swiggy is 1 upon 80, similarly from middle income group it is one upon 50 and from high income group it is one upon 20

Adding all the mutually exclusive cases we get,

(.05*1/80+0.3*1/50 +.65*1/20)*7.2cr= 2817000

We approximated 2817000 deliveries by swiggy in a day whereas the real number is 300000

(edited)

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Keller replied on Apr 11, 2023

Calculating the market size of the Food Delivery Service industry can be a complex process that involves a range of different factors. Some of the key variables that need to be taken into account include the number of players in the market, the geographic reach of those players, and the overall volume of orders that are processed through Food Delivery App services.

One common approach to estimating market size is to use top-down analysis, which involves looking at overall industry revenues and then breaking those down into individual segments or companies. This can be done using a variety of data sources, including market research reports, financial statements, and industry databases.

Another approach is to use a bottom-up analysis, which involves estimating the size of the market based on the number of potential customers and their likely spending habits. This can be done using surveys or other forms of customer research to gather data on factors like demographics, income levels, and preferences for food delivery services.

Of course, these are just a few of the many factors that need to be considered when calculating the market size of the Food Delivery Service industry. If you're interested in learning more about how to create your own Food Delivery App, you might find this article helpful: https://code-care.com/blog/create-your-own-food-delivery-app/. It provides a detailed overview of the key features and functionality that you'll need to include in your app to ensure its success in this competitive market.

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Aden Mullen replied on Mar 28, 2023

Hey there,

Calculating the market size of the food delivery service industry can be a complex task, as it involves analyzing a wide range of factors such as market trends, customer demographics, and competitor activity. However, there are a few key steps you can take to estimate the market size and potential for growth in this industry.

One approach is to start by analyzing the total revenue generated by existing food delivery services in a particular geographic region or market. This can provide a baseline estimate of the market size and potential demand for food delivery services.

Another approach is to conduct market research to gather information on consumer preferences and behaviors related to food delivery services. This can help you identify target customer segments and better understand the factors that drive demand for these services.

In addition to these methods, it can also be useful to consider the potential for growth and expansion in the food delivery service industry, as well as any emerging trends or innovations that may impact the market.

If you're interested in developing a food delivery app, it's important to have a solid understanding of the market size and potential demand for these services. You can learn more about food delivery app development and the key features and functionality to include in your app in the guide "Create Your Own Food Delivery App" at https://code-care.com/blog/create-your-own-food-delivery-app/.

Overall, while calculating the market size of the food delivery service industry can be challenging, there are many strategies and tools available to help you estimate demand and identify opportunities for growth and innovation.

 


 

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Mathilde updated an answer on Dec 13, 2022

To find the overall market potential (that is, the potential market volume), multiply your number of target customers by the penetration rate.

To calculate the monetary value of the market, multiply the market volume by your average value. Here is a good article about marketing technology trends https://sloboda-studio.com/blog/marketing-tech-trends/

(edited)

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