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Market size of an online-transportation service such as Uber/grab bike in a day

Anonymous A

Hi, i'm new to learn here about consulting, if there's a questions about how many transactions could an online transportaion service such as uber or grab bike in a day,how should i approach to answer it?

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Marco
Expert
replied on 02/27/2017
Specific coaching: company you are applying for; 1st or 2nd round; your professional background; ...

Hi,

here's how I would approach it

- Define the geographic area to be covered [the whole world? the U.S.? NYC? Manhattan?...for this example I'll use Manhattan]

- Population living there [~ 1.5 M] + population travelling there for work or leisure [not sure about the figure, anything in the 50 - 100 M a year range]

- Divide the travellers figure per days of the year [100 M / 365 ≈ 275k]

- Assume a very low number of travellers comes to Manhattan by car [I'll say it's 0%] and most of the local population doesn't have / use the car [10% of people own a car and use it daily]

- The potential market for your service will be [275k] + [1.5 M * 90%] = [1.625 M]

- Assume [50%] of these people use public transportation, [20%] uses taxis and another [20%] either walks or bikes: this leaves you with [10% ~ 163k] potential daily customers

- Assume there's [10] competitors in this market with an equal market share: your company will process [10% of the transactions ~ 16k transactions a day]

All of the assumptions I used can obviously be challenged and can also be addressed by specific questions to the interviewer.

Hope this helped.

Best,

marco

Vlad replied on 02/27/2017
McKinsey / Accenture / More than 300 real MBB cases / Collected all Big 3 offers / Harvard Business School

I would use the following logic:

1) When I open the Uber app I see xx available cars covering some area

2) Assume some utilization rate for peak / off-peak and apply it to get the total number of cars in your area

3) Multiply that area by the number of similar areas to cover the city (ajust to how busy your area is)

4) Make assumptions re av. rides length to calculate rides per hour (don't forget to include utilization rate you've used before). Make sure to segment the day by peak / off peak time

5) Multiply rides per hour by the number of cars in peak / off-peak and operating hours to get total rides

(edited)

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