Market sizing: how many people work to deliver food in HK in 2021

Market sizing marketsizing
New answer on Jan 10, 2022
4 Answers
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Daisy
Skilled
asked on Jan 05, 2022

Hi everyone, I have one market sizing question that I encountered during my case interview months ago. Can anybody give me some feedback? BTW, I am still struggling with sanity check. What is the best way to do it? Thanks so much:)

Assess how many people work to deliver food in HK in 2021?

= The total number of ordered meals (total demand) / the number of meals one deliveryman can deliver

1. The number of meal one deliveryman can deliver 
4h*(3meal*90%)=11
8h*(3meal*50%)=12

-1641407639-ftb5jllt786s.png

One deliveryman one day can deliver 11+12=23 meals
Assume that there are 360 days -> 23meals*360=8280meals/year

2. Total demand

HK population: 8million 
8/4=2m    

-1641407723-e75fvq628xvv.png

   1.2+6+1.2+0.2=8.6m meals/week
8.6m*50=430m
430m/8280=52,000 delivermen

 

     

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Best answer
Hagen
Expert
replied on Jan 06, 2022
Current Bain & Company Project Leader and interviewer | 250+ interviews conducted | 6+ years of coaching and mentoring

Hi Ruizhi,

First of all, it is great to see your consistency in finding out the solution to the question!

This is indeed an interesting question which is probably relevant for quite a lot of users, so I am happy to provide my perspective on it:

  • Generally speaking, your approach seems to be fine.
  • Still, I would advise you to (re-)consider the following aspects of your market sizing:
    • Think carefully about the underlying drivers of the usage of delivery food. To my understanding, unless the dynamics in China are vastly different, the key underlying drivers are 1) age (i.e. small children and very old normally are not able to order delivery food) and 2) household income. Based on this, I would advise you to segment the Chinese population in a different, maybe more efficient way.
    • I do not fully understand the difference between “Penetration rate”, “# of HKers ordered meals” and “Frequency of purchase/ week”. To my understanding, there is the share of people in a given segment that use delivery food and there is the average frequency of purchase/ week for those that use delivery food. Still, it seems that you are using 3 factors. Why is this the case? 
  • Lastly, for market sizing questions (in this specific situation), you can do two types of sanity checks:
    • Quantitative sanity checks: You might include simple quantitative sanity checks by setting your calculations equal to the results, by typing e.g. “XX+YY+ZZ=AA”
    • Reality checks: You might as well simply google on the market size of delivery food. Even if you do not find the figures for HK, you could most probably find the information for comparable cities.

In case you want a more detailed discussion on how to best approach any type of case study question, please feel free to contact me directly.

I hope this helps,

Hagen

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Ian
Expert
Content Creator
updated an answer on Jan 06, 2022
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

This isn't bad but you've also overcomplicated it a bit! A few thoughts:

  1. Just calculate for a typical day
  2. A given driver should be assumed to be fully utilized
  3. Careful of your age splits- I would just anyone below 16 and above 65
  4. Consider income split for the remaining spot (lower income can't afford to get delivery)

(edited)

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Luca
Expert
Content Creator
replied on Jan 05, 2022
BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Hello Ruizhi,

Below you can find some thoughts on your approach:

  • Utilization rate of non-peak hours is too low: why should I pay for 2 delivery men at 50% instead of using only one? The only reason is that you can not split the workday but you are considering 12h/day so I don't think that's the case
     
  • Are you sure that you can consider 12 hours per day per man? are you considering that you have holidays or days off during the week? I don't think you can ask a delivery man to work 84 hours per week:)
     
  • Why did you consider orders as evenly distributed? Of course you have peak hours and days (e.g. Saturday evening)

An easier way to crack a case like this is to consider the worst scenario during the week (e.g. peak hours during the weekend) and to calculate how many orders you should manage. Once that you have the orders, you can calculate the number of delivery men that you need, making the assumptions that you will distribute them during non peak hours of the week.
Does it make sense?

Hope it helps,
Luca

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Daisy on Jan 05, 2022

Dear Luca, thanks for the reply. However, from my understanding, this question is about calculating the number of deliverman in HK in 2021, not the number of people I need to employee. Therefofore, the utilization rate which is the occupation rate is because sometimes they cannot receive food orders. Thanks, however, I do think I need to divide workdays and weekends.

Clara
Expert
Content Creator
replied on Jan 10, 2022
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

To add on top of the answers that were already posted, and given that market sizing cases were the topic of many questions in this Forum, I developped a market sizing case, that you can find for free in PrepL´s library

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/market-sizing-new-startup-launch-baby-strollers-in-the-us-244

Let me know if you have any doubts with it, it contains a detailed explanation and methodology about how to solve this specific example, but you can extrapolate to many other market sizings!

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Hagen gave the best answer

Hagen

Current Bain & Company Project Leader and interviewer | 250+ interviews conducted | 6+ years of coaching and mentoring
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