Product case study example: grocery delivery

Adjacent expansion strategy: what the company can reuse, what is different about the new business, and which model to start with. The full solution is below: the structure, every exhibit, the math, a model answer and the mistakes to avoid.

Type
Product strategy
Difficulty
Medium
Length
About 15 minutes
Format
Product interview

The question

The interviewer asks one open question. Try it before you read on.

How would you think about a restaurant delivery app expanding into grocery delivery?

Facts the interviewer gives

The company is a US restaurant delivery app, strong in large cities.
The goal is more orders per customer and better use of drivers.
Drivers are busiest at lunch and dinner.
Grocery delivery services already exist in the market.

The numbers behind the answer

Interviewers often hand over a chart or two halfway through. These illustrative numbers show the math that supports the recommendation.

Exhibit 1

Restaurant orders and driver capacity by time of day

One large city, orders per hour on a typical weekday. Illustrative numbers.

Restaurant ordersOrders drivers online can carryOrders per hour, orders per hour
6002,4007003,0009001,6002,6001,6003,2001,6009 to 11 am11 am to 2pm2 to 5 pm5 to 9 pm9 to 11 pm
Restaurant orders and driver capacity by time of day
CategoryRestaurant orders (orders per hour)Orders drivers online can carry (orders per hour)
9 to 11 am6001,600
11 am to 2 pm2,4002,600
2 to 5 pm7001,600
5 to 9 pm3,0003,200
9 to 11 pm9001,600

What to notice

  • Drivers are nearly full at lunch and dinner, with 200 spare orders an hour.
  • From 9 to 11 am and from 2 to 5 pm, drivers online could carry 1,000 and 900 more orders an hour.
  • Those quiet hours hold 4,700 spare order slots a day, the capacity grocery top-ups can use.

Exhibit 2

Profit per grocery order by way in

Dollars per order. A small warehouse also costs $1,400 a day in rent and staff, and delivers in under 30 minutes. Illustrative numbers.

Profit per grocery order by way in
Order typeBasket ($)ItemsOur revenue ($)Picking ($)Delivery ($)Profit before fixed costs ($)
Top-up, partner store packs30Up to 159063
Weekly stock-up, our shopper picks12020 to 4016108−2
Top-up, our own warehouse30Up to 1512255

What to notice

  • A top-up packed by a partner store makes $3 an order, because nobody on our side picks it.
  • A weekly stock-up loses $2 an order once our shopper spends time picking 20 to 40 items.
  • Our own warehouse makes $5 an order before its running costs, so it needs 280 orders a day to break even.
Every number, worked out12 calculations
Every number, worked out
Spare capacity at lunch (orders an hour)2,600 − 2,400200
Spare capacity at dinner (orders an hour)3,200 − 3,000200
Spare capacity, 9 to 11 am (orders an hour)1,600 − 6001,000
Spare capacity, 2 to 5 pm (orders an hour)1,600 − 700900
Spare order slots, 9 to 11 am(1,600 − 600) × 22,000
Spare order slots, 2 to 5 pm(1,600 − 700) × 32,700
Spare order slots in the quiet hours2,000 + 2,7004,700
Top-up profit per order ($)9 − 0 − 63
Stock-up profit per order ($)16 − 10 − 8−2
Warehouse profit per order before running costs ($)12 − 2 − 55
Warehouse break-even (orders a day)1,400 ÷ 5280
Daily profit if top-ups fill half the quiet-hour slots ($)4,700 ÷ 2 × 37,050

The model answer

A strong candidate's whole answer, as it sounds out loud. The marked phrases are explained below.

The answer in 30 seconds

Grocery fits our idle driver hours and could become a weekly habit, but baskets, picking and margins differ. I'd start with a marketplace of convenience stores and local grocers focused on small, urgent top-up orders, measured by orders per customer, cost per order and substitution satisfaction, with restaurant orders as a guardrail.

  1. 1WhyThe business reason for the move.
  2. 2What carries over and what's differentAssets to reuse and new challenges.
  3. 3Ways inMarketplace versus own warehouses.
  4. 4Which trip to winStock-up versus top-up.
  5. 5Recommendation and metricsA clear start, metrics, a guardrail and a trigger to go further.

I'd start with why. I'll assume a restaurant delivery app in the US, strong in big cities, wants to grow orders per customer. Restaurant orders peak at lunch and dinner, so drivers sit idle mid-morning and afternoon. Grocery could fill those hours and become a weekly habit.

What carries over: millions of customers who trust the app, a network of drivers, and know-how in fast delivery. What's different: grocery baskets are bigger with 20 to 40 items instead of one meal. Items have to be picked off shelves, and substitutions are common. Some items need to stay cold. And grocery margins are thin, so delivery costs matter even more.

There are two ways in. One, a marketplace: partner with existing grocery stores, and our shoppers or the store's staff pick the order. Two, our own small warehouses in dense neighborhoods, stocked with a few thousand items, delivering in under 30 minutes. Owning warehouses gives control and speed, but it's expensive and risky. A marketplace is cheaper and faster to launch but gives less control.

I'd also think about which grocery trip to win. A weekly stock-up is big and planned, and established grocery delivery services are strong there. A top-up order, forgot the milk or need ingredients for tonight, is small and urgent, which matches our strength in speed and our drivers on bikes and in cars.

My recommendation is to start with a marketplace focused on top-up orders, partnering with convenience stores and local grocers in our top cities. It reuses our drivers in their quiet hours, needs little upfront spending, and plays to speed. Version one: a grocery tab in the app with partner stores, baskets of up to about 15 items, and a simple substitution choice for every item.

I'd measure: orders per customer per month for those who try grocery, delivery cost per grocery order compared with restaurant orders, and substitution satisfaction. Guardrail: restaurant orders from grocery users, since we don't want to replace a restaurant order with a cheaper grocery one.

I'd consider our own warehouses only if top-up demand in a neighborhood is dense enough that partner stores can't keep up.

Why this answer works

  • Reuse, then adapt

    Adjacent moves are strongest when they reuse real assets, like idle drivers, and are honest about what's new.

  • Pick the job to win

    Choosing the top-up trip over the weekly shop plays to the company's existing strength.

  • Watch for cannibalization

    A new product can quietly replace a more valuable one. A guardrail catches it.

The phrases that do the work

  • “drivers sit idle mid-morning and afternoon”

    Business reason. Finds a real asset the move can use.

  • “A top-up order, forgot the milk or need ingredients for tonight, is small and urgent”

    Segment choice. Matches the trip to the company's strength.

  • “we don't want to replace a restaurant order with a cheaper grocery one”

    Cannibalization guardrail. Protects the core business.

Common mistakes on this case

  • 1Assuming grocery is just restaurant delivery with more items.
  • 2Jumping to building warehouses without weighing the cost.
  • 3Trying to win the weekly stock-up against established players.
  • 4No guardrail on the core restaurant business.

Now run this case out loud

Soreno's AI interviewer asks you this question, follows up on your choices and scores your answer.

Questions people ask

Is this about a real company?

No. The company is not named. The question and the numbers on this page were written for practice, and the numbers are illustrative.

How long does this case take?

About 15 minutes out loud, the length of one product interview question. It is rated medium.

How should I use this solution?

Try the case first. Read the prompt and the facts, write your structure and work the numbers, then compare each step with the walkthrough and the model answer.

Can I practice this product strategy case out loud?

Yes. Soreno's AI interviewer runs this case with you, shows the exhibits when you ask, follows up on your answers and scores each part.

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