Wayfair Interview Question: 50,000 shoppers with a 0.5% c... | Glassdoor

Interview Question

Business Intelligence Analyst Interview Boston, MA

50,000 shoppers with a 0.5% conversion rate for a chair

  that costs $250. Wayfair makes a 27% profit. Next, 50,000 shoppers will get a 10% discount. What is the conversion rate they must achieve to achieve the same profits as before?
Tags:
technical, analytical, business case
Answer

Interview Answer

17 Answers

19

This is incorrect
Old revenue = 50000*250*.005=250*250
New revenue with conversion rate r% = 50000*r*250*.9 = old revenue = 250*250
r = .55%

Anonymous on Jul 9, 2015
5

Number 2 is wrong, number 1 is right. Just because revenues equal doesnt mean profits will equal - they sacrifice profits when they decide to give the sale

Anonymous on Oct 27, 2015
2

Do they expect you to do this in your head, or will they give you pen/paper and a minute?

Thomas on Feb 7, 2016
6

July 9th Answer is the correct answer. It is not hard:
Initial profit is = 50000 * 0.005 * 250 * 0.27 (No need for the calculator yet)
After sale profit = 50000 * x * 250 * 0.01 * 0.27 (Still don't need the calc)
The question asks for the conversion rate such that profit are the same before and after the sale, so...
Initial profit = After Sale profit
50000 * 0.005 * 250 * 0.27 = 50000 * x * (250 - (250 * 0.01)) * 0.27 (divide through & cancel)
0.005 * 250 = x * 225
x = (0.005 * 250) / 225
x = 0.0056 or 0.56%

Hans on Mar 8, 2016
1

You don't actually need to calculate anything other than the new conversion rate. Why? Look at the equation below:
(customer sent = 50000) * (customer bought / customer sent = 0.005 conversion rate) * (revenue / customer bought = 250) * 0.27 (profit / revenue) gives (profit / customer sent). this should be equal to the one after discount. only (revenue / customer bought) changed -> it decreased 10%. therefore, conversion rate needs to increase by (1/0.9), which gives 5.56%.

simple on Jul 16, 2016
0

July 9 is correct. Nov 21 is incorrect.

Michael on Nov 10, 2016
1

July 9 is wrong because the profit margin changes(As sale price changes, but the cost doesn't change)

Anonymous on Feb 16, 2017
0

$250 is the actual cost of the chair (profit not included) or the price listed??

Anonymous on Aug 7, 2017
0

Answer from Nov 21 is correct while July 9 is incorrect. The latter one is just making the revenues equal before and after the sale. It is ignoring the fact that profit % i.e. cost price is also changing after the sale.
Before the sale cost price is 182.5*250. After sale cost price would be 182.5*(no >250), as with new conversion rate more customers will be buying. So even if the revenues are equal, profits won't be equal.

Anonymous on Sep 25, 2018
0

Total Shoppers 50000
Conversion Rate 0.5
Total Customers 250

Selling Price 250
Profit % 27
Cost price 196.8503937
Profit in $ 53.1496063

Total Sales 12500000
Total Profit 13287.40157

Scenario 2:

Selling price 225
Profit 28.1496063

Customers required 472.027972

Conversion Rate in % 0.944055944

Please note that the $250 selling price is (Cost price + 27% profit) on it. So Nov 21, 2014, assumption of doing .27*250 to get the profit is wrong.

FatherStrum on Oct 9, 2018
1

The correct answer is 0.79%. If the selling price is reduced by 10%, the profit margin will not remain 27%. It actually becomes 18.9%.

People who calculated 0.56% assumed the margin was static at 27% despite the price reduction.

Anonymous on May 28, 2019
1

The new conversion rate is 0.944, Profit from case 2 = $16,875

and the third part, if this scenario actually occurred I would give a 10% discount (with the new conversion rate .944%) because the overall profit margin would remain same i.e. $16,875

Anonymous on Aug 19, 2019
1

Wow!!! All I can say is if these are the types of questions asked, it is no longer a mystery to me as to why corporate people are COMPLETELY out of touch with reality of the field experiences!!!

Anonymous on Dec 22, 2019

One or more comments have been removed.
Please see our Community Guidelines or Terms of Service for more information.

Add Answers or Comments

To comment on this, Sign In or Sign Up.