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Product Management Root Cause Analysis Question: Investigating Glovo's grocery delivery average order value decline

Asked at Glovo

12 mins

Why has the average order value for Glovo's grocery deliveries dropped by 15% in the past month?

Data Analysis Problem Solving Strategic Thinking Food Delivery E-commerce On-Demand Services
Root Cause Analysis User Behavior Competitive Strategy Grocery Delivery AOV Optimization

Introduction

The recent 15% drop in average order value (AOV) for Glovo's grocery deliveries is a concerning trend that requires immediate attention. As we delve into this issue, we'll employ a systematic approach to identify, validate, and address the root cause while considering both short-term and long-term implications for the business.

Framework overview

This analysis follows a structured approach covering issue identification, hypothesis generation, validation, and solution development.

Step 1

Clarifying Questions (3 minutes)

  • Looking at the timing, I'm thinking there might be a seasonal effect. Has this 15% drop been compared to the same period last year?

Why it matters: Seasonal fluctuations could explain the change without indicating a deeper problem. Expected answer: Yes, it's been compared and is still significant. Impact on approach: If seasonal, we'd focus on year-over-year trends rather than month-to-month.

  • Considering user segments, I'm curious if this drop is uniform across all customer types. Have we seen any differences in AOV changes between new and returning customers?

Why it matters: Different user segments may be responding differently to recent changes or market conditions. Expected answer: The drop is more pronounced among returning customers. Impact on approach: We'd investigate factors specifically affecting loyal customers' purchasing behavior.

  • Thinking about recent changes, have there been any significant updates to the app, pricing structure, or product offerings in the past month?

Why it matters: Recent changes could directly impact user behavior and order values. Expected answer: A new feature for budget-friendly baskets was introduced. Impact on approach: We'd analyze the impact of this feature on order composition and value.

  • Considering external factors, has there been any notable shift in competitor pricing or promotions during this period?

Why it matters: Competitive pressure could be driving customers to adjust their ordering habits. Expected answer: A major competitor launched an aggressive discount campaign. Impact on approach: We'd need to assess our pricing strategy and value proposition in light of competitive actions.

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