Exercise 6

1- What is the footwear market size in the U.S.?

2- Imagine you run an eCommerce website and 60% of your customers seek the website’s return policy page before placing an order. What could it possibly mean? How would you improve the customer experience for them?

You can submit your answers in the comments section of this blog post to receive feedback. You can also see other people’s answers, the feedback they received, and give your own feedback in the same section.

See also:

How to answer an estimation question in a product manager job interview

How to answer a product improvement question in a product manager job interview

List of estimation questions for product manager job interviews

List of problem solving questions for product manager job interviews

List of product improvement questions for product manager job interviews.

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Leonardo
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Here is how I would estimate the footwear market size in the US.

First, let’s estimate the total number of shoes bought every year. I will create a table that helps me come up with that estimate. Note that for simplicity reasons, I will assume that the US population is 320 million and there are 4 million people in each age year (320 million / 4 = 80 million). Also, population of men and women are equal. Note that below, the number of shoes purchased per year for each age group and price per shoe are estimates.

0 to 5 years of age. – 5 years x 4 million = 20 million people – they buy 4 shoes per year. Each shoe is estimated to be $50. This means total market size in this segment is 20 million x 4 per person per year x $50 = $4 billion
5 to 15 years of age – boys – 10 yeas x 4 million / 2 = 20 million people – they buy 3 shoes per year. Each shoe is estimated to be $50. This means total market size in this segment is 20 million x 4 per person per year x $50 = $4 billion
5 to 15 yeas of age – girls – 10 yeas x 4 million /2 = 20 million people – they buy 6 shoes per year. Each shoe is estimated to be $40. This means total market size in this segment is 20 million x 6 per person per year x $40 = $4.8 billion
15 to 55 years of age – men – 30 yeas x 4 million / 2 = 60 million people – they buy 4 shoes per year. Each shoe is estimated to be $80. This means total market size in this segment is 30 million x 4 per person per year x $80 = $9.6 billion
5 to 55 yeas of age – women – 30 yeas x 4 million /2 = 60 million people – they buy 8 shoes per year. Each shoe is estimated to be $60. This means total market size in this segment is 30 million x 8 per person per year x $60 = $14.4 billion
55 to 80 years of age – men and women – 25 years x 4 million = 100 million – they buy 2 shoes per year. Each shoe is estimated to be $50. Total market size this segment is 100 million x 2 shoes per year per person x $50 = $10 billion

So, total market size is $4B+ $4B+ $4.8B + $9.6B + $14.4B + $10B = $46.8 billion

To do a quick sanity check. This number means that on average each person spends $47billion / 320 million = $150 per person per year. The number seems reasonable.

Taige
Guest

I did it another way but got similar answer!

We want to clarify that it’s shoes (not skates, special equipment, etc.), for both genders, in the USA, new shoe sales only, and we want a dollar amount.

After that I’d say we’d calculate the market size based on demand.

Assumptions:
– 300 mil people in USA
– 100% people need shoes even though some people may not (disabled, etc.)
– 3 pairs are bought per year (one for sports, one for work, and one for walking)
– kids may buy more, seniors may buy fewer, so it averages out
– women may buy more as well but don’t know how many and some men may buy a lot fewer, so will stick to the 3 pairs estimate
– there’s also used shoes being sold, but that’s excluded from calculations

300mil * 3 pairs = 900 mil shoes sold per year

Price of the shoe depends.
1 % of shoes are luxury, estimate @$300
50% of shoes are normal, estimate @$80
49% of shoes are low cost, estimate at @$20

Weighted average
1%*300 + 50%*80 + 49%*20
= 3 + 40 + 9.6 = aprx 50 per shoe

$50 * 900 = 45000 Mil = 45Bil

Andrew
Guest

Some typos here:
1) “15 to 55 years of age – men – 30 yeas”, 55-15=40 not 30
2) 5 to 55 yeas of age – women – 30 yeas , 55-5=50, not 30

overall solution seems reasonable.